2024
ANNUAL R EPO RT
TH E P O O LCOR P
DI F F E R EN C E
T H E P O O LCO R P
D I F F E R E N C E
OUR NETWORKS AND LOCATIONS
N O RTH A ME R I C A
1
81
66
59
30
7
6
5
4
4
3
3
4
4
2
3
1
1
2
1
1
2
1
1
2
3
2
1
3
2
5
5
11
10
9
9
9
7
7
7
11
5
2
3
1
1
5
10
NETWORK
TOTAL SALES CENTERS
SCP®
266
SUPERIOR®
74
HORIZON®
90
NPT®
18
TOTAL
448
EUROPE
2
9
1
1
1
1
2
AUS TR ALIA
3
1
1
1
3
1
....................................
......................................................
........
.............................
...........................
D R I V I N G BOLD NEW
I N N OVAT I O N
TA B LE O F
CON TEN TS
Message to Our Shareholders
1
Financial Highlights
2
Improving Retail & Service Value Proposition
3
Expanding Our Digital Ecosystem
4
Pool Corporation 2024 Form 10-K
5
Shareholder Information,
Company Officers & Directors
Inside Back Cover
....
VI SI ON
STAT E M E NT
To be the best worldwide distributor of outdoor lifestyle products
that include all products relating to swimming pools, irrigation &
other products that enhance the quality of outdoor home life.
M I SSI ON
STAT E M E N T
To provide exceptional value to our customers and suppliers,
creating exceptional return for our shareholders while
providing exceptional opportunities for our employees.
—1—
MESSAGE TO OUR
SHAREHOLDERS
DEAR FELLOW SHAREHOLDERS,
In 2024, we were pleased to report a fourth consecutive year
of sales exceeding $5 billion. While net sales were 4% lower
than 2023, steady maintenance outperformance mitigated
continued weakness in homeowner discretionary spending,
which impacted new pool construction and remodeling
activities. Our operating income for the year totaled $617
million with an operating margin of 11.6%, and we generated
operating cash flow of $659 million and 152% of net income.
Along with excellent working capital management, our
operating cash flow allowed us to reduce our debt by $103
million and return over $483 million to our shareholders
through dividends and share repurchases.
We continued expanding our industry-leading sales center
network in 2024 by adding 12 locations, bringing our
worldwide total to 448, which is the most far-reaching
wholesale distribution network in the industry. These
additional locations enhance our capacity for future growth,
offering our vendors the broadest market distribution
footprint in the industry and providing our customers with the
most convenient access to the products and expertise they
need. In addition, our Pinch A Penny franchise network grew
by 11 stores, primarily in the strategic Texas market, raising
the network total to 295 stores. We have added distribution
capacity supporting Pinch A Penny franchised stores in
strategic markets and plan to continue adding new franchised
store locations across western U.S. sunbelt markets in the
years ahead.
We made considerable progress on further development of our
digital ecosystem this year as we accelerated our mission to
transform how we and our industry interact. Our POOL360®
WaterTest and POOL360® PoolService tools integrate
e-commerce, software applications and data-driven insights,
and are designed to boost our retail and service customers’
abilities to serve pool owners. Each tool links directly into our
POOL360® B2B platform, unlocking capacity for our builder,
remodeling, service and retail customers and our sales center
network. Further, our new all-inclusive Regal® and E-Z Clor®
Pool Care mobile apps, which are linked to our proprietary
chemical brand products, help improve water chemistry and
clarity and simplify the pool ownership experience. We
believe these investments are important differentiators and
create an increasing competitive advantage that extends
our industry leadership and positions us to gain share over
the long-term. We plan to continue investing in our digital
ecosystem, bringing the full power of Pool Corporation to our
customers’ fingertips 24 hours a day, 7 days a week.
The current conditions in our industry, impacted by higher
inflation and interest rates, have suppressed major remodel
and new pool construction activities. In 2024, approximately
61,000 new in-ground pools were constructed, about half of
the 117,000 in-ground pools that were installed in 2021. Even
with reduced discretionary spending bringing new in-ground
pool units down almost 50% from 2021, our net sales were flat
over the same period, which makes us confident that we have
outperformed the market. Our capacity creation initiatives
also helped us manage through significant cost inflation to
maintain an operating margin in line with our expanded 2020
operating margin. We believe our company’s performance in
2024 reflects the resilience of the maintenance portion of our
industry, the success of our focused initiatives in this key area
and the industry growth opportunities ahead as conditions
return to a more historically consistent cadence. Our results
also demonstrate the powerful combination of a robust
business model coupled with a seasoned, inspired team.
As we look to the future, we are confident about our
organization’s talent, capabilities and teamwork to achieve
our strategic growth and performance goals. When our
industry enters a renewed cycle following this past five-year
period, we stand ready and prepared to meet our customers’
requirements to serve the growing needs of a resilient,
vibrant outdoor living products marketplace. New product
technologies and enhanced features will expand the market
and continue improving the ease and efficiency of enjoying
swimming pools and outdoor living environments in the years
ahead. With the largest sales center network, broadest product
offering, interactive and comprehensive customer platforms
and a culture driven by relentless focus on our customers’
experiences, we believe that Pool Corporation is positioned
to continue its strong financial performance creating superior
returns for our shareholders. We appreciate your ongoing
support and look forward to creating exceptional opportunities
for you, our customers, our vendors, our employees and the
communities we serve for many years ahead.
PETER D. ARVAN
President and
Chief Executive Officer
JOHN E. STOKELY
Chair of the Board of Directors
and Lead Independent Director
—2—
FINANCIAL HIGHLIGHTS
CREATING
WAVES OF SUCCESS
NET SALES (in millions)
9% CAGR 2014-2024
$6,500
$6,000
$5,500
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
2019
2016
2015
2018
2017
2021
2022
2023
2024
2020
5,296
6,180
5,542
5,311
2,363
2,571
2,998
2,788
3,937
3,200
GROSS PROFIT (in millions)
9% CAGR 2014-2024
$2,200
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
1,617
1,660
1,575
1,933
925
741
870
676
805
1,131
2019
2016
2015
2018
2017
2021
2023
2024
2022
2020
OPERATING INCOME (in millions)
13% CAGR 2014-2024
$1,100
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
833
747
617
1,026
216
284
314
256
341
464
2019
2016
2015
2018
2017
2021
2023
2024
2022
2020
DILUTED EARNINGS PER SHARE
17% CAGR 2014-2024
$20
$18
$16
$14
$12
$10
$8
$6
$4
$2
2019
2016
2015
2018
2017
2021
2022
2023
2024
2020
5.62
2.90
3.47
4.51
8.97
6.40
15.97
18.70
13.35
11.30
USES OF CASH
Since company inception (in millions)
Dividends
$1,288
(21%)
Share Repurchases
$2,746
(46%)
Acquisitions, net and
Other Investments
$1,439
(24%)
Capital
Expenditures
$556
(9%)
IMPROVING
RETAIL & SERVICE
VALUE PROPOSITION
In 2024, we successfully launched
four new brands, including new
packaging, displays, planograms,
and in-store signage for our
retail customers.
Relaunching our brands included a detailed
activation guide and marketing portal
accessible through POOL360, which facilitated
seamless onboarding for the 2025 Retail Edge
program and access to brand assets available
to order for Regal®, E-Z Clor®, Life®, PoolStyle®
and SuperPro® XtremeBlue®, as well as
top vendors.
SuperPro®
XtremeBlue® Filters
As part of our growing portfolio of premium, high-performance
solutions, XtremeBlue® filters deliver superior quality and
reliability at a competitive price. They exemplify our
commitment to providing trusted alternatives that meet
or exceed industry standards.
—3—
EXPANDING OUR DIGITAL
E C O S Y S T E M
POOL360 ®
Expanding access to our private-label products increases availability
through our POOL360® ecosystem, ensuring seamless purchasing
and delivery. Our proprietary brands allow us to control quality,
maintain competitive pricing, and provide our customers with
products tailored to their unique needs. By integrating e-commerce,
software applications, and data-driven insights, POOL360®
enhances customer experience and operational efficiency.
POOL360®
POOLSERVICE
POOL360® PoolService continues unlocking capacity
for our customers and sales center network. With this robust
software platform, pool professionals can better manage their service business
by providing a complete Customer Relationship Management (CRM) tool, routing,
billing, QuickBooks integration, and other day-to-day management capabilities
while improving their customers’ experiences. Each tool links directly into our
POOL360® B2B platform, creating efficiencies for us and our customers.
POOL360®
WATERTEST
POOL360® WaterTest continues to
redefine the water testing process
from a cost center to a profit center
by integrating professional water
testing with our complete line
of proprietary pool and hot tub
chemicals, ensuring optimal water
chemistry management for
our customers.
In addition to these professional tools, we launched
the all-new Regal® and E-Z Clor® Pool Care mobile
apps, providing at-home water testing solutions
that empower pool owners to take control of
their pool maintenance, bringing the full power
of Pool Corporation to our customers’ fingertips
24 hours a day, 7 days a week.
—4—
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
Check box Checked
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2024
or
Check box UnChecked
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from blank to blank
POOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
0-26640
(Commission File Number)
36-3943363
(I.R.S. Employer
Identification No.)
109 Northpark Boulevard,
Covington, Louisiana
(Address of principal executive offices)
70433-5001
(Zip Code)
(985) 892-5521
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
POOL
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes Check box Checked No Check box UnChecked
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes Check box UnChecked No Check box Checked
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes Check box Checked No Check box UnChecked
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes Check box Checked No Check box UnChecked
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller
reporting
company,”
and
“emerging
growth
company”
in
Rule
12b-2
of
the
Exchange
Act.
Large accelerated filer
Check box Checked
Non-accelerated filer
Check box UnChecked
Accelerated filer
Check box UnChecked
Smaller reporting company
Check box UnChecked
Emerging growth company
Check box UnChecked
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. Check box UnChecked
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. Check box Checked
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
Check box UnChecked
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). Check box UnChecked
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes Check box UnChecked No Check box Checked
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant based on the
closing sales price of the registrant’s common stock as of June 28, 2024 was $11,422,468,034.
As of February 20, 2025, there were 37,630,465 shares of common stock outstanding.
Documents Incorporated by Reference
Portions of the registrant’s Proxy Statement for the 2025 Annual Meeting of Stockholders are incorporated by reference into
Part III of this Form 10-K.
POOL CORPORATION
TABLE OF CONTENTS
Page
PART I.
Item 1.
Business
1
Item 1A.
Risk Factors
12
Item 1B.
Unresolved Staff Comments
20
Item 1C.
Cybersecurity
21
Item 2.
Properties
23
Item 3.
Legal Proceedings
26
Item 4.
Mine Safety Disclosures
26
PART II.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
27
Item 6.
[Reserved]
28
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
29
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
47
Item 8.
Financial Statements and Supplementary Data
48
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
83
Item 9A.
Controls and Procedures
83
Item 9B.
Other Information
86
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
86
PART III.
Item 10.
Directors, Executive Officers and Corporate Governance
86
Item 11.
Executive Compensation
86
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
86
Item 13.
Certain Relationships and Related Transactions, and Director Independence
86
Item 14.
Principal Accountant Fees and Services
86
PART IV.
Item 15.
Exhibits, Financial Statement Schedules
87
Item 16.
Form 10-K Summary
87
Index to Exhibits and Signatures
PART I.
Item 1. Business
General
Pool Corporation (the Company, which may also be referred to as we, us or our), a member of the S&P 500 Index, is the
world’s largest wholesale distributor of swimming pool supplies, equipment and related leisure products and is one of the
leading distributors of irrigation and landscape maintenance products in the United States.
We believe that our industry is fragmented, and as such, we add considerable value to the industry by purchasing products from
a large number of manufacturers and then efficiently distributing the products with high levels of service to our customer base
on conditions that are more favorable than our customers could obtain on their own.
As of December 31, 2024, we operated 448 sales centers in North America, Europe and Australia, from which we sell
swimming pool supplies, equipment and related leisure products, irrigation and landscape maintenance products and hardscape,
tile and stone products to our customer base, including pool builders, retail stores, service companies, landscape contractors and
others, through our five distribution networks listed below:
•
SCP Distributors (SCP);
•
Superior Pool Products (Superior);
•
Horizon Distributors (Horizon);
•
National Pool Tile (NPT); and
•
Sun Wholesale Supply (Sun Wholesale).
Our Industry
We operate in the outdoor living industry, which services approximately 11.0 million bodies of water in the United States alone,
including 5.4 million in-ground swimming pools. These pools require routine maintenance throughout their lifetime, and we
believe significant growth opportunities reside with pool remodel and pool equipment replacement activities due to the aging of
the installed base of swimming pools. We continue to add products to take advantage of technological advancements and the
development of sustainable, energy-efficient and more aesthetically attractive products. We believe that the pool industry will
continue to grow with the increased penetration of new pools into households with the discretionary income and physical
capacity to install a swimming pool. Further, we believe the desire for consumers to enhance their outdoor living spaces with
water-sensing and battery-powered alternatives, hardscapes, lighting and other outdoor living-related products provides us with
additional future growth opportunities.
Over the past several years, favorable demographic and socioeconomic trends have positively impacted our industry, and we
believe these trends will continue over the long term. These favorable trends include the following:
•
long-term growth in housing units in warmer climate markets due to the population migration toward the southern
United States, where outdoor home entertainment is more prevalent and extends longer throughout the year;
•
increased homeowner spending on outdoor living spaces for relaxation and entertainment as lower housing turnover
encourages consumers to renovate their existing homes;
•
consumers bundling the purchase of a swimming pool and other products, with new irrigation systems, landscaping
and improvements to outdoor living spaces often being key components to both pool installations and remodels;
•
consumers using more automation and control products, higher quality materials and other pool features that add to our
sales opportunities over time; and
•
consumers increasing focus on sustainable, energy-efficient products.
In 2024, we estimate that close to 65% of our sales through the swimming pool industry are related to maintenance and minor
repair of existing swimming pools. Maintaining a safe and consistent water chemistry as well as necessary upkeep and repair of
swimming pool equipment, such as pumps, heaters, filters and safety equipment, creates non-discretionary demand for pool
chemicals, equipment and other related parts and supplies. The recurring nature of the maintenance and repair market has
helped maintain a relatively consistent rate of industry contribution to revenue over time. This characteristic has helped buffer
our performance when unfavorable economic conditions, such as higher interest rates and softness in the housing market,
adversely impact consumer discretionary spending, including pool construction and major replacement and renovation
activities. As the installed base of in-ground swimming pools ages, we also believe cosmetic considerations such as a pool’s
1
appearance and the overall look of backyard environments create ongoing demand for our other discretionary and non-
discretionary products.
The following table reflects growth in the domestic installed base of in-ground swimming pools over the past 11 years (based
on Company estimates for 2024 and information from 2023 P.K. Data, Inc. reports):
We estimate that just over 20% of our current year sales were derived from the swimming pool remodel, renovation and
upgrade market. The activity in this market, which includes major swimming pool remodeling and upgrading, is driven by the
aging of the installed base of pools and availability of enhanced feature products such as swimming pool automated controls,
variable speed pumps, robotic cleaners and LED pool and hot tub lighting. Many new homeowners with existing pools
transform older pools into a modern backyard oasis through upgraded features, finishes and equipment. Among other factors
such as the southern population migration and housing shortage trends, the timing of these types of expenditures is more
sensitive to economic factors including home values, existing single-family home sales and consumer confidence as compared
to the non-discretionary demand of the maintenance and minor repair market.
We estimate that new swimming pool construction comprised almost 15% of 2024 sales. The demand for new pools is
generally driven by the perceived benefits of pool ownership including increased use of outdoor space, enhanced property
value, relaxation, entertainment, family activity, exercise and convenience. The industry competes for new pool sales against
other discretionary consumer purchases such as kitchen and bathroom remodeling, boats, motorcycles, recreational vehicles and
vacations.
The irrigation and landscape maintenance industry shares many characteristics with the pool industry, and we believe that it
exhibits similar long-term growth potential. Irrigation system installations often occur in tandem with new single-family home
construction making them more susceptible to economic variables that drive new home sales. However, the landscape industry
offers similar maintenance-related growth opportunities as the swimming pool industry. Product offerings such as chemicals
and fertilizers, power equipment and related repair and maintenance services offer recurring revenue streams in an industry
otherwise closely tied to the new housing market. The irrigation and landscape maintenance distribution business serves both
residential and commercial markets, with the majority of sales related to the residential market. Within the United States
market, we believe that residential and commercial irrigation systems, landscape maintenance products, power equipment,
hardscapes and specialty outdoor products and accessories offer a total addressable market value of approximately $19.0
billion.
2
Economic Environment
Certain trends in the housing market, the cost and availability of consumer credit and general economic conditions (as
commonly measured by Gross Domestic Product or GDP) affect our industry, particularly the installation of new pools and
irrigation systems, as well as the timing and extent of pool remodels, equipment replacements, landscaping projects and outdoor
living space renovations. Consumers typically spend more on new pools, new irrigation systems, renovations and replacement
when general economic conditions are strong.
Existing home turnover continued to decline in 2024 driven by high interest rates and homeowners taking advantage of their
existing lower rate mortgages. Nonetheless, new home construction grew versus a decline in new pool construction, creating
more available backyards for swimming pools when economic conditions stabilize. We believe that over the long term, higher
rates of home appreciation and turnover have a positive impact on new pool installations. While most new swimming pools are
installed in existing homes, there has also been a correlation of new pool construction activity to new home construction
activities over time. We also believe that homeowners’ discretionary spending capacity, availability of consumer credit and
favorable borrowing rates are critical factors enabling the purchase of new swimming pools and irrigation systems. Similar to
other discretionary purchases, replacement and renovation activities are more heavily impacted by economic factors such as
consumer confidence, GDP and employment levels. During periods of high demand, contractor labor availability can limit our
customers’ ability to fully meet consumer construction and renovation demand.
In recent years, steady increases in home values, lack of affordable new homes and increased mortgage rates have prompted
homeowners to stay in their homes longer. Although homeowners’ investment in their houses has moderated from the
pandemic heightened levels of 2020 to 2022, home investment levels generally remain favorable. We estimate that new in-
ground pool construction units decreased 15% from 72,000 units in 2023 to approximately 61,000 units in 2024 as demand has
continued to normalize and was particularly pressured by the unfavorable macroeconomic environment. We expect that
consumers will continue to invest in outdoor living spaces as they consider backyards an extension of their home space. We
believe that we are well positioned to benefit from the inherent long-term growth opportunities in our industry fueled by
favorable population migration trends, strong housing demand dynamics and product developments and technological
advancements as consumers focus on more sustainable and energy-efficient products.
We generally pass industry price increases through our supply chain and from time to time may make strategic volume
inventory purchases ahead of vendor price increases in order to obtain favorable pricing.
During 2022, supply chain
interruptions, production shutdowns and weather-related events resulted in an increased inflation benefit of 10% as higher costs
to produce and transport finished products were passed through to consumers. Inflationary product cost increases moderated in
2023 to approximately 3% to 4%.
In 2024, inflationary product cost increases returned to our historical average of
approximately 1% to 2%, which we expect to continue into 2025.
Business Strategy and Growth Strategy
Our mission is to provide exceptional value to our customers and suppliers, creating exceptional return to our shareholders,
while providing exceptional opportunities to our employees. Our core strategies are as follows:
•
to promote the growth of our industry;
•
to promote the growth of our customers’ businesses; and
•
to continuously strive to operate more effectively.
We promote the growth of our industry through various advertising and promotional programs intended to raise consumer
awareness of new and existing product offerings by our vendors, the benefits and affordability of pool ownership, the ease of
pool maintenance and the many ways in which a pool and the surrounding spaces may be enjoyed beyond swimming. These
programs include digital and media advertising, industry-oriented website development such as www.swimmingpool.com®,
www.hottubs.com® and www.nptpool.com®, social media platforms and other digital marketing initiatives, including our new,
all-inclusive Regal and E-Z Clor Pool Care mobile apps that enable at-home water testing, as well as our NPT® Backyard
mobile app. We use these programs as tools to educate consumers and lead prospective pool owners to our customers. We also
promote the growth of our industry by offering a growing selection of energy-efficient and environmentally friendly products,
which support sustainability and can help pool owners save energy, water, time and money. Our environmentally friendly
technology products include variable speed pumps, LED pool and hot tub lights and high-efficiency heat pumps. Our Horizon
sales centers offer organic fertilizers, organic pesticides, and irrigation and drainage products that reduce water usage and soil
erosion, allowing our customers and homeowners to have less of an impact on freshwater reserves.
3
We promote the growth of our customers’ businesses by offering the broadest product assortment through the largest number of
conveniently located market-based sales centers and through comprehensive support programs that include promotional tools
and marketing support to help our customers generate increased sales. We provide in depth product training that allows our
customers to expand the scope of their product offerings. We also provide uniquely tailored advertising programs through our
EDGE Marketing Portal that include such features as digital marketing, customer lead generation, personalized websites,
brochures, direct mail, marketing campaigns and business development training. We assist certain customers with aspects of
their businesses, including site selection, store layout and design, product merchandising, comprehensive product offering
selections and efficient ordering and inventory management processes. In addition to these programs, we feature consumer
showrooms in many of our sales centers and host our annual Retail Summit to educate our customers about product offerings
and the overall industry. We also function as a day-to-day resource by offering product and market expertise to serve our
customers’ unique needs.
In addition to our efforts aimed at promoting industry and customer growth, we strive to operate more effectively by
continuously focusing on improvements in our operations, which we define as capacity creation. We create capacity with
business-to-business (B2B) development tools and execution aimed at developing best-in-class service and value creation for
our customers and suppliers. In particular, our POOL360 and Horizon 24/7 B2B internet and mobile platforms help our
customers be more productive by allowing them to digitally review and order our products, while leveraging our customer
service staff resources, particularly during peak business periods. These tools offer real-time integration into our enterprise
resource planning system, creating efficiencies in our business processes and also provide our customers graphical catalog
presentation in the same platform. Our BlueStreak mobile ordering platform enables our sales associates to process orders
faster, often eliminating the need for customers to get out of their vehicles. Similarly, we employ velocity slotting technology
and other processes to enhance the operational efficiencies of our sales centers and warehouses.
We believe that ongoing investments in digital transformation and technology help us provide best-in-class service to our
customers by improving the customer experience, enhancing our existing customer relationships and expanding our customer
base. To that end, a part of our growth strategy includes investing in technology that allows us to better serve our customers
and using this information to make better data-driven decisions for our business. Our POOL360 digital ecosystem is a suite of
SaaS products transforming the way pool professionals do business. POOL360 WaterTest and POOL360 PoolService are tools
designed to unlock capacity for our customers and our sales center network. By integrating e-commerce, software applications
and data-driven insights, POOL360 enhances both customer experience and operational efficiency. POOL360 WaterTest is a
professional water testing software available to our retail customers that incorporates our complete line of proprietary-branded
pool and hot tub chemicals into pool owners’ water chemistry maintenance requirements. Our POOL360 PoolService mobile
application allows pool professionals to better manage their service business through providing a complete Customer
Relationship Management (CRM) tool, routing, billing and other day-to-day management capabilities, while improving their
customers’ experiences. Each of these tools links directly into our POOL360 B2B platform, creating efficiencies for both us
and our customers. Going forward, we plan to continue growing our suite of POOL360 technologies with additional resources
for our customers.
We have grown our distribution networks through new sales center openings, acquisitions and the expansion of existing sales
centers depending on our market presence and capacity. For additional information regarding our new sales center openings,
acquisitions and closures/consolidations, see Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and Item 8, Note 2 of “Notes to Consolidated Financial Statements,” included in this Form 10-K.
We plan to continue to make strategic acquisitions and open new sales centers to further penetrate existing markets and expand
into both new geographic markets and new product categories. We believe that our high customer service levels and expanded
product offerings have enabled us to gain market share historically. Going forward, we expect to continue to realize sales
growth through market share gains and continued expansion of our product offerings with a focus on our proprietary and
exclusive brand products.
Customers and Products
We serve roughly 125,000 customers, most of which are small, family-owned businesses with relatively limited capital
resources. Most of these businesses provide labor and technical services to the end consumer and operate as independent
contractors and specialty retailers employing few if any employees. These customers also buy products from other distributors,
mass merchants, home stores and certain specialty and internet retailers. No single customer accounted for 10% or more of our
sales in 2024.
4
We provide extended payment terms to qualified customers for sales under pre-season early buy programs, which typically
occur during the fourth and first quarters. The extended terms usually require payments in equal installments during the second
quarter of each year. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations -
Critical Accounting Estimates - Allowance for Doubtful Accounts” for additional information.
We sell our products primarily to the following types of customers:
•
swimming pool remodelers and builders;
•
specialty retailers that sell swimming pool supplies, including independently owned and operated Pinch A Penny
franchise stores;
•
swimming pool repair and service businesses;
•
irrigation construction and landscape maintenance contractors; and
•
commercial pool operators and pool contractors who build, remodel or service large commercial installations such as
hotels, universities and community recreational facilities.
We conduct our operations through 448 sales centers in North America, Europe and Australia. Our primary markets, those with
the highest concentration of swimming pools, are Florida, California, Texas and Arizona, collectively representing
approximately 54% of our 2024 net sales. In 2024, we generated approximately 96% of our sales in North America (including
Canada and Mexico), 4% in Europe and less than 1% in Australia. While we continue to expand both domestically and
internationally, we expect this geographic mix to be similar over the next few years. References to product line and product
category data throughout this Form 10-K generally reflect data related to our North America swimming pool market, as it is
more readily available for analysis and represents the largest component of our operations.
Our goal is to be a trusted resource for industry professionals, retailers and consumers in the outdoor living industry. We use
local sales and marketing personnel to promote the growth of our business and develop and strengthen our customers’
businesses. Our sales and marketing personnel focus on developing customer training programs and promotional activities,
creating and enhancing sales management tools and providing product and market expertise. Our local sales personnel work
from our sales centers as trusted resources for our customers and are charged with understanding and meeting our customers’
specific needs. Our sales center personnel help educate our customers on a variety of topics including the newest, most
innovative products and solutions that can elevate their businesses.
We offer our customers more than 200,000 manufacturer and proprietary and exclusive brand products. We sell the following
types of products:
•
maintenance products, such as chemicals, supplies and pool accessories;
•
repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps and lights;
•
building materials, such as concrete, plumbing and electrical components, both functional and decorative pool
surfaces, decking materials, tile, hardscapes and natural stone, used for pool installations and remodeling;
•
pool equipment and components for new pool construction and the remodeling and replacement of existing pools;
•
irrigation and related products, including irrigation system components and professional turf care equipment and
supplies;
•
commercial pool products, including American Society of Material Engineers-certified heaters, safety equipment,
commercial decking equipment and commercial pumps and filters;
•
fiberglass pools and hot tubs and packaged pool kits including walls, liners, braces and coping for in-ground and
above-ground pools; and
•
other pool construction and recreational products, which consist of a number of product categories and include
discretionary recreational and related outdoor living products, such as grills and components for outdoor kitchens.
We believe that our selection of pool equipment, supplies, chemicals, replacement parts, irrigation and related products and
other pool construction and recreational products is the most comprehensive in the industry. We currently have over 650
product lines and approximately 45 product categories. Based on our 2024 product classifications, sales for our pool and hot
tub chemicals product category represented approximately 15% of total net sales for 2024, 14% of total net sales in 2023 and
13% of total net sales in 2022. No other product categories accounted for 10% or more of total net sales in any of the last three
fiscal years.
5
We continue to identify new related product categories, and we typically introduce new categories each year in select
markets. We then evaluate the performance in these markets and focus on those product categories that we believe exhibit the
best long-term growth potential. We expect to realize continued sales growth for these types of product offerings by expanding
the number of locations that offer these products, increasing the number of products offered at certain locations and continuing
a modest broadening of these product offerings on a company-wide basis.
New product technology provides opportunities not only for improved energy-efficiency but also expanded control and
convenience in enjoying leisure activities.
We offer a growing selection of energy-efficient and environmentally friendly
products, which support sustainability and can help pool owners save energy, water, time and money over time. Major
equipment manufacturers have developed and will continue to develop more retrofit kits that allow homeowners to interact with
their pools or hot tubs through their smartphones. We see each of these developments as significant growth opportunities for
our business.
Over the last several years, we have increased our product offerings and service abilities related to commercial swimming
pools. We consider the commercial market to be a key growth opportunity as we focus more attention on providing products to
customers who operate and service large commercial installations such as hotels, condominiums, apartment complexes,
universities and community recreational facilities. We continue to leverage our existing sales center networks and customer
and vendor relationships to grow this market.
In 2024, we estimate that the sale of maintenance and minor repair products (non-discretionary) accounted for approximately
64% of our sales, while approximately 22% of our sales were derived from partially discretionary products used in the remodel,
renovation and upgrading of pools, and approximately 14% of our sales were derived from discretionary products used in the
construction and installation of swimming pools. These components may vary from year to year.
Operating Strategy
We distribute swimming pool supplies, equipment and related leisure products domestically through our SCP and Superior
sales center networks and internationally through our SCP network. We adopted the strategy of operating two distinct
distribution networks within the U.S. swimming pool market primarily to offer our customers a choice of distinctive product
selections, locations and service personnel. We distribute irrigation, landscape maintenance and related products through our
Horizon network.
Swimming pool tile, decking materials and interior pool surfacing products are distributed through our NPT network, as well as
through SCP and Superior networks. Our NPT network primarily serves the swimming pool market with our market-leading
brand of pool tile and composite pool finish products but also provides some overlap with the irrigation and landscape industry
as we offer NPT hardscapes and other outdoor living products. As consumers create and enhance outdoor living areas and
invest more in their outdoor environment, we believe we can focus our resources to address such demand by leveraging our
existing pool and irrigation and landscape maintenance customer base. We believe the development of our NPT network is a
natural extension of our distribution model. In addition to our 18 stand-alone NPT sales centers, we currently have 117 SCP
and Superior sales centers that feature consumer showrooms where swimming pool and landscape contractors, as well as
homeowners, can view and select pool components including pool tile, decking materials and interior pool finishes in various
styles and grades. We also offer virtual tools for homeowners to select and design their pool and outdoor environments,
collaborating with their chosen contractors to install these products. Our NPT® Backyard mobile app and www.nptpool.com®
allow our customers to virtually design, customize and view a pool in their own backyard in a short amount of time. We
believe our showrooms, local stocking of products, specialized delivery equipment and virtual support provide us with a
competitive advantage in these categories. Given the more discretionary nature of these products, this business tends to be
more sensitive to external market factors compared to our business overall.
Sun Wholesale Supply distributes swimming pool supplies, equipment and related leisure products, primarily servicing
independently owned and operated Pinch A Penny franchise locations. Since our acquisition in December 2021, we have
expanded Pinch A Penny franchise operations through additional locations of Pinch A Penny franchised stores and plan to
continue these expansion initiatives. Sun Wholesale Supply also owns and operates a specialty chemical re-packaging plant
providing pool chemical products to the Pinch A Penny franchised store network and a portion of the chemical products sold
through our SCP and Superior networks.
6
We evaluate our sales centers based on their performance relative to predetermined standards that include both financial and
operational measures. Our corporate support groups provide our field operations with various services, such as developing and
coordinating customer and vendor related programs, real estate support services to find appropriate locations for our sales
centers, human resources support, information systems support, support from our logistics and fleet teams, accounting and
financial analysis support and expert resources to help them achieve their goals. We believe our incentive programs and
feedback tools, along with the competitive nature of our sales center network, stimulate and enhance the performance of our
employees.
Distribution
Our sales centers are located within population centers near customer concentrations, typically in industrial, commercial or
mixed-use zones. Customers may pick up products at any sales center location, or we may deliver products to their premises or
job sites via our trucks or third-party carriers. For additional information on our sales centers, see Item 2, “Properties,” of this
Form 10-K.
Our sales centers generally maintain well-stocked inventories to meet our customers’ immediate needs. We utilize warehouse
management technology to optimize receiving, inventory control, picking, packing and shipping functions. For additional
information regarding our inventory management, see Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Critical Accounting Estimates - Inventory Obsolescence,” of this Form 10-K.
We also operate four centralized shipping locations (CSLs) in the United States and one CSL in Europe that redistribute
products we purchase in bulk quantities to our sales centers or, in some cases, directly to customers. Our CSLs are regional
locations that carry a wide range of outdoor living products.
Purchasing and Suppliers
We believe we enjoy good relationships with our suppliers, who generally offer competitive pricing, return policies and
promotional allowances. It is customary in our industry for certain manufacturers to manage their shipments by offering
seasonal terms to qualifying purchasers such as Pool Corporation, which are referred to as early buy purchases. These early
buy purchases typically allow us to place orders in the fall at a modest discount, take delivery of product during the off-season
months and pay for these purchases in the spring or early summer.
Our preferred vendor program encourages our distribution networks to stock and sell products from a smaller number of
vendors offering better overall terms and service to optimize profitability and shareholder return. We also work closely with
our vendors to develop programs and services to better meet the needs of our customers and to concentrate our inventory
investments. These practices, together with a more comprehensive service offering, have positively impacted our selling
margins and our returns on inventory investments. See Item 7, “Management’s Discussion and Analysis of Financial Condition
and Results of Operations - Critical Accounting Estimates - Vendor Programs,” for additional information.
We regularly evaluate supplier relationships and consider alternate sourcing to ensure competitive cost, service and quality
standards. Our largest suppliers include Pentair plc, Zodiac Pool Systems, Inc, and Hayward Pool Products, Inc., which
accounted for approximately 20%, 12% and 11%, respectively, of the cost of products we sold in 2024.
Competition
We are the largest wholesale distributor of swimming pool and related backyard products (based on industry knowledge and
available data) and one of the only national wholesale distributors focused on the swimming pool industry in the United
States. We are also one of the leading distributors of irrigation and landscape maintenance products in the United States. We
face intense competition from many regional and local distributors in our markets and from a limited number of other national
wholesale distributors. We also face competition, both directly and indirectly, from mass market retailers (both store-based and
internet) and large pool supply retailers who primarily buy directly from manufacturers.
7
Some geographic markets we serve, particularly the four largest and higher pool density markets of Florida, California, Texas
and Arizona have a greater concentration of competition than others. Barriers to entry in our industry are relatively low. We
believe that the principal competitive factors in swimming pool and irrigation and landscape supply distribution are:
•
the breadth and availability of products offered;
•
the quality and level of customer service, including online communications and access, ease of ordering and speed of
product delivery;
•
the availability of sales and marketing programs;
•
consistency and stability of business relationships with customers and suppliers;
•
competitive product pricing; and
•
geographic proximity to the customer.
Environmental, Social and Governance (ESG)
Environmental
We are committed to sustainable business practices, which includes offering energy-efficient and environmentally-friendly
products to our customers, closely monitoring our sourcing activities, and being good stewards within the communities we
serve. In our operations, maximizing the efficiency of our fleet and improving the energy efficiency of our facilities help us to
manage our carbon footprint. We continually strive to ensure success in our business while protecting resources for future
generations. We also endeavor to handle, distribute, transport and dispose of our products in a responsible manner, particularly
the chemicals and fertilizers that we sell.
Social - Human Capital Management
We employed approximately 6,000 people at December 31, 2024 and approximately 90% of our employees were located in the
U.S. Given the seasonal nature of our business, our peak employment period is the summer season and, depending on expected
sales levels, we add 100 to 200 employees to our work force to meet seasonal demand. We believe that we have good relations
with our employees. None of our employees are currently covered under any collective bargaining agreements.
Our goal is to be an Employer of Choice by focusing on the engagement, development, retention, and health and well-being of
our employees. We believe that our success is a direct result of the contributions and commitment of our employees. We
provide competitive pay and benefits, training and continuing education, and professional development and promotional
opportunities to engage and reward our team. We have established a set of standard operating procedures to optimize our
human capital management function, including recruitment and employee relations policies, training practices and operational
instructions. We focus on the following factors in implementing and developing our human capital strategy:
•
employee health, safety and wellness;
•
talent management;
•
employee growth and development; and
•
employee compensation and benefits.
Employee Health, Safety and Wellness
Our commitment to the health, safety and wellness of our employees ranks at the top of our core operating priorities. Our
ultimate goal is to send every employee home each night in the same condition in which they came to work that morning. We
aim to achieve zero serious injuries through continued investment in, and focus on, our core safety programs and injury-
reduction initiatives. This effort begins immediately with new employees and is reinforced each day through a focus on
training, safety awareness, risk identification and other essential safety protocols. We closely monitor overall workers’
compensation and auto claims, OSHA recordable incidents, Department of Transportation compliance and other internally
established safety prevention elements in an effort to make every workday safe.
Talent Management
We value the differences in perspective and lived experience that our thousands of employees bring to work. We understand
that a talented team is strongest when there are varying viewpoints and ideas. Our commitment to fostering a welcoming
workplace goes beyond hiring; it’s about ensuring every voice is heard and valued.
8
We are committed to supporting our workforce through the hiring, retention and advancement of top-tier talent through the
following:
•
Recruiting, developing and retaining a dynamic workforce and providing developmental opportunities for career
advancement for all employees;
•
Ensuring that our policies, practices and procedures are fair and provide equal employment opportunity for a wide
range of prospective candidates and employees; and
•
Communicating that we, as an Employer of Choice, are committed to a culture with action-oriented programs that
produce results and employee engagement.
To create connection and community within our workforce, we have established a mentoring program to cultivate the growth
and development of our high potential employees.
We also support our employees with training and development
opportunities, which include content aimed at creating and sustaining an inclusive environment.
Employee Growth and Development
We strive to be an Employer of Choice by investing in our employees. Our goal is to attract, develop and retain a talented team
inspired by our mission to maintain exceptional relationships with our customers and suppliers and create exceptional return to
our shareholders, while providing exceptional opportunities for our employees. Our success depends on our employees
understanding how their work contributes to the company’s overall strategy.
When our employees succeed, the company succeeds. To help our employees achieve success in their roles, we emphasize
continuous training and career development opportunities. These opportunities include annual performance reviews, succession
planning, promotion and advancement opportunities, ongoing training in safety and security protocols, updates on new products
and service offerings and deployment of technologies. We also provide a series of managerial training to our field and
departmental leaders. This coursework covers topics such as recruitment best practices, effective communications, leading and
empowering others and managing employee performance.
We provide an entry level training program to prepare Manager Trainees (MITs) for sales and operations management
opportunities and build our pipeline for field leadership. Our MITs are hosted at either our EDGEucation Center or in a virtual
classroom. They gain valuable experience during their training program through field-based interaction with customers and
operating management. Our program includes interaction with subject matter experts, hands-on projects and role play to
provide MITs with practical industry knowledge, leadership skills and the tools necessary to succeed within our organization.
Our employees are also involved in a multitude of volunteer efforts that positively impact our communities through support of
charitable organizations. Since 2021, through our partnership with YMCA’s across the country, we have provided water safety
lessons for more than 42,000 underserved children and training for approximately 3,000 lifeguards. Our local employees and
partners have also donated their time and energy to make these events a success.
Employee Compensation and Benefits
We strive to provide market-competitive compensation, benefits and services to our employees, and our performance-based
compensation philosophy rewards each employee’s individual contributions. Our total compensation package includes cash
compensation (base salary and performance-based incentive or bonus payments), company contributions toward additional
benefits (such as health and disability plans), retirement plans with a company match and paid time off. We also offer the
opportunity to become a shareholder through equity grants for certain roles and our employee stock purchase plan. Our
employees can take advantage of a range of benefits, including healthcare and wellness programs, tuition reimbursement for
eligible employees and multi-year scholarships to their dependents, and financial wellness programs to help provide education
and tools to assist in improving, maintaining and capitalizing on our employees’ financial future. We closely monitor employee
turnover and conduct exit interviews to gain relevant information and adapt our engagement and retention strategy as
appropriate.
9
Governance
Our employees, managers and officers conduct our business under the direction of our Chief Executive Officer (CEO) and the
oversight of our Board of Directors (our Board) to enhance our long-term value for our stockholders. The core responsibility of
our Board is to exercise its fiduciary duty to act in the best interests of our company and our stockholders. In exercising this
obligation, our Board and committees perform a number of specific functions, including risk assessment, review and oversight.
While management is responsible for the day-to-day management of risk, our Board is responsible for oversight of our risk
management programs, ensuring that an appropriate culture of risk management exists within the company, and assisting
management in addressing specific risks, such as strategic risks, financial risks, cybersecurity risks, regulatory risks and
operational risks.
Seasonality and Weather
Our business is seasonal. In general, sales and operating income are highest during the second and third quarters, which
represent the peak months of swimming pool use, pool and irrigation installation and maintenance activities. Sales are lower
during the first and fourth quarters. In 2024, we generated approximately 60% of our net sales and 73% of our operating
income in the second and third quarters of the year.
We typically experience a build-up of product inventories and accounts payable during the winter months in anticipation of the
peak selling season. Excluding borrowings to finance acquisitions, dividend payments and share repurchases, our peak
borrowing usually occurs during the second quarter, primarily because extended payment terms offered by certain of our
suppliers are typically payable in April, May and June, while our peak accounts receivable collections typically occur in June,
July and August.
We expect that our quarterly results of operations will continue to fluctuate depending on the timing and amount of revenue
contributed by new and acquired sales centers. Based on our peak summer selling season, we generally open new sales centers
and close or consolidate sales centers, when warranted, either in the first quarter before the peak selling season begins or in the
fourth quarter after the peak selling season ends.
Weather is one of the principal external factors affecting our business. The table below presents some of the possible effects
resulting from various weather conditions.
Weather
Possible Effects
Hot and dry
• Increased purchases of chemicals and supplies
for existing swimming pools
• Increased purchases of above-ground pools and
irrigation and lawn care products
Unseasonably cool weather or extraordinary amounts
of rain
• Fewer pool and irrigation and landscaping
installations
• Decreased purchases of chemicals and supplies
• Decreased purchases of impulse items such as
above-ground pools and accessories
Unseasonably early warming trends in spring/late cooling
trends in fall
(primarily in the northern half of the U.S. and Canada)
• A longer pool and landscape season, thus positively
impacting our sales
Unseasonably late warming trends in spring/early cooling
trends in fall
(primarily in the northern half of the U.S. and Canada)
• A shorter pool and landscape season, thus negatively
impacting our sales
For discussion regarding the effects seasonality and weather had on our results of operations in 2024 and 2023, see Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Seasonality and Quarterly
Fluctuations,” of this Form 10-K.
10
Government Regulations
Our business is subject to a wide variety of regulations, principally under local fire codes and international, federal, state and
local environmental and health and safety requirements, including regulation by the Environmental Protection Agency, the
Consumer Product Safety Commission, the Department of Transportation, the Occupational Safety and Health Administration,
the National Fire Protection Agency and the International Maritime Organization. Most of these requirements govern the
packaging, labeling, handling, transportation, storage and sale of chemicals and fertilizers. We store certain types of chemicals
and/or fertilizers at each of our sales centers and the storage of these items is strictly regulated by local fire codes. In addition,
we sell algaecides and pest control products that are regulated as pesticides under the Federal Insecticide, Fungicide and
Rodenticide Act and various state pesticide laws. These laws primarily relate to labeling, annual registration and licensing.
Intellectual Property
We maintain both domestic and foreign registered trademarks and patents, primarily for our proprietary and exclusive brand
products that are important to our current and future business operations. We also own rights to numerous internet domain
names.
Geographic Areas
See Note 12 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for financial information
about geographic areas for the past three years.
Website Access and Additional Information
Our website is www.poolcorp.com. Our website and other websites mentioned in this Form 10-K are for information only and
the contents of such websites are not incorporated in, or otherwise to be regarded as part of, this Form 10-K.
Our periodic reports, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K
and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
are available free of charge on our website at www.poolcorp.com as soon as reasonably practicable after we electronically file
such reports with, or furnish them to, the Securities and Exchange Commission (SEC).
We regularly evaluate the possibility of acquiring additional companies or assets, and at any given time may be engaged in
discussions or negotiations regarding these transactions. We generally do not announce our acquisitions until they are
completed, unless it is required by regulatory or other rules to announce when a definitive agreement is reached.
Investors should also be aware that while we customarily provide high-level sales and earnings guidance and may answer
questions raised by securities analysts, it is against our policy to disclose any material non-public information or other
confidential information. Accordingly, investors should not assume that we agree with any statement or report issued by an
analyst with respect to our past or projected performance. To the extent that reports issued by securities analysts contain any
projections, forecasts or opinions, such reports are not our responsibility.
Unless otherwise indicated, information contained in this report and other documents filed by us under the federal securities
laws concerning our views and expectations regarding the industries in which we operate are based on estimates made by us
using data from industry sources and making assumptions based on our industry knowledge and experience. We have not
independently verified data from industry or other third-party sources and cannot guarantee its accuracy or completeness.
In this annual report and other of our public disclosures, we may estimate the impact that favorable or unfavorable weather had
on our operating results. In connection with these estimates, we make several assumptions and rely on various third-party
sources. It is possible that others assessing the same data could reach conclusions that differ from ours.
11
Item 1A. Risk Factors
Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act
of 1995
This report contains forward-looking information that involves risks and uncertainties. Our forward-looking statements express
our current expectations or forecasts of possible future results or events, including projections of earnings and other financial
performance measures, statements of management’s expectations regarding our strategic, operational and capital allocation
plans and objectives, management’s views on industry, economic, competitive, technological and regulatory conditions and
other forecasts of trends and other matters. Forward-looking statements speak only as of the date of this filing, and we
undertake no obligation to publicly update or revise such statements to reflect new circumstances or unanticipated events as
they occur. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use
words such as “anticipate,” “estimate,” “expect,” “intend,” “believe,” “will,” “outlook,” “project,” “may,” “can,” “plan,”
“target,” “potential,” “should” and other words and expressions of similar meaning.
No assurance can be given that the expected results in any forward-looking statement will be achieved, and actual results may
differ materially due to one or more factors, including the risks described below in this Item 1A, below in Item 7 of this Form
10-K and elsewhere in this Form 10-K. For these statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act.
Risk Factors
Investing in our securities involves multiple risks and uncertainties. Certain factors that may affect our business and could
cause actual results to differ materially from those expressed in any forward-looking statement are described below. Investors
should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form
10-K. The risks discussed below are not the only risks we face. Other risks or uncertainties not presently known to us, or that
we currently believe are immaterial, may emerge or materially affect our business if they occur. Further, our business may also
be affected by additional factors that generally apply to all companies operating in the U.S. and globally, which we have not
included below.
Risks Relating to Macroeconomic Conditions or Events
The demand for our products may be adversely affected by unfavorable economic conditions and changes in consumer
discretionary spending.
Demand for our products is subject to fluctuations and is difficult to predict, often due to factors outside of our control.
Consumer discretionary spending significantly affects our sales and is impacted by a variety of factors, including changes in
general economic conditions, the housing market, unemployment rates, wage levels, interest rate fluctuations, inflation,
disposable income levels, consumer confidence and access to credit. In times of economic uncertainty, the demand for
swimming pool, irrigation, landscape and related outdoor living products typically declines, often corresponding with declines
in discretionary consumer spending. Currently, we estimate that approximately 64% of our net sales are derived from
maintenance and minor repair products, while approximately 22% of our sales are derived from products used in the remodel,
renovation, and upgrade of pools. However, the growth in these portions of our business depends on the expansion of the
installed pool base, which has been and could in the future be adversely affected by decreases in construction activities, similar
to the trends experienced in 2023 and 2024. A weak economy may also cause consumers to defer discretionary replacement
and renovation activity. Even in generally favorable economic conditions, severe or prolonged downturns in the housing
market could have a material adverse impact on our financial performance. Such downturns expose us to certain additional
risks, including but not limited to the risk of customer closures or bankruptcies, which could shrink our potential customer base
and inhibit our ability to collect on those customers’ receivables.
We believe that homeowners’ access to consumer credit at attractive interest rates is a critical factor enabling the purchase of
new pools, irrigation systems and outdoor living products and to a lesser extent, major renovations and remodel projects.
Unfavorable economic conditions or a downturn in the housing market could result in a significant tightening of credit markets,
which can limit the ability of consumers to access financing for these purchases.
Over the past couple years, new pool construction projects have decreased, impacted by higher interest rates and inflation,
increased economic uncertainties, and tightened consumer credit. While inflation and interest rates have recently moderated,
uncertainty remains, including as to the timing and magnitude of further reductions by the Federal Reserve of its overnight
borrowing rate and its corresponding impact on the market.
12
Discretionary spending is often adversely affected during times of economic, social or political uncertainty, whether caused by
health threats, man-made or natural disasters, or other similar events discussed below in this item 1A. These events could
create uncertainties that negatively impact our business in ways that we cannot presently predict.
Changes in our customer base could also impact us. Our business could be adversely impacted if (i) consolidation of our
customers leads to changes in purchasing habits, (ii) more people choose to live in urban settings or rented space or (iii) more
homeowners bypass our customers by directly procuring their own supplies or undertaking their own improvement projects.
An outbreak of disease or similar public health threat could adversely impact our business and results of operations.
An outbreak of disease or similar public health threat, such as the COVID-19 pandemic and its negative impact on the
worldwide economy, could have an adverse impact on our workforce, supply chain or operations. Although our revenues
increased during the COVID-19 pandemic that began in early 2020, we cannot assure you that our revenues would increase in
the event of a future public health emergency. Any future public health crises, and any corresponding governmental response,
could adversely impact our business and results of operations in ways that we cannot predict.
Other catastrophic events or societal unrest could adversely impact our operations.
Terrorism and other acts of violence, wars, rioting, labor strife, civil disturbances, societal unrest, geopolitical tensions or
political instability could negatively impact us directly by interfering with our ability to operate or indirectly by depressing
macroeconomic conditions. Our customers could also encounter hardships that negatively impact their ability to make timely
payments to us or to continue doing business with us.
Risks Relating to Our Business and Industry
We are susceptible to adverse weather conditions, which could intensify as a result of changing climate patterns.
Given the nature of our business, weather is one of the principal external factors affecting our business and the effect of
seasonality has a significant impact on our results. In 2024, we generated 60% of our net sales and 73% of our operating
income in the second and third quarters of the year. These quarters represent the peak months of swimming pool use, pool and
irrigation installation and maintenance activities. Unfavorable weather during these quarters in our largest geographic regions
can significantly affect our results, as further described in “Seasonality and Weather” in Item 1 of this Form 10-K. While
warmer weather conditions generally impact our sales favorably, natural disasters and other significant weather events can
create more variability in our reported results in the short term or otherwise adversely impact our sales or operations. Drought
conditions or water management initiatives may lead to government-imposed water use restrictions. Such restrictions could
result in decreased pool and irrigation system installations which could negatively impact our sales.
Certain extreme weather events and natural disasters, such as hurricanes, tornadoes, earthquakes, tropical storms, floods, intense
storms, drought and wildfires, may adversely impact us in several ways, including interfering with our ability to deliver our
products and services, interfering with our receipt of supplies from our vendors, reducing demand for our products and services,
and damaging our facilities. We have experienced short-term impacts on our sales due to closures from weather events such as
Hurricane Ian in 2022 and Hurricanes Helene, Francine and Milton in 2024. Although these events have not had any material
lasting impacts on our business or resulted in any material permanent operational challenges, similar events could adversely
affect our business in the future. The areas in which we operate, including Florida, California, Texas and other coastal areas,
have experienced, and are expected to continue to experience, natural disasters and extreme weather events. The physical
effects of changing climate patterns may increase the frequency or severity of natural disasters and extreme weather events in
the future, which would increase our exposure to these risks.
For additional discussion regarding seasonality and weather, see Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations - Seasonality and Quarterly Fluctuations,” of this Form 10-K.
Our distribution business is highly dependent on our ability to maintain favorable and stable relationships with suppliers.
As a distribution company, maintaining favorable relationships with our suppliers is critical to our success. We believe that we
add considerable value to the swimming pool and irrigation supply chains by purchasing products from a large number of
manufacturers and distributing the products to a highly fragmented customer base on conditions that are more favorable than
these customers could obtain on their own. We believe that we currently enjoy good relationships with our suppliers, who
generally offer us competitive pricing, return policies and promotional allowances. However, any failure to maintain favorable
relationships with our suppliers could have an adverse effect on our business.
13
Our largest suppliers are Pentair plc, Zodiac Pool Systems, Inc., Hayward Pool Products, Inc., which accounted for 20%, 12%
and 11%, respectively, of the costs of products we sold in 2024. A decision by our largest suppliers, acting individually or in
concert, to sell their products directly to retailers or other end users, bypassing distribution companies like ours, would have an
adverse effect on our business. Additionally, if our suppliers experience difficulties or disruptions in their operations, if there is
any material interruption in our supply chain or if we lose any significant supplier due to financial failure or any other reason,
we may experience increased supply costs or delays in establishing replacement supply sources that meet our quality and
control standards, which may affect our profitability.
We purchase many of our products from suppliers pursuant to vendor arrangements that entitle us under certain conditions to
receive rebates. These rebates effectively reduce the costs of our products. Rebate arrangements are subject to renegotiation
with our suppliers from time to time. If we fail to qualify for these rebates or are unable to renew rebate programs at desirable
terms, or a supplier materially reduces or stops offering rebates, our costs could increase substantially, and our gross margin and
net income could be materially adversely affected.
Failure to achieve and maintain a high level of product and service quality and safety could damage our reputation, expose
us to litigation and negatively impact our financial performance.
We rely on a global network of manufacturers and other suppliers to provide us with the products we distribute. To succeed,
we must continue to maintain effective business relationships with qualified suppliers who can timely and efficiently supply us
with high quality products. As we increase the number of proprietary and exclusive brand products we distribute, our exposure
to potential liability claims may increase. Product and service quality issues could negatively impact customer confidence in
our brands and our business. If our product and service offerings do not meet applicable safety standards or our customers’
expectations regarding safety or quality, we could experience lost sales, increased costs and be exposed to legal, financial and
reputational risks, including litigation, governmental enforcement actions and costly product recalls.
Similar concerns
impacting our competitors could damage the reputation of our industry and indirectly have an unfavorable impact on our
operations.
We face intense competition both from within our industry and from other leisure product alternatives.
Within our industry, we directly compete against national, regional and local distributors for the business of pool owners and
other end-use customers. We indirectly compete against mass market retailers and large pool or irrigation supply retailers as
they purchase the great majority of their supplies directly from manufacturers. We compete to a lesser extent with internet
retailers, as they purchase the majority of their supplies from distributors. Outside of our industry, we compete indirectly with
alternative suppliers of big-ticket consumer discretionary products, such as boat and motor home distributors, and with other
companies who rely on discretionary homeowner expenditures, such as home remodelers. We may not be able to compete
effectively against our competitors and other leisure product alternatives, which could have an adverse impact on our business.
New competitors may emerge as there are low barriers to entry in our industry, which has led to highly competitive markets
consisting of various-sized entities, ranging from small or local operators to large regional businesses. If our customers are
attracted by the alternatives afforded by any of our competitors, they may be less inclined to purchase products or services from
us, impacting our results of operations. Given the density and demand for pool products, some geographic markets that we
serve also tend to have a higher concentration of competitors than others, particularly Florida, California, Texas and Arizona.
These states encompass our four largest markets and represented approximately 54% of our net sales in 2024. The entry of
significant new competitors into these markets could negatively impact our sales.
More aggressive competition by store- and internet-based mass merchants and large pool or irrigation supply retailers could
adversely affect our sales.
Mass market retailers today carry a limited range of, and devote a limited amount of shelf space to, merchandise and products
targeted to our industry. Historically, mass market retailers have generally expanded by adding new stores and products, but
their offering of pool and irrigation related products has remained relatively constant. Should store- and internet-based mass
market retailers increase their focus on the pool or irrigation industries or increase the breadth of their pool and irrigation and
related product offerings, they may become a more significant competitor for our direct customers and end-use consumers,
which could have an adverse impact on our business. Additionally, because the internet facilitates competitive entry, price
transparency and comparison shopping, increased internet sales by us or our competitors could increase the level of competition
we face or reduce our margin. Further, we may face additional competitive pressures if large pool or irrigation supply retailers
look to expand their customer base to compete more directly within the distribution channel.
14
We depend on our ability to attract, develop and retain highly qualified personnel.
We consider our employees to be the foundation for our growth and success. As such, our future success depends in large part
on our ability to attract, retain and motivate qualified personnel. This includes succession planning related to our executive
officers and key management personnel. Hiring and retaining such qualified individuals may be adversely impacted by several
factors, including (i) uncertainties regarding general economic conditions or industry conditions, (ii) our failure to offer
competitive compensation and (iii) increased competition for qualified individuals. If we are unable to attract and retain key
personnel, our operating results could be adversely affected.
Given the seasonal nature of our business, we may hire additional employees during the summer months, including seasonal
and part-time employees, who generally are not employed during the off-season. If we are unable to attract and hire additional
personnel during the peak season, our operating results could be negatively impacted. Additionally, competition for qualified
employees could require us to pay higher wages to attract and retain a sufficient number of employees.
Inflation and other events over the past few years have increased employees’ expectations regarding compensation and benefits
and workplace flexibility. These developments have made it more difficult and costly for us to attract and retain top talent.
While we do not expect these developments to have a material adverse impact on us, we can provide no assurances to this
effect.
Past growth may not be indicative of future growth.
Historically, we have experienced substantial sales growth through organic market share gains, new sales center openings,
expanded product offerings and acquisitions that have increased our size, scope and geographic footprint. Our various business
strategies and initiatives, including our growth initiatives, are subject to business, economic and competitive uncertainties and
contingencies, many of which are beyond our control. While we contemplate continued growth through internal expansion and
acquisitions, no assurance can be made as to our ability to:
•
penetrate new markets;
•
generate sufficient cash flows to support expansion plans and general operating activities;
•
obtain financing;
•
identify appropriate acquisition candidates and successfully integrate acquired businesses;
•
identify appropriate locations for new sales centers and successfully integrate them into our network;
•
maintain favorable supplier arrangements and relationships; and
•
identify and divest assets which no longer meet our objectives.
If we do not successfully manage these potential difficulties or successfully execute our business strategies and initiatives, our
operating results could be adversely affected.
The COVID-19 pandemic positively impacted home-centric trends in all of our markets, which led to a non-recurring surge of
investment in pools and other backyard products. This surge abated in mid-2022, when spending on these products began to
decrease. We do not expect our near-term sales to match the levels experienced at the height of the pandemic.
We are subject to inventory management risks. Insufficient inventory may result in lost sales opportunities or delayed
revenue, while excess inventory may negatively impact our gross margin.
We balance the need to maintain inventory levels that are sufficient to maximize operational efficiencies and minimize potential
supply chain constraints against the risk of inventory obsolescence due to changing consumer preferences and fluctuating
commodity prices. In order to successfully manage our inventories, we must estimate demand from our customers and
purchase products that substantially correspond to consumer demand. If we overestimate demand and purchase too much of a
particular product, we face a risk that the price of that product will fall, leaving us with inventory that we cannot sell at optimal
profit margins. In addition, we may have to write down such inventory if we are unable to sell it for its recorded value. If we
underestimate demand and purchase insufficient quantities of products, inventory shortages could result in delayed revenue or
loss of sales opportunities altogether as potential customers turn to competitors’ products that are readily available. If we
maintain insufficient inventory levels and prices rise for these products, we could be forced to purchase products at higher
prices and forego profitability in order to meet customer demand. Our business, financial condition and results of operations
could be negatively impacted if we fail to accurately forecast demand for our products or successfully manage our inventories.
15
Risks Relating to Technology, Cybersecurity and Data Privacy
We rely on information technology systems to support our business operations. A significant disruption, breach or
cybersecurity attack of our technological infrastructure could adversely affect our financial condition and results of
operations.
Information technology supports several aspects of our business, including among others, transaction processing, customer
service, pricing, product sourcing, inventory management, financial reporting, collections and cost management. Our ability to
operate effectively on a day-to-day basis, communicate with our customers and accurately report our results depends on a
reliable technological infrastructure, which is inherently susceptible to internal and external threats. We are vulnerable to
interruption, including by fire, natural disaster, extreme weather events, power loss, telecommunication failures, internet
failures, security breaches and other catastrophic events. Exposure to various types of cyber-attacks such as malware, computer
viruses, worms, ransomware, social engineering or other malicious acts, as well as human error, could also potentially disrupt
our operations, result in a significant interruption in the delivery of our goods and services or result in the loss of sensitive data.
We are making, and expect to continue to make, investments in technology to maintain and update our computer systems and to
expand our ability to engage in e-commerce with our customers. We may experience delays in making these updates and may
not implement these changes as quickly or successfully as our customers expect, or as quickly or successfully as changes
implemented by our competitors. In addition, implementing significant system changes increases the risk of computer system
disruption. The potential problems and interruptions associated with implementing technology initiatives or conversions, as
well as providing training and support for those initiatives, could disrupt or reduce our operational efficiency. Advances in
computer and software capabilities, encryption technology and other discoveries increase the complexity of our technological
environment, including how each interact with our various software platforms. Such advances could delay or hinder our ability
to process transactions or could compromise the integrity of our data, resulting in a material adverse impact on our financial
condition and results of operations. We also may experience occasional system interruptions and delays that make our
information systems unavailable or slow to respond, including the interaction of our information systems with those of third
parties or the failure of software of services provided by third parties that we do not control. A lack of sophistication or
reliability of our information systems could adversely impact our operations and customer service and could require major
repairs or replacements, resulting in significant costs and foregone revenue. Increasing complexity of technology could
increase our cost of doing business.
We devote significant resources to protect our systems and data from cyber-attacks. Refer to Item 1C. “Cybersecurity” for
further information on our cybersecurity risk management and strategy and governance. In recent years we have faced, and
expect to continue to face, various attempted cyber-attacks of increasing sophistication. To date, we are not aware of any
cybersecurity incident or threat that materially impacted or could reasonably be anticipated to materially affect our business,
results of operations or financial condition. However, we cannot guarantee that we will not experience such an incident in the
future. The risk of breaches is likely to continue to increase due to several factors, including (i) the increasing use of machine
learning, artificial intelligence (AI) and other sophisticated techniques to initiate cyber and phishing attacks, (ii) the wider
accessibility of cyber-attack tools that can circumvent security controls and evade detection, (iii) the expanded size, use and
complexity of our systems, and (iv) our increased reliance on e-commerce, open source software, cloud computer services and
work-from-home staffing. Consequently, we may not be able to implement security barriers or other preventative measures that
repel all future cyber-attacks or detect such attacks in a timely manner, which may result in significant expenses from system
downtime, lower sales, increases in insurance costs, fines and fees, lost business relationships, managerial distractions,
litigation, increases to regulatory oversight, expenditures for additional threat prevention technologies or reputational harm, any
of which could materially impact us. We also participate in a broader ecosystem of supply chain partners, both digital and
physical, who face similar risks. Cyber-attacks on our partners could negatively impact our business.
Although we maintain insurance coverage that may, subject to policy terms and conditions (including self-insured deductibles,
coverage restrictions and monetary coverage caps), cover certain aspects of our cyber risks, such insurance coverage may be
unavailable or insufficient to cover our losses.
Failure to maintain the security of confidential information could damage our reputation and expose us to litigation.
Additionally, changes in data privacy laws and our ability to comply with them could have a material adverse effect on us.
In the course of doing business, we collect and store data that is sensitive to us and our employees, customers and vendors. The
failure to prevent unauthorized access to our data or the personal data of our customers or suppliers could put us at a
competitive disadvantage. Such a breach could result in damage to our reputation and subject us to potential litigation, liability,
fines and penalties and require us to incur significant expense to address and remediate or otherwise resolve these issues,
resulting in a possible material adverse impact on our financial condition and results of operations.
16
A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection,
security, disclosure, transfer and other processing of personal and other data. The European Union and other international
regulators, as well as state governments, have recently enacted or enhanced data privacy regulations, such as the California
Consumer Privacy Rights Act, and other governments are considering establishing similar or stronger protections. These
regulations impose certain obligations for handling specified personal information in our systems and for apprising individuals
of the information we have collected about them. Many of these laws are complex and change frequently and often conflict
with the laws in other jurisdictions. Despite our best efforts to comply, any noncompliance could result in incurring potential
substantial penalties and reputational damage.
Risks Relating to Legal, Regulatory and Compliance Matters
The nature of our business subjects us to compliance with employment, environmental, health, transportation, safety and
other governmental regulations.
Changes in, expanded enforcement of, or adoption of new federal, state, local or
international laws and regulations could increase our costs of doing business.
We are subject to numerous federal, state, local and international laws and regulations, many of which are complex and subject
to varying interpretations, including regulations related to employment, environmental, health, transportation and safety
requirements, which govern such things as packaging, labeling, handling, transportation, storage and sale of chemicals and
fertilizers. These laws and regulations, and related enforcement levels, may change as a result of a variety of factors, including
political, economic or social events. Changes in, expanded enforcement of, or adoption of new federal, state, local or
international laws and regulations, including those governing minimum wage or living wage requirements, the classification of
exempt and non-exempt employees or other wage, labor or workplace regulations, could adversely impact our results of
operations.
We sell algaecides and pest control products that are regulated as pesticides under the Federal Insecticide, Fungicide and
Rodenticide Act and various state pesticide laws. These laws primarily relate to labeling, annual registration and licensing.
Management has processes in place to facilitate and support our compliance with these requirements. However, failure to
comply with these laws and regulations may result in investigations, the assessment of administrative, civil and criminal fines,
damages, seizures, disgorgements, penalties or the imposition of injunctive relief. Although we presently do not expect to incur
any capital or other expenditures relating to regulatory matters in amounts that may be material to us, we may be required to
make such expenditures in the future. These laws and regulations have changed substantially and rapidly over the years, and
we anticipate that there will be continuing changes.
The clear trend in environmental, health, transportation and safety regulations is to place more restrictions and limitations on
activities that impact the environment, such as the use and handling of chemicals and the discharge of greenhouse gas
emissions. It is possible that the costs of compliance with increasingly prescriptive laws and regulations will continue to
increase.
We might not be able to successfully anticipate and remain in compliance with evolving future regulatory
requirements.
Governmental actions designed to address changing climate patterns or the failure to meet environmental social and
governance (ESG) expectations or standards or achieve our ESG commitments could adversely affect our business and
increase our costs of doing business.
Concerns over changing climate patterns have led to, and may in the future lead to, new or increased legal and regulatory
requirements designed to reduce or mitigate the effects of changing climate patterns, which could increase our compliance
obligations. In particular, advocates of change are continuing to explore ways to reduce greenhouse gas emissions. These
changes over time could affect the availability and cost of certain consumer products, commodities and energy, which in turn
may impact our ability to procure certain products or services required for the operation of our business at the quantities and
levels we require. The regulation of greenhouse gas emissions could result in additional taxes or other costs to us or require us
to modify our facilities or vehicle fleet. Changes in customers’ attitudes toward the environmental impact of a pool’s energy
consumption or pool chemical products could reduce demand for our products.
Our initiatives aimed at reducing our impact on the environment and climate change reflect our current plans and aspirations,
and it is possible that we may not be able to achieve our desired impact, which may cause us to suffer from legal claims,
reputational damage or a loss of demand for our products. Investors or other stakeholders could react negatively to our targets
or other positions we take on ESG matters, which could negatively impact our relationships with such stakeholders or result in
claims that our initiatives harmed them or us.
17
Various governmental bodies in Europe and the United States, particularly in the state of California, have adopted or proposed
laws or regulations increasing the obligations of companies to disclose information about their emissions and other similar data.
We expect that these initiatives will expose us to additional risk.
We store chemicals, fertilizers and other combustible materials that involve fire, safety and casualty risks.
We store chemicals and fertilizers, including certain combustibles and oxidizing compounds, at our sales centers. In addition to
training our employees on safety protocols and procedures, we follow local fire marshal regulations at our facilities, which vary
by jurisdiction and are subject to change, and assess the need for sprinklers and chemical storage vaults. A fire, explosion or
flood affecting one of our facilities could give rise to safety and casualty losses and related liability claims. We also maintain
what we believe is prudent insurance protection. However, we cannot guarantee that our insurance coverage will be adequate to
cover future claims that may arise or that we will be able to maintain adequate insurance in the future at rates we consider
reasonable. Successful claims for which we are not fully insured may adversely affect our working capital and profitability. In
addition, changes in the insurance industry have generally led to higher insurance costs and decreased availability of coverage.
We conduct business internationally, which exposes us to additional risks.
Our ability to successfully conduct operations in, and source products and materials from, international markets is affected by
many of the same risks we face in our U.S. operations, as well as unique costs and difficulties of managing international
operations. Our international operations, including Canada and Mexico, accounted for 7% of our total net sales in 2024 and
expose us to certain additional risks, including:
•
difficulty in staffing international subsidiary operations;
•
different political, economic and regulatory conditions;
•
local laws and customs;
•
currency fluctuations (including the current strength of the U.S. dollar compared to foreign currencies), exchange
controls and repatriation restrictions;
•
adverse tax consequences; and
•
adverse consequences for violating anti-corruption, anti-competition, economic sanctions, immigration and other laws
governing international commerce.
For foreign-sourced products, we may be subject to certain trade restrictions that would prevent us from obtaining products, as
well as delivery delays or failures if we order products from vendors with whom we have no prior relations. Fluctuations in
other factors relating to international trade, such as tariffs, trade restrictions, transportation costs and inflation are additional
risks for our international operations.
We do not have operations in the Middle East, Russia or Ukraine. However, the contributory effects of the geopolitical
conflicts in these and other areas globally may result in higher inflation, labor costs, energy and commodity prices and costs of
materials and services (together with shortages or inconsistent availability of materials and services), which could negatively
affect our business (particularly our European operations), results of operations and financial condition.
Changes in import policy or trade relations, interruptions in our supply chain or increased commodity or supply chain costs
could adversely affect our results of operations.
Because we source certain products from outside the United States, major changes in tax policy, import or export regulations,
other trade restrictions or trade relations, such as the imposition of additional tariffs or duties on imported products, could
adversely affect our business, results of operations, effective income tax rate, liquidity and net income.
The variability and complexity of tariffs and duties exposes us to the risk of higher costs and inadvertent noncompliance
associated with our imported products. Moreover, in recent years the United States has generally increased its tariff rates and
indicated that additional increases could be forthcoming. Changes in laws, court rulings, or differences in interpretation on
product classification could lead to changes in duty and tariff rates on these or other imported products.
Excess tax benefits or deficiencies recognized from our accounting for share-based awards impact our reported earnings.
In 2017, we adopted Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment
Accounting. Our projections of financial statement impacts related to ASU 2016-09 are subject to several assumptions which
can vary significantly, including our estimated share price and the period that our employees will exercise vested stock options.
18
Excess tax benefits or deficiencies recognized under ASU 2016-09 vary from quarter to quarter and past results may not be
indicative of future results.
Financial Risks
The cost of servicing our debt could reduce our profitability if interest rates remain at elevated levels.
Our unsecured syndicated senior credit facility, term facility and receivables facility bear interest at variable rates. We have
entered into interest rate swap contracts and a forward-starting interest rate swap contract to reduce our exposure to fluctuations
in variable interest rates on current and future interest payments that we owe on a portion of our variable rate borrowings.
While the Federal Reserve began cutting interest rates in the latter part of 2024, interest rates remain relatively high. If interest
rates remain elevated or increase, the cost of servicing our variable rate debt not covered by our interest rate swaps could
materially reduce our profitability and cash flows. For additional information regarding our interest rate risk, see Item 7A,
“Quantitative and Qualitative Disclosures about Market Risk” of this Form 10-K.
Changes in tax laws and accounting standards related to tax matters have caused, and may in the future cause, fluctuations
in our effective tax rate.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Taxation and tax policy
changes, tax rate changes, new tax laws, changes in tax law interpretations and changes in accounting standards and guidance
related to tax matters may cause fluctuations in or adversely affect our effective tax rate. Our effective tax rate may also be
impacted by changes in the geographic mix of our earnings.
We cannot assure you we will continue paying dividends at the current rates, or at all.
We cannot assure you we will continue periodic dividends on our capital stock at the current rates, or at all. Any quarterly
dividends on our common stock will be paid from funds legally available for such purpose when, and if, declared by our Board
of Directors. Decisions on whether, when and in which amounts to continue making any future dividend distributions will
remain at all times entirely at the discretion of our Board of Directors, which reserves the right to change or terminate our
dividend practices at any time and for any reason without prior notice. Holders of our common stock should be aware they
have no contractual or other legal right to receive dividends.
Similarly, holders of our common stock should be aware that repurchases of our common stock under any repurchase plan then
in effect are completely discretionary and may be suspended or discontinued at any time for any reason regardless of our
financial position.
Lapses in our disclosure controls and procedures or internal control over financial reporting could materially and adversely
affect us.
We maintain disclosure controls and procedures designed to provide reasonable assurances regarding the accuracy and
completeness of our SEC reports and internal control over financial reporting designed to provide reasonable assurance
regarding the reliability and compliance with U.S. generally accepted accounting principles (GAAP) of our financial
statements. We cannot assure you these measures will be effective.
19
Item 1B. Unresolved Staff Comments
None.
20
Item 1C. Cybersecurity
Risk Management and Strategy
Our cybersecurity program, which is primarily documented in our business interruption and incident response policy, is
designed to assess, identify and manage material risks from cybersecurity threats. Our program leverages components from the
National Institute of Standards and Technology Cybersecurity Framework (NIST CSF), which we use to help us identify, assess
and manage cybersecurity risks relevant to our business. Our cybersecurity program is a component of our overall enterprise
risk program. We deploy multiple strategies and dedicate significant resources toward systems designed to identify, assess,
manage, mitigate and respond to cybersecurity threats. We also consistently strive to improve the detection and response
capabilities of our cybersecurity program. To do this, we monitor best practices across the cybersecurity space and endeavor to
incorporate those in our own cybersecurity program.
Our cybersecurity policies and procedures include the controls and technology we use to identify, assess and respond to
cybersecurity threats and incidents. These policies and procedures also focus on identifying vulnerabilities in our internal and
external environments and remediating those vulnerabilities. To combat cybersecurity risk, we focus on proactive procedures
such as patch management and emphasize the importance of cybersecurity across our organization through quarterly trainings,
which include best practices and participation in simulated phishing exercises to strengthen employee vigilance.
We evaluate our controls and response protocols at least twice a year using external third-party assessors and consultants in
both advisory and adversarial engagements. These third-party experts are familiar with our systems and could be retained in the
event of a significant incident to assist us in evaluating and responding to such an incident. We also regularly test our
environment as part of our focus on identifying and eliminating vulnerabilities. We incorporate the lessons learned from these
engagements into our cybersecurity program. Recognizing the risks posed by external partners, we have implemented a third-
party risk management program, which includes due diligence assessments, contractual safeguards, and regular monitoring of
vendors and partners with access to our systems or data; however, we cannot ensure in all circumstances that their defensive
efforts will be successful.
Like most large organizations, we face constant and dynamic risks related to cybersecurity. In recent years we have faced, and
expect to continue to face, various attempted cyber-attacks of increasing sophistication. To date, we are not aware of any
cybersecurity incident or threat that materially impacted or could reasonably be anticipated to materially affect our business,
results of operations or financial condition. However, we cannot guarantee that we will not experience such an incident in the
future. For a further description of these risks, see “Risk Factors – Risks Relating to Technology, Cybersecurity and Data
Privacy,” included in Item 1A of this Form 10-K, which should be read in conjunction with this Item 1C.
Governance
Our Board of Directors (Board) is responsible for oversight of our risk management programs and assisting management in
addressing specific risks, including cybersecurity risks. The Audit Committee assists our Board in reviewing cybersecurity and
other information technology risks, controls and procedures, including our plans to mitigate cybersecurity risks and to respond
to data breaches. The Audit Committee also helps in reviewing with management any specific cybersecurity issues that could
have a material impact on us. Our Chief Information Officer (CIO) provides the Board with updates on cybersecurity risks at
regularly scheduled board meetings at least twice a year. These updates include the results of any third-party reviews and
related remediation items.
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our CIO, who has held that
role since 2019 and has been employed by the company since 2004. With almost 20 years of experience in cybersecurity, our
CIO has extensive cybersecurity expertise and in-depth knowledge and experience instrumental in developing and executing
our cybersecurity strategies. Our CIO oversees our cyber governance programs, evaluates our compliance with applicable
standards and remediates known risks. Our CIO also oversees our internal phishing tests, leads our employee cyber training
program and seeks to promote company-wide awareness of cybersecurity risk through broad-based communications and
educational initiatives.
At the day-to-day operational level, our CIO manages an information security team tasked with executing our cybersecurity
program. This team includes a director of network security, technical director of enterprise architecture, system architects and
network security staff. Members of our information technology (IT) management group, led by our CIO, have extensive years
of combined experience in defending large, complex corporate environments. Our CIO, IT management group, architects and
network security team members receive briefings and annual training on cybersecurity threats and response methods that
provide real world threat scenarios to measure the effectiveness of our programs and technologies in protecting our systems.
Our team of professionals also monitors our compliance with laws governing privacy rights, data protection and cybersecurity.
21
Our incident response policy outlines our protocols for assessing, managing and responding to cyber incidents. This policy
guides the response of our global IT team, which, depending on the significance of the incident, may include escalating the
issue to executive management, notifying one or more members of our Board, maintaining communication with users and
notifying law enforcement and other agencies if warranted. We may also receive assistance from a third-party security
operations center (SOC) and other industry-leading third-party providers.
22
Item 2. Properties
We lease our corporate offices, which consist of approximately 60,000 square feet of office space in Covington, Louisiana,
from an entity in which we have a 50% ownership interest. We own seventeen sales center facilities, which includes seven
sales center facilities in Florida, three in Texas, two in Alabama, and one in each of California, Georgia, Mississippi, Tennessee
and Virginia.
As part of our 2021 acquisition of Porpoise Pool & Patio, Inc., we own the corporate headquarters, which consist of
approximately 46,000 square feet and the Sun Wholesale Supply facilities located in Florida, which consist of approximately
209,000 square feet. We also own a chemical re-packaging plant in Florida, which is approximately 105,000 square feet, and
lease three additional properties for storage space that range in size from 39,000 square feet to 122,000 square feet.
We lease all of our other properties, and the majority of our leases have three to seven year terms. As of December 31, 2024,
we had sixteen leases with remaining terms longer than seven years that expire between 2032 and 2036. Most of our leases
contain renewal options, some of which involve rent increases. In addition to minimum rental payments, which are set at
competitive rates, certain leases require reimbursement for taxes, maintenance and insurance. We do not believe that any single
lease is material to our operations.
Our sales centers range in size from approximately 2,000 square feet to 95,000 square feet and generally consist of warehouse,
counter, display and office space. Our centralized shipping locations (CSLs) range in size from approximately 115,000 square
feet to 185,000 square feet.
We believe that our facilities are well maintained, suitable for our business and occupy sufficient space to meet our operating
needs. As part of our normal business, we regularly evaluate sales center performance and site suitability and may relocate a
sales center or consolidate multiple locations if a sales center is redundant in a market, underperforming or otherwise deemed
unsuitable. We do not believe that any single lease is material to our operations.
The table below summarizes the changes in our sales centers during the year ended December 31, 2024:
Network
12/31/23
New
Locations
Consolidated/
Closed
Locations
Acquired
Locations
12/31/24
SCP (1)
209
7
—
2
218
Superior
74
—
—
—
74
Horizon
92
1
(3)
—
90
NPT (2)
17
1
—
—
18
Total Domestic
392
9
(3)
2
400
SCP International
47
1
—
—
48
Total
439
10
(3)
2
448
(1)
At December 31, 2024, this total includes two distribution locations for Sun Wholesale Supply. We also own and
operate a chemical re-packaging plant and one Pinch A Penny retail store. At December 31, 2023, we owned three
Pinch A Penny retail stores and sold two of these in 2024.
(2)
In addition to the stand-alone NPT sales centers, there are 117 SCP and Superior locations that have consumer
showrooms and serve as stocking locations that feature NPT brand tile and composite finish products.
23
The tables below identify the number of sales centers in each state, territory or country by distribution network as of
December 31, 2024:
Location
SCP
Horizon
Superior
NPT
Total
United States
California
29
20
25
7
81
Florida
44
17
5
—
66
Texas
31
20
5
3
59
Arizona
8
11
8
3
30
Georgia
8
—
2
1
11
Washington
3
8
—
—
11
Tennessee
6
—
4
—
10
Nevada
2
3
3
1
9
New York
9
—
—
—
9
North Carolina
5
1
2
1
9
Alabama
5
—
2
—
7
New Jersey
5
—
2
—
7
Pennsylvania
6
—
1
—
7
Virginia
3
3
1
—
7
Louisiana
5
—
—
1
6
Illinois
4
—
1
—
5
Indiana
2
—
3
—
5
Oregon
1
4
—
—
5
South Carolina
4
—
1
—
5
Colorado
1
1
2
—
4
Missouri
3
—
1
—
4
Ohio
2
—
2
—
4
Oklahoma
2
—
1
1
4
Arkansas
3
—
—
—
3
Idaho
1
2
—
—
3
Mississippi
3
—
—
—
3
Massachusetts
3
—
—
—
3
Michigan
3
—
—
—
3
Connecticut
2
—
—
—
2
Kansas
2
—
—
—
2
Kentucky
1
—
1
—
2
Minnesota
1
—
1
—
2
Utah
2
—
—
—
2
Wisconsin
1
—
1
—
2
Hawaii
1
—
—
—
1
Iowa
1
—
—
—
1
Maryland
1
—
—
—
1
Nebraska
1
—
—
—
1
New Mexico
1
—
—
—
1
North Dakota
1
—
—
—
1
Puerto Rico
1
—
—
—
1
West Virginia
1
—
—
—
1
Total United States
218
90
74
18
400
24
Location
SCP
Horizon
Superior
NPT
Total
International
Canada
17
—
—
—
17
France
9
—
—
—
9
Australia
6
—
—
—
6
Mexico
5
—
—
—
5
Portugal
3
—
—
—
3
Italy
2
—
—
—
2
Spain
2
—
—
—
2
Belgium
1
—
—
—
1
Croatia
1
—
—
—
1
Germany
1
—
—
—
1
United Kingdom
1
—
—
—
1
Total International
48
—
—
—
48
Total
266
90
74
18
448
25
Item 3. Legal Proceedings
From time to time, we are subject to various claims and litigation arising in the ordinary course of business, including product
liability, personal injury, commercial, contract and employment matters. While the outcome of any litigation is inherently
unpredictable, based on currently available facts, we do not believe that the ultimate resolution of any of these matters will have
a material adverse impact on our financial condition, results of operations or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
26
PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Common Stock
Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “POOL.” On February 20, 2025,
there were approximately 829 holders of record of our common stock and a significantly larger number of beneficial holders of
our common stock.
Common Stock Dividends
We initiated quarterly dividend payments to our shareholders in the second quarter of 2004 and we have continued payments in
each subsequent quarter. Our Board has increased the dividend amount nineteen times, most recently in the second quarters of
2011 through 2024. Our Board may declare future dividends at its discretion, after considering various factors, including our
earnings, capital requirements, financial position, contractual restrictions and other relevant business considerations. For a
description of restrictions on dividends in our Credit Facility, Term Facility and Receivables Facility, see Note 5 of “Notes to
Consolidated Financial Statements,” included in Item 8 of this Form 10-K. We cannot assure shareholders or potential
investors that dividends will be declared or paid any time in the future if our Board determines that there is a better use of our
funds.
Stock Performance Graph
The information included under the caption “Stock Performance Graph” in this Item 5 of this Annual Report on Form 10-K is
not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities
Exchange Act of 1934 (the 1934 Act) or to the liabilities of Section 18 of the 1934 Act, and will not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933 or the 1934 Act, except to the extent we specifically
incorporate it by reference into such a filing.
The following graph compares the cumulative total shareholder return on our common stock for the last five fiscal years with
the total return on the S&P 500 Index (of which we have been a member since 2020) and the Nasdaq Index for the same period,
in each case assuming the investment of $100 on December 31, 2019 and the reinvestment of all dividends. We believe the
S&P 500 Index is comprised of similar-sized public companies that represent the most likely alternative investments for
investors. Additionally, we chose the S&P 500 Index for comparison, as opposed to an industry index, because we do not
believe that we can reasonably identify a peer group or a published industry or line-of-business index that contains a sufficient
number of companies in a similar line of business.
27
Company / Index
Base
Period
12/31/19
Indexed Returns
Years Ending
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
Pool Corporation
$
100.00
$
176.95
$
270.70
$
146.09
$
195.04
$
168.93
S&P 500 Index
100.00
118.40
152.39
124.79
157.59
197.02
Nasdaq Index
100.00
144.92
177.06
119.45
172.77
223.87
Issuer Purchases of Equity Securities
The table below summarizes the repurchases of our common stock in the fourth quarter of 2024:
Period
Total Number
of Shares
Purchased (1)
Average
Price
Paid per
Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plan (2)
Maximum Approximate
Dollar Value of Shares
That May Yet be Purchased
Under the Plan (2)
October 1 – October 31, 2024
55,752 $
363.34
55,692 $
486,956,114
November 1 – November 30, 2024
170,615 $
360.71
170,550 $
425,421,246
December 1 – December 31, 2024
175,915 $
355.58
175,915 $
362,869,451
Total
402,282 $
358.83
402,157
(1)
These shares may include shares of our common stock surrendered to us by employees in order to satisfy minimum tax
withholding obligations in connection with certain exercises of employee stock options or lapses upon vesting of
restrictions on previously restricted share awards, and/or to cover the exercise price of such options granted under our
share-based compensation plans. There were 125 shares surrendered for this purpose in the fourth quarter of 2024.
(2)
In May 2024, our Board approved an additional $316.2 million under our share repurchase program for the repurchase
of shares of our common stock on the open market at prevailing market prices bringing the total authorization
available under the program to $600.0 million. As of February 20, 2025, $336.8 million remained available for use
under our current share repurchase program.
Unregistered Sales of Equity Securities
There were no unregistered sales of equity securities during the three months ended December 31, 2024.
Item 6. [RESERVED]
Not applicable.
28
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
For a discussion of our base business calculations, see the RESULTS OF OPERATIONS section below.
2024 FINANCIAL OVERVIEW
Financial Results
Net sales decreased 4% to $5.3 billion in 2024 compared to $5.5 billion in 2023. Base business results approximated
consolidated results for the year. Maintenance activities remained stable throughout 2024, reflecting steady demand for non-
discretionary products, while sales of discretionary products for new pool construction and remodeling were softer, impacted by
macroeconomic conditions. Inflationary product cost increases moderated, benefiting net sales approximately 1% to 2% in
2024, compared to 3% to 4% in 2023.
Gross profit was $1.6 billion in 2024, a 5% decrease from gross profit of $1.7 billion in 2023. Gross margin declined 30 basis
points to 29.7% in 2024 compared to 30.0% in 2023. Pricing optimization efforts, the reversal of previously recorded estimated
import taxes in the first quarter of 2024 and higher volume-related purchase incentives compared to last year benefited our
current year gross margin. These impacts were offset by a less favorable product and customer mix.
Selling and administrative expenses (operating expenses) increased 5%, or $44.7 million, to $958.1 million in 2024. As a
percentage of net sales, operating expenses increased 150 basis points to 18.0% in 2024 compared to 16.5% in 2023. Expense
growth drivers included higher costs associated with the expansion of our network and our technology initiatives as well as
inflationary rent, wage and insurance increases. These increases were partially mitigated by close management of variable
costs.
Operating income for the year decreased 17% to $617.2 million, down from $746.6 million in 2023. Operating margin
decreased 190 basis points to 11.6% in 2024 compared to 13.5% in 2023.
Interest and other non-operating expenses, net for the year was reduced by $8.2 million compared to 2023, primarily due to
lower average debt between periods.
We recorded an $8.8 million, or $0.23 per diluted share, tax benefit from Accounting Standards Update (ASU) 2016-09,
Improvements to Employee Share-Based Payment Accounting, for the year ended December 31, 2024 compared to a tax benefit
of $6.7 million, or $0.17 per diluted share, realized in 2023.
Net income declined 17% to $434.3 million in 2024 compared to $523.2 million in 2023. Earnings per share decreased 15% to
$11.30 per diluted share compared to $13.35 per diluted share in 2023. Without the impact from ASU 2016-09 in both periods,
earnings per diluted share decreased 16% to $11.07 per diluted share compared to $13.18 per diluted share in 2023. See
RESULTS OF OPERATIONS below for definitions of our non-GAAP measures and reconciliations of our non-GAAP
measures to GAAP measures.
Financial Position and Liquidity
Net cash provided by operations was $659.2 million in 2024. Our cash flows were impacted by our inventory reduction efforts
in 2023 and lower net income in 2024. These impacts were partially offset by a benefit of $68.5 million from the deferral of
our third and fourth quarter estimated tax payments, subsequently paid in February 2025, as allowed for companies impacted by
Hurricane Francine. Our 2024 operating cash flows helped to fund the following initiatives:
•
share repurchases including related excise tax payments, totaling $306.3 million for the year;
•
quarterly cash dividend payments to shareholders, totaling $179.6 million for the year;
•
a $103.0 million debt reduction; and
•
net capital expenditures and acquisitions of $64.2 million.
Total net receivables, including pledged receivables, decreased 8% compared to December 31, 2023, primarily due to lower
sales in 2024. Our allowance for doubtful accounts was $8.6 million at December 31, 2024 and $11.7 million at December 31,
2023. Our days sales outstanding ratio, as calculated on a trailing four quarters basis, was 26.3 days at December 31, 2024 and
26.8 days at December 31, 2023.
29
Our inventory management efforts reduced our inventory levels by 6% to $1.3 billion, compared to $1.4 billion at
December 31, 2023, outpacing the 4% decline in net sales. Our reserve for inventory obsolescence was $26.7 million at
December 31, 2024 compared to $23.5 million at December 31, 2023. Our inventory turns, as calculated on a trailing four
quarters basis, were 2.8 times at December 31, 2024 and 2.7 times at December 31, 2023.
Total debt outstanding of $950.4 million at December 31, 2024 decreased $103.0 million compared to December 31, 2023 as
we have used operating cash flows to reduce our debt.
Current Trends and Outlook
Consumers’ investments in their homes, including backyard renovations, continue to be favorable. In recent years, steady
increases in home values, lack of affordable new homes and increased mortgage rates have positioned homeowners to stay in
their homes longer and upgrade their home environments, including their backyards. During the COVID-19 pandemic
(generally 2020 through 2022), we experienced unprecedented demand as families spent more time at home and sought
opportunities to create or expand home-based outdoor living and entertainment spaces. This trend had a positive impact on our
financial performance during 2020 through 2022. Beginning in the latter half of 2022 through 2024, these trends moderated
resulting in lagging new pool construction and remodeling activities. As a result, in 2024, we estimate that new in-ground pool
construction units decreased 15% from 72,000 units in 2023 to 61,000 units, impacted by lower discretionary activities and
further pressured by the macroeconomic environment.
Market conditions in 2024 were challenged by generally higher than normal interest rates and product cost and labor inflation,
which led to consumer hesitancy on discretionary spending and some cyclical suppression of demand. While these market
conditions impacted new pool construction and remodeling projects, our non-discretionary maintenance product sales in 2024
were not significantly impacted. As lower housing turnover encourages consumers to renovate their existing homes, we expect
that consumers will continue to invest in outdoor living spaces as they consider backyards an extension of their home space.
We believe that we are well positioned to benefit from the inherent long-term growth opportunities in our industry fueled by
favorable population migration trends, positive housing demand dynamics, and product developments and technological
advancements as consumers focus on more sustainable and energy-efficient products.
In view of current trends, we established our outlook for 2025 based on reasonable expectations for industry demand, pricing
and inflationary conditions, continued capacity creation to have a positive impact on variable expenses, continued investment in
our digital transformation initiatives and ongoing leverage of existing investments in our business and continuous process
improvements. We also plan to broaden our geographic presence by opening 8 to 10 new sales centers in 2025 and by making
selective acquisitions when appropriate opportunities arise.
We base our assumptions on normal weather conditions and do not incorporate alternative weather predictions into our
guidance. Favorable weather positively impacts industry activity by accelerating growth in any given year, expanding the
number of available construction days, extending the pool season and pool usage and positively impacting demand for
discretionary products. Conversely, unfavorable weather typically impedes growth.
The following summarizes our outlook for 2025:
•
We expect sales to be flat to a low single digit increase compared to 2024, impacted by the following factors and
assumptions:
Circle used as bullet
normal weather patterns for 2025;
Circle used as bullet
sustained demand for pool maintenance products;
Circle used as bullet
similar volumes of discretionary products used for pool construction and remodeling, renovation and
upgrading of pools as 2024;
Circle used as bullet
inflationary product cost increases, which generally pass through to customers of approximately 1% to 2%;
and
Circle used as bullet
one less selling day in the first quarter and for the full year of 2025 compared to 2024.
•
We project gross margin for the full year of 2025 to be in the range of our 2024 gross margin at 29.7% and our long-
term target of 30.0%, with our highest margin in the second quarter of the year. We expect that our long-term gross
margin target will be more achievable as construction trends improve. Our actual gross margin will depend on
changes in product and customer mix and on amounts and timing of sales and inflationary price increases.
30
•
We expect to leverage our existing infrastructure and strategically manage discretionary spending. We project that our
operating expenses in 2025 will be impacted by the following factors:
Circle used as bullet
an increase of approximately $15.0 million in performance-based compensation to incentivize and reward our
employees;
Circle used as bullet
$10.0 million of spend for new sales centers as we further expand our sales center network;
Circle used as bullet
continued investment in technological solutions to enhance our customer service; and
Circle used as bullet
inflationary increases in areas such as labor and occupancy costs with some offsets from our efficiency
initiatives.
In 2025, we expect our effective tax rate will be around 25% without the impact of ASU 2016-09. Our effective tax rate is
dependent upon our results of operations and may change if actual results are different from our current expectations. Due to
ASU 2016-09 requirements, we expect our effective tax rate will fluctuate from quarter to quarter, particularly in periods when
employees elect to exercise their vested stock options or when restrictions on share-based awards lapse. We estimate that we
have approximately $3.2 million in unrealized excess tax benefits related to stock options that expire and restricted awards that
vest in the first quarter of 2025. We may recognize additional tax benefits related to stock option exercises in 2025 from grants
that expire in years after 2025, for which we have not included any expected benefits in our guidance. The estimated impact
related to ASU 2016-09 is subject to several assumptions which can vary significantly, including our estimated share price and
the period that our employees will exercise vested stock options. We recorded an $8.8 million benefit in our provision for
income taxes for the year ended December 31, 2024 related to ASU 2016-09.
We project that 2025 earnings will be in the range of $11.08 to $11.58 per diluted share, including an estimated $0.08 benefit
from ASU 2016-09 during the first quarter of 2025. We expect to continue to use cash for the payment of cash dividends as
and when declared by our Board and to fund opportunistic share repurchases over the next year.
The forward-looking statements in this Current Trends and Outlook section and elsewhere in this document are subject to
significant risks and uncertainties, including the sensitivity of our business to weather conditions; changes in the economy,
consumer discretionary spending, the housing market, inflation, or interest rates; our ability to maintain favorable relationships
with suppliers and manufacturers; the extent to which favorable consumer spending trends over the past several years will
continue; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth
strategies; changes in the regulatory environment; new or additional taxes, duties or tariffs; excess tax benefits or deficiencies
recognized under ASU 2016-09 and other risks detailed in Item 1A of this Form 10-K. Also see “Cautionary Statement for
Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995” prior to the heading “Risk
Factors” in Item 1A.
31
CRITICAL ACCOUNTING ESTIMATES
Critical accounting estimates are those estimates made in accordance with U.S. generally accepted accounting principles that
involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our
financial condition or results of operations.
Management has discussed the development, selection and disclosure of our critical accounting estimates with the Audit
Committee of our Board. Our critical accounting estimates are discussed below, including, to the extent material and
reasonably available, the impact such estimates have had, or are reasonably likely to have, on our financial condition or results
of operations.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts based on an estimate of the losses we will incur if our customers do not make
required payments. We perform periodic credit evaluations of our customers and typically do not require collateral. Consistent
with industry practices, we generally require payment from our North American customers within 30 days, except for sales
under early buy programs for which we provide extended payment terms to qualified customers. The extended terms usually
require payments in equal installments in April, May and June or May and June, depending on geographic location. Credit
losses have generally been within or better than our expectations.
Similar to our business, our customers’ businesses are seasonal. Sales are lowest in the winter months and our past due
accounts receivable balance as a percentage of total receivables generally increases during this time. We provide reserves for
uncollectible accounts based on our accounts receivable aging. These reserves range from 0.05% for amounts currently due to
up to 100% for specific accounts more than 60 days past due.
At the end of each quarter, we perform a reserve analysis of all accounts with balances greater than $20,000 and more than 60
days past due. Additionally, we perform a separate reserve analysis on the balance of our accounts receivables with emphasis
on past due accounts. We estimate future losses based upon historical bad debts, customer receivable balances, age of customer
receivable balances, customers’ financial conditions and current and forecasted economic trends, including certain trends in the
housing market, the availability of consumer credit and general economic conditions (as commonly measured by Gross
Domestic Product or GDP). We monitor housing market trends through review of the House Price Index as published by the
Federal Housing Finance Agency, which measures the movement of single-family home prices.
During the year, we write off account balances when we have exhausted reasonable collection efforts and determined that the
likelihood of collection is remote. These write-offs are charged against our allowance for doubtful accounts. In the past five
years, write-offs have averaged approximately 0.10% of net sales annually.
Write-offs as a percentage of net sales
approximated 0.16% in 2024, 0.12% in 2023 and 0.08% in 2022. We expect that write-offs will range from 0.05% to 0.10% of
net sales in 2025.
At the end of each fiscal year, we prepare a hindsight analysis by comparing the prior year-end allowance for doubtful accounts
balance to (i) current year write-offs and (ii) any significantly aged outstanding receivable balances. Based on our most recent
hindsight analysis, we concluded that the prior year allowance was within a range of acceptable estimates and that our
estimation methodology is appropriate.
If the balance of the accounts receivable reserve increased or decreased by 20% at December 31, 2024, pretax income would
change by approximately $1.7 million and earnings per share would change by approximately $0.03 per diluted share (based on
the number of weighted average diluted shares outstanding for the year ended December 31, 2024).
Inventory Obsolescence
Product inventories represent the largest asset on our balance sheet. Our goal is to manage our inventory such that we minimize
stock-outs to provide the highest level of service to our customers. To do this, we maintain at each sales center an adequate
inventory of stock keeping units (SKUs) with the highest sales volumes. At the same time, we continuously strive to better
manage our slower moving classes of inventory, which are not as critical to our customers and thus, inherently turn at slower
rates.
32
We establish our reserve for inventory obsolescence based on inventory with lower sales velocity and inventory with no sales
for the past 12 months, which we believe represent some exposure to inventory obsolescence. The reserve is intended to reflect
the value of inventory at net realizable value. We have not changed our methodology from prior years.
In evaluating the adequacy of our reserve for inventory obsolescence, we consider a combination of factors, including:
•
the level of inventory in relation to historical sales by product, including inventory usage based on product sales at
both the sales center level and on a company-wide basis;
•
changes in customer preferences or regulatory requirements;
•
seasonal fluctuations in inventory levels;
•
geographic location; and
•
superseded products and new product offerings.
We periodically adjust our reserve for inventory obsolescence as changes occur in the above-identified factors. At the end of
each fiscal year, we prepare a hindsight analysis by comparing the prior year-end obsolescence reserve balance to (i) current
year inventory write-offs and (ii) the value of products with no sales for the past 12 months that remain in inventory. Based on
our most recent hindsight analysis, we concluded that our prior year reserve was within a range of acceptable estimates and that
our estimation methodology is appropriate.
If the balance of our inventory reserve increased or decreased by 20% at December 31, 2024, pretax income would change by
approximately $5.3 million and earnings per share would change by approximately $0.10 per diluted share (based on the
number of weighted average diluted shares outstanding for the year ended December 31, 2024).
Vendor Programs
Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve any of a
number of measures. These measures generally relate to the volume level of purchases from our vendors, or our net cost of
products sold, and may include negotiated pricing arrangements. We account for vendor programs as a reduction of the prices
of the vendor’s products and therefore a reduction of inventory until we sell the product, at which time we recognize such
consideration as a reduction of cost of sales in our income statement.
Throughout the year, we estimate the amount earned based on our expectation of total purchases for the fiscal year relative to
the purchase levels that mark our progress toward the attainment of various levels within certain vendor programs. We accrue
vendor program benefits on a monthly basis using these estimates provided that we determine they are probable and reasonably
estimable. Our estimates for annual purchases, future inventory levels and sales of qualifying products are driven by our sales
projections, which can be significantly impacted by a number of external factors including changes in economic conditions and
weather. Changes in our purchasing mix also impact our estimates, as certain program rates can vary depending on our volume
of purchases from specific vendors.
We continually revise these estimates throughout the year to reflect actual purchase levels and identifiable trends. As a result,
our estimated quarterly vendor program benefits accrual may include cumulative catch-up adjustments to reflect any changes in
our estimates between reporting periods. These adjustments have a greater impact on gross margin in the fourth quarter since it
is our seasonally slowest quarter and because the majority of our vendor arrangements are based on calendar year periods. We
update our estimates for these arrangements at year end to reflect actual annual purchase or sales levels. In the first quarter of
the subsequent year, we prepare a hindsight analysis by comparing actual vendor credits received to the prior year vendor
receivable balances. Based on our most recent hindsight analysis, we concluded that our vendor program estimates were within
a range of acceptable estimates and that our estimation methodology is appropriate.
If market conditions were to change, vendors may change the terms of some or all of these programs. Although such changes
would not affect the amounts we have recorded related to products already purchased, they may lower or raise our cost for
products purchased and sold in future periods.
Income Taxes
We record deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and
liabilities using currently enacted rates and laws that will be in effect when we expect the differences to reverse. Due to
changing tax laws and state income tax rates, significant judgment is required to estimate the effective tax rate expected to
apply to tax differences that are expected to reverse in the future.
33
We record Global Intangible Low Tax Income (GILTI) on foreign earnings as period costs if and when incurred, although we
have not realized any impacts since the December 2017 enactment of U.S. tax reform.
As of December 31, 2024, U.S. income taxes were not provided on the earnings or cash balances of our foreign subsidiaries,
outside of the provisions of the transition tax from U.S. tax reform. As we have historically invested or expect to invest the
undistributed earnings indefinitely to fund current cash flow needs in the countries where held, additional income tax provisions
may be required. Determining the amount of unrecognized deferred tax liability on these undistributed earnings and cash
balances is not practicable due to the complexity of tax laws and regulations and the varying circumstances, tax treatments and
timing of any future repatriation.
We operate in 41 states, 1 United States territory and 11 foreign countries. We are subject to regular audits by federal, state and
foreign tax authorities, and the amount of income taxes we pay is subject to adjustment by the applicable tax authorities. We
recognize a benefit from an uncertain tax position only after determining it is more likely than not that the tax position will
withstand examination by the applicable taxing authority. Our estimate for the potential outcome of any uncertain tax issue is
highly judgmental. We regularly evaluate our tax positions and incorporate these expectations into our reserve estimates. We
believe we have adequately provided for any reasonably foreseeable outcome related to these matters. However, our future
results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made
or resolved, or when statutes of limitation on potential assessments expire. These adjustments may include changes in valuation
allowances that we have established. As a result of these uncertainties, our total income tax provision may fluctuate on a
quarterly basis.
Each year, we prepare a return to provision analysis upon filing our income tax returns. Based on our most recent hindsight
analysis, we concluded that our prior year income tax provision was within a range of acceptable estimates and that our
provision calculation methodology is appropriate. Differences between our effective income tax rate and federal and state
statutory tax rates are primarily due to excess tax benefits associated with the exercise of deductible nonqualified stock options
and the lapse of restrictions on deductible restricted stock awards.
Performance-Based Compensation Accrual
The Compensation Committee of our Board (Compensation Committee) and our management have designed compensation
programs intended to create a performance culture. The primary objectives of our compensation programs are to attract,
motivate, reward and retain our employees without leading to unnecessary risk taking. Our compensation packages include
bonus plans that are specific to groups of eligible participants and their levels and areas of responsibility. The majority of our
bonus plans consist of annual cash payments that are based primarily on objective performance criteria. We calculate bonuses
based on the achievement of certain key measurable financial and operational results, including operating income.
We use an annual cash performance award (annual bonus) to focus corporate behavior on short-term goals for growth, financial
performance and other specific financial and business improvement metrics. Management sets the company’s annual bonus
objectives at the beginning of the bonus plan year using both historical information and forecasted results of operations for the
current plan year. Management also establishes specific business improvement objectives for both our operating units and
corporate employees.
The Compensation Committee approves objectives for annual bonus plans involving executive
management.
We have also utilized our medium-term (three-year) Strategic Plan Incentive Program (SPIP) to provide senior management
with an additional cash-based, pay-for-performance award based on the achievement of specified earnings growth objectives.
Payouts through the SPIP are based on three-year compound annual growth rates (CAGRs) of our diluted EPS. Beginning in
2023, our Compensation Committee did not grant any awards under the SPIP.
We record annual performance-based compensation accruals based on operating income achieved in a quarter as a percentage
of total expected operating income for the year. We estimate total expected operating income for the current plan year using
management’s estimate of the total overall incentives earned per the stated bonus plan objectives. Starting in June, and
continuing each quarter through our fiscal year end, we adjust our estimated performance-based compensation accrual based on
our detailed analysis of each bonus plan, the participants’ progress toward achievement of their specific objectives and
management’s estimates related to the discretionary components of the bonus plans, if any.
Our quarterly performance-based compensation expense and accrual balances may vary relative to actual annual bonus expense
and payouts due to differences between estimated and actual performance and the discretionary components of the bonus plans.
34
We generally make bonus payments at the end of February following the most recently completed fiscal year. Each year, we
compare the actual bonus payouts to amounts accrued at the previous year’s end to determine the accuracy of our performance-
based compensation estimates. Based on our most recent hindsight analysis, we concluded that our performance-based
compensation accrual balances were within a reasonable range of acceptable estimates and that our estimation methodologies
are appropriate.
Impairment of Goodwill and Other Indefinite-Lived Intangible Assets
Goodwill is our largest intangible asset. At December 31, 2024, our goodwill balance was $698.9 million, representing
approximately 21% of total assets. Goodwill represents the excess of the amount we paid to acquire a company over the
estimated fair value of tangible assets and identifiable intangible assets acquired less liabilities assumed.
We perform a goodwill impairment test in the fourth quarter of each year or on a more frequent basis if events or changes in
circumstances occur that indicate potential impairment. We have the option of first analyzing qualitative factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. When a qualitative
goodwill test is performed, we analyze factors to determine whether it is more likely than not that the fair value of a reporting
unit is less than the carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill
impairment test. The evaluation of qualitative factors includes an assessment of relevant facts, events and circumstances
including but not limited to: macroeconomic conditions, industry and market conditions, and the current and forecasted
financial performance of the reporting unit. In combination with our qualitative test, we also estimate the fair value of our
reporting units by projecting company-wide future cash flows using management’s assumptions for sales growth rates,
operating margins and discount rates. Estimated earnings multiples are then used to estimate the fair value of each reporting
unit. These estimates can significantly affect the outcome of our impairment test.
To the extent our qualitative test indicates it is more likely than not that the fair value of a reporting unit is less than the carrying
amount or for any reporting unit where we only perform a quantitative test, we perform a discounted cash flow analysis at the
reporting unit level to further evaluate our initial fair value estimate. If the carrying value of the reporting unit exceeds the fair
value, we record a goodwill impairment charge for the difference, up to the carrying value of the goodwill. The fair value
estimates used in our impairment test are determined using discounted cash flow models, which require the use of significant
unobservable inputs, representative of a Level 3 fair value measurement. Since we define an operating segment as an individual
sales center and we do not have operations below the sales center level, we define a reporting unit as an individual sales
center.
To test the reasonableness of our fair value estimate, we compared our company-wide estimated fair value to our market
capitalization as of the date of our annual impairment test. In 2024, our company-wide estimated fair value was in line with our
market capitalization. To facilitate a sensitivity analysis, we reduced our consolidated fair value estimate to reflect more
conservative discounted cash flow assumptions, the sensitivity of a 150 basis point increase in our estimated weighted average
cost of capital or a 50 basis point decrease in the estimated perpetuity growth rate. Our sensitivity analysis resulted in a fair
value modestly lower than our market capitalization and did not result in the identification of additional at-risk locations.
If our assumptions or estimates in our fair value calculations change or if operating results are less than forecasted, we could
incur impairment charges in future periods. Impairment charges would decrease operating income, negatively impact diluted
EPS and result in lower asset values on our balance sheet.
In October 2024, we performed our annual goodwill impairment test and did not record any goodwill impairment at the
reporting unit level. As of October 1, 2024, we had 251 reporting units with allocated goodwill balances. Our most significant
goodwill balance of $401.6 million was related to our Porpoise Pool & Patio reporting unit and the next largest goodwill
balance for a reporting unit was $12.1 million. The average goodwill balance per reporting unit was $2.8 million.
In September 2023, we recorded goodwill impairment of $0.6 million, primarily related to one of our Horizon reporting units in
Texas that we previously identified as being most at risk of goodwill impairment. We had been monitoring this location’s
results, which came in below expectations at the end of the 2023 season. We performed an interim goodwill impairment
analysis, which included a discounted cash flow analysis, and determined that the estimated fair value of the reporting unit no
longer exceeded its carrying value. Following this, in October 2023, we performed our annual goodwill impairment test and
did not recognize any goodwill impairment at the reporting unit level.
In October 2022, we performed our annual goodwill impairment test and recorded goodwill impairment of $0.6 million related
to the closure of a Horizon reporting unit in that period.
35
Recent Accounting Pronouncements
See Note 1 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for details.
36
RESULTS OF OPERATIONS
The table below summarizes information derived from our Consolidated Statements of Income expressed as a percentage of net
sales for the past three fiscal years:
Year Ended December 31,
2024
2023
2022
Net sales
100.0 %
100.0 %
100.0 %
Cost of sales
70.3
70.0
68.7
Gross profit
29.7
30.0
31.3
Operating expenses
18.0
16.5
14.7
Operating income
11.6
13.5
16.6
Interest and other non-operating expenses, net
0.9
1.1
0.7
Income before income taxes and equity in earnings
10.7 %
12.4 %
15.9 %
Note: Due to rounding, percentages may not add to operating income or income before income taxes and equity in
earnings.
Our discussion of consolidated operating results includes the operating results from acquisitions in 2024, 2023 and 2022. We
have included the results of operations in our consolidated results since the respective acquisition dates.
Fiscal Year 2024 compared to Fiscal Year 2023
Base Business
When calculating our base business results, we exclude for a period of 15 months sales centers that are acquired, opened in new
markets or closed. We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing
business and existing sales centers that we consolidate with acquired sales centers.
We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of
total net sales. After 15 months, we include acquired, consolidated and new market sales centers in the base business
calculation including the comparative prior year period.
We have not provided separate base business income statements within this Form 10-K as base business results closely
approximated consolidated results. Acquired and new market sales centers excluded from base business contributed less than
1% to the change in net sales.
The table below summarizes the changes in our sales center count during 2024:
December 31, 2023
439
Acquired locations
2
New locations
10
Closed/consolidated locations
(3)
December 31, 2024
448
For information about our recent acquisitions, see Note 2 of “Notes to Consolidated Financial Statements,” included in Item 8
of this Form 10-K.
37
Net Sales
(in millions)
Year Ended December 31,
Change
2024
2023
Net sales
$
5,311.0
$
5,541.6
$ (230.6)
(4)%
Net sales in 2024 declined 4% compared to 2023. During 2024, maintenance activities were stable, reflecting steady demand
for non-discretionary products, while sales volumes for discretionary products declined, impacted by unfavorable
macroeconomic conditions.
The following factors impacted our sales during the year and are listed in order of estimated magnitude:
•
lower sales volumes due to a decline in discretionary products used in new pool construction and renovation projects
(see discussion below);
•
stability from maintenance-related revenues, evidenced by 2% sales growth in chemicals compared to 2023, which
represented 15% of our net sales; and
•
a benefit of approximately 1% to 2% from inflationary product cost increases.
In 2024, sales of equipment, which is used across maintenance, renovation and new pool construction and includes swimming
pool heaters, pumps, lights, filters and automation, were flat compared to 2023 and represented approximately 31% of net sales
in 2024. Sales of building materials fell 10% compared to 2023 and represented approximately 12% of net sales in 2024.
Sales to specialty retailers that sell swimming pool supplies and customers who service large commercial installations are
included in the appropriate existing product categories, and growth in these areas is reflected in the discussion above. In 2024,
sales to retail customers decreased 4% compared to 2023 and represented approximately 14% of our consolidated net sales.
Sales to commercial customers increased 9% compared to 2023 and represented approximately 5% of our consolidated net sales
in 2024.
2024 Quarterly Sales Performance Compared to 2023 Quarterly Sales Performance
Quarter
2024
First
Second
Third
Fourth
Net Sales Decline
(7)%
(5)%
(3)%
(2)%
•
In the first quarter of 2024, net sales were affected by lower sales volumes due to reduced pool construction and
discretionary activity.
Unfavorable weather conditions further reduced sales by approximately 2%.
Net sales
benefited from a greater concentration of customer early buys and approximately 1% to 2% from inflationary product
cost increases, net of price deflation, compared to an inflationary benefit of 4% to 5% in the first quarter of 2023.
•
During the second quarter of 2024, maintenance-related revenues remained stable, with chemical sales growing 1%
compared to the second quarter of 2023, representing 15% of net sales. Net sales were negatively impacted by lower
sales volumes due to reduced pool construction and discretionary activities. Sales benefited approximately 1% from
inflationary product cost increases, net of price deflation, which was lower than the 3% to 4% benefit observed in the
second quarter of 2023.
•
Net sales in the third quarter of 2024 were supported by steady demand for maintenance products while the
discretionary portions of our business continued to see pressure resulting in lower sales volumes due to a decline in
pool construction and discretionary spending. The third quarter of 2024 benefited approximately 2% from an
additional selling day compared to the same period in 2023.
•
In the fourth quarter of 2024, lower sales during this seasonally slower period were impacted by weaker spending on
discretionary products and solid performance in maintenance-related sales.
In addition to the sales discussion above, see further details of significant weather impacts under the subheading Seasonality
and Quarterly Fluctuations below.
38
Gross Profit
(in millions)
Year Ended December 31,
Change
2024
2023
Gross profit
$ 1,575.3
$ 1,660.0
$ (84.7)
(5)%
Gross margin
29.7 %
30.0 %
Gross margin declined 30 basis points to 29.7% in 2024 compared to 30.0% in 2023, impacted by:
•
higher inventory costs in 2024 as we were carrying a significant amount of lower cost strategically-purchased
inventory in the beginning of 2023 that was successfully reduced to normalized levels by the end of 2023 and had an
unfavorable impact on 2024; and
•
less favorable product and customer mix.
A $12.6 million reversal of previously recorded estimated import taxes in the first quarter of 2024 increased gross margin by 20
basis points. Gross margin also benefited from our margin initiatives, such as increased sales of higher margin private-label
chemicals, and higher levels of vendor incentives earned versus 2023 due to increased purchasing as compared to the prior year
when we were actively reducing inventory levels.
Operating Expenses
(in millions)
Year Ended December 31,
Change
2024
2023
Selling and administrative expenses
$
958.1
$
913.5
$
44.6
5%
Operating expenses as a percentage of net sales
18.0 %
16.5 %
Operating expenses increased 5%, or $44.6 million, to $958.1 million in 2024, up from $913.5 million in 2023. The primary
drivers of expense growth were higher costs associated with the expansion of our network and our technology initiatives as well
as inflationary rent, wage and insurance increases. These increases were partially mitigated through close management of our
variable costs and lower performance-based compensation.
Interest and Other Non-operating Expenses, net
Interest and other non-operating expenses, net decreased $8.2 million compared to 2023, primarily due to a decrease in average
debt between periods. Our weighted average effective interest rate was 5.2% in 2024 and 2023 on average outstanding debt of
$956.3 million in 2024 versus $1.1 billion in 2023.
Income Taxes
Our effective income tax rate was 23.4% at December 31, 2024 and 24.0% at December 31, 2023. We recorded a $8.8 million,
or $0.23 per diluted share, benefit from ASU 2016-09 for the year ended December 31, 2024 compared to a benefit
of $6.7 million, or $0.17 per diluted share, realized in 2023. Without the benefits from ASU 2016-09, our effective tax rate
was 25.0% for both the years ended 2024 and 2023.
Net Income and Earnings Per Share
Net income decreased 17% to $434.3 million in 2024 compared to $523.2 million in 2023. Earnings per share decreased 15%
to $11.30 per diluted share compared to $13.35 per diluted share in 2023.
39
Reconciliation of Non-GAAP Financial Measures
The non-GAAP measures described below should be considered in the context of all of our other disclosures in this Form 10-K.
Adjusted Diluted EPS
We have included adjusted diluted EPS, a non-GAAP financial measure, as a supplemental disclosure, because we believe this
measure is useful to management, investors and others in assessing our year-over-year operating performance.
Adjusted diluted EPS is a key measure used by management to demonstrate the impact of tax benefits from ASU 2016-09 on
our diluted EPS and to provide investors and others with additional information about our potential future operating
performance to supplement GAAP measures.
We believe this measure should be considered in addition to, not as a substitute for, diluted EPS presented in accordance with
GAAP, and in the context of our other disclosures in this Form 10-K. Other companies may calculate this non-GAAP financial
measure differently than we do, which may limit its usefulness as a comparative measure.
The table below presents a reconciliation of diluted EPS to adjusted diluted EPS.
(Unaudited)
Year Ended
December 31,
2024
2023
Diluted EPS
$
11.30
$
13.35
Less: ASU 2016-09 tax benefit
0.23
0.17
Adjusted diluted EPS
$
11.07
$
13.18
Fiscal Year 2023 compared to Fiscal Year 2022
For a detailed discussion of the Results of Operations in Fiscal Year 2023 compared to Fiscal Year 2022, see the Results of
Operations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2023 Annual Report on
Form 10-K.
40
Seasonality and Quarterly Fluctuations
For discussion regarding the effects seasonality and weather have on our business, see Item 1, “Business,” of this Form 10-K.
The following table presents certain unaudited quarterly included income statement and balance sheet data for the most recent
eight quarters to allow for a meaningful comparison of the seasonal fluctuations in these amounts. We believe this information
reflects all normal and recurring adjustments considered necessary for a fair presentation of this data. Due to the seasonal
nature of our industry, the results of any one or more quarters are not necessarily a good indication of results for an entire fiscal
year or of continuing trends, including the impact of new and acquired sales centers.
(Unaudited)
(in thousands)
QUARTER
2024
2023
First
Second
Third
Fourth
First
Second
Third
Fourth
Statement of Income Data
Net sales
1,120,810
1,769,784
1,432,879
987,480
1,206,774
1,857,363
1,474,407
1,003,050
Gross profit
338,560
530,141
416,403
290,244
369,755
567,783
428,731
293,775
Operating income
108,720
271,481
176,353
60,651
145,771
327,009
194,443
79,344
Net income
78,885
192,439
125,701
37,300
101,699
232,250
137,843
51,437
Net sales as a % of annual
net sales
21 %
33 %
27 %
19 %
22 %
34 %
27 %
18 %
Gross profit as a % of
annual gross profit
21 %
34 %
26 %
18 %
22 %
34 %
26 %
18 %
Operating income as a % of
annual operating
income
18 %
44 %
29 %
10 %
20 %
44 %
26 %
11 %
Balance Sheet Data
Total receivables, net
527,175
577,529
425,693
314,861
564,171
630,950
461,582
342,910
Product inventories, net
1,496,947
1,295,600
1,180,491
1,289,300
1,686,683
1,392,886
1,259,308
1,365,466
Accounts payable
907,806
515,645
401,702
525,235
739,749
485,099
429,436
508,672
Total debt
979,177
1,116,553
923,829
950,356
1,365,750
1,184,586
1,033,897
1,053,320
Note: Due to rounding, the sum of quarterly percentage amounts may not equal 100%.
Weather Impacts on Fiscal Year 2024 to Fiscal Year 2023 Comparisons
The first quarter of 2024 was the tenth wettest first quarter on national record leading to mixed impacts across our markets,
particularly in the month of March, which is seasonally our highest sales month of the first quarter. However, we also observed
above-average temperatures during the quarter contributing positively to economic activities in many regions, such as
improvement in California during March. The adverse effects of cooler and wetter weather in Florida and the Southeast
compared to the first quarter of last year and excessive precipitation in Texas and the Northeast outweighed the positives,
resulting in an unfavorable net impact on net sales. In the first quarter of 2023, varied weather conditions had a more
pronounced unfavorable impact on net sales due to unusually wet and cold weather in the western U.S., particularly California
and Arizona. This wet and cold weather was partially offset by generally favorable conditions in our southern markets, where
sales benefited from warmer weather and below-average precipitation.
The second quarter of 2024 was marked by precipitation variability across the U.S. with wetter conditions in the central U.S.
and Texas and below average precipitation in the western U.S. Maintenance activities benefited from warmer-than-average
temperatures across most regions, particularly in June. Overall, mixed weather conditions led to varied impacts across our
markets. In contrast, weather conditions in the second quarter of 2023 unfavorably impacted sales due to cooler temperatures
across the West through the mid-Atlantic region and the impact of wildfires in Canada.
The third quarter of 2024 saw a mix of weather conditions across the continental U.S. Several regions faced notable weather
events during the quarter. Tropical weather brought localized flooding and heavy rainfall particularly to the coastal areas of
41
Florida, Louisiana and the Carolinas. Wetter conditions and cooler temperatures in July of 2024, compared to July of 2023,
impacted maintenance activities in Texas, a key market, during a prominent selling month. The Northeast and Midwest regions
experienced generally warm and dry conditions throughout the quarter, which was favorable for pool-related activities. The
West, particularly in California, continued its trend of above-average temperatures and dry conditions, which supported outdoor
and construction activities. Collectively, weather conditions in the third quarter of 2024 had a relatively neutral impact on the
overall business. Similarly, in the third quarter of 2023, hot temperatures across the southern United States were offset by rainy
conditions in the Northeast, resulting in a fairly neutral impact on our business.
Repair and replacement activity following Hurricanes Helene and Milton provided some weather-related benefits to Florida’s
fourth quarter results, contributing to an increase in consolidated sales of approximately 1%. The fourth quarter of 2024 was
warmer than average with low precipitation across the country. October 2024 was one of the warmest and driest months on
record while November provided some relief with above average precipitation levels in the Midwest. December was consistent
with observed trends with both above-average temperatures and below-average precipitation. Excluding Florida, the fourth
quarter of 2024 was comparable to the fourth quarter of 2023 which had overall warm weather conditions.
Weather Impacts on Fiscal Year 2023 to Fiscal Year 2022 Comparisons
For a detailed discussion of Weather Impacts on Fiscal Year 2023 compared to Fiscal Year 2022, see the Seasonality and
Quarterly Fluctuations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2023 Annual Report
on Form 10-K.
Geographic Areas
Since all of our sales centers have similar operations and share similar economic characteristics, we aggregate our sales centers
into a single reportable segment. For additional details, see Note 1 of our “Notes to Consolidated Financial Statements,”
included in Item 8 of this Form 10-K.
For a breakdown of net sales and property, plant and equipment between our United States and international operations, see
Item 1, “Business,” of this Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is defined as the ability to generate adequate amounts of cash to meet short-term and long-term cash needs.
We assess our liquidity in terms of our ability to generate cash to fund our operating activities, taking into consideration the
seasonal nature of our business. Significant factors which could affect our liquidity include the following:
•
cash flows generated from operating activities;
•
the adequacy of available bank lines of credit;
•
the quality of our receivables;
•
acquisitions;
•
dividend payments;
•
capital expenditures;
•
changes in income tax laws and regulations;
•
the timing and extent of share repurchases; and
•
the ability to attract long-term capital with satisfactory terms.
Our primary capital needs are seasonal working capital obligations, debt repayment obligations and other general corporate
initiatives, including acquisitions, opening new sales centers, technology-related investments, dividend payments and share
repurchases. Our primary working capital obligations are for the purchase of inventory, payroll, rent, other facility costs and
selling and administrative expenses. Our working capital obligations fluctuate during the year, driven primarily by seasonality
and the timing of inventory purchases. Our primary sources of working capital are cash from operations supplemented by bank
borrowings, which have historically been sufficient to support our growth and finance acquisitions. We have funded our capital
expenditures and share repurchases in substantially the same manner.
42
We prioritize our use of cash based on investing in our business, maintaining a prudent capital structure, including a modest
amount of debt, and returning cash to our shareholders through dividends and share repurchases. Our specific priorities for the
use of cash are as follows:
•
capital expenditures primarily for maintenance and growth of our sales center network, technology-related investments
and fleet vehicles;
•
inventory and other operating expenses;
•
strategic acquisitions executed opportunistically;
•
payment of cash dividends as and when declared by our Board;
•
repayment of debt to maintain an average total target leverage ratio (as defined below) between 1.5 and 2.0; and
•
discretionary repurchases of our common stock under our Board authorized share repurchase program.
We focus our capital expenditure plans based on the needs of our existing sales centers and the opening of new sales centers.
Our capital spending primarily relates to leasehold improvements, delivery and service vehicles and information technology. In
recent years, we have increased our investment in technology and automation enabling us to operate more efficiently and better
serve our customers.
Historically, our capital expenditures have averaged roughly 1.0% of net sales. Capital expenditures were 1.1% of net sales in
2024, 1.1% of net sales in 2023 and 0.7% in 2022. In 2022, our capital expenditures as a percentage of net sales were lower
than our historical average due to significant sales growth in that year. Based on management’s current plans, we project
capital expenditures for 2025 will average 1% to 1.5% of net sales.
We believe we have adequate availability of capital to fund present operations and the current capacity to finance any working
capital needs that may arise. We continually evaluate potential acquisitions and hold discussions with acquisition candidates.
If suitable acquisition opportunities arise that would require financing, we believe that we have the ability to finance any such
transactions.
As of February 20, 2025, $336.8 million remained available to purchase shares of our common stock under our current Board-
approved share repurchase plan program. We expect to repurchase additional shares in the open market from time to time
depending on market conditions. We plan to fund these repurchases with cash provided by operations and borrowings under
our credit and receivables facilities described below.
Sources and Uses of Cash
The following table summarizes our cash flows (in thousands):
Year Ended December 31,
2024
2023
Operating activities
$
659,186
$
888,229
Investing activities
(66,169)
(71,597)
Financing activities
(576,550)
(798,132)
Cash provided by operations of $659.2 million for 2024 decreased $229.0 million compared to 2023. This decline was
primarily driven by our inventory reduction efforts in prior year and lower net income in 2024. These impacts were partially
offset by a benefit from the hurricane relief deferral of our third and fourth quarter estimated tax payments totaling $68.5
million.
Cash used in investing activities decreased $5.4 million to $66.2 million in 2024, primarily reflecting a decrease of $6.8 million
in payments for acquisitions compared to 2023.
Cash used in financing activities decreased to $576.6 million in 2024 compared to $798.1 million in 2023. The change in
financing activities primarily reflects a $232.4 million decrease in net debt payments, partially offset by an increase in
dividends paid of $12.2 million.
For a discussion of our sources and uses of cash in 2022, see the Liquidity and Capital Resources – Sources and Uses of Cash
section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2023 Annual Report on Form 10-K.
43
Future Sources and Uses of Cash
To supplement cash from operations as our primary source of working capital, we will continue to utilize our three major credit
facilities, which are the Amended and Restated Revolving Credit Facility (the Credit Facility), the Term Facility (the Term
Facility) and the Receivables Securitization Facility (the Receivables Facility). For additional details regarding these facilities,
see the summary descriptions below and more complete descriptions in Note 5 of our “Notes to Consolidated Financial
Statements,” included in Item 8 of this Form 10-K.
Credit Facility
Our Credit Facility, as amended, provides for $1.3 billion in borrowing capacity consisting of a $800.0 million unsecured
revolving credit facility and a $500.0 million term loan facility. The Credit Facility also includes an accordion feature
permitting us to request one or more incremental term loans or revolving credit family commitment increases up to $250.0
million and sublimits for the issuance of swingline loans and standby letters of credit. We pay interest on revolving and term
loan borrowings under the Credit Facility at a variable rate based on the one-month Term secured overnight financing rate
(SOFR), plus an applicable margin. The term loan requires quarterly amortization payments with all remaining principal due
on the term loan maturity date of September 25, 2026. The revolving credit facility matures on September 30, 2029. We intend
to continue to use the Credit Facility for general corporate purposes, for future share repurchases and to fund future growth
initiatives.
At December 31, 2024, there was $657.1 million outstanding, including a $462.5 million term loan, with a $15.1 million
standby letter of credit outstanding and $590.3 million available for borrowing under the Credit Facility. The weighted average
effective interest rate for the Credit Facility as of December 31, 2024 was approximately 4.0%, excluding commitment fees and
including the impact of our interest rate swaps.
Term Facility
Our Term Facility provides for $185.0 million in borrowing capacity and matures on December 30, 2026. Proceeds from the
Term Facility were used to pay down the Credit Facility in December 2019, adding borrowing capacity for future share
repurchases, acquisitions and growth-oriented working capital expansion. We pay interest on borrowings under the Term
Facility at a variable rate based on one month Term SOFR, plus an applicable margin. The Term Facility is repaid in quarterly
installments of 1.250% of the Term Facility on the last business day of each quarter beginning in the first quarter of 2020 with
the final principal repayment due on the maturity date. We may prepay amounts outstanding under the Term Facility without
penalty other than interest breakage costs. In June 2023, we made a prepayment on the Term Facility of $45.0 million with
$32.4 million applied against the remaining quarterly installments and the remainder applied against the amount due at
maturity.
At December 31, 2024, the Term Facility had an outstanding balance of $109.9 million at a weighted average effective interest
rate of 5.6%.
Receivables Securitization Facility
Our two-year accounts receivable securitization facility (the Receivables Facility) offers us a lower-cost form of financing and
was recently amended on October 31, 2024. As amended, under this facility, we can borrow up to $375.0 million between April
through May and from $210.0 million to $350.0 million during the remaining months of the year. We pay interest on
borrowings under the Receivables Facility at a variable rate based on one month Term SOFR, plus an applicable margin. The
Receivables Facility matures on October 30, 2026.
The Receivables Facility provides for the sale of certain of our receivables to a wholly owned subsidiary (the Securitization
Subsidiary). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights
to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities. Upon
payment of the receivables by customers, rather than remitting to the financial institutions the amounts collected, we retain such
collections as proceeds for the sale of new receivables until payments become due.
At December 31, 2024, there was $174.1 million outstanding under the Receivables Facility at a weighted average effective
interest rate of 5.3%, excluding commitment fees.
44
Financial Covenants
Financial covenants of the Credit Facility, Term Facility and Receivables Facility include maintenance of a maximum average
total leverage ratio and a minimum fixed charge coverage ratio, which are our most restrictive financial covenants. As of
December 31, 2024, the calculations of these two covenants are detailed below:
•
Maximum Average Total Leverage Ratio. On the last day of each fiscal quarter, our average total leverage ratio must
be less than 3.25 to 1.00. Average Total Leverage Ratio is the ratio of the sum of (i) Total Non-Revolving Funded
Indebtedness as of such date, (ii) the trailing twelve months (TTM) Average Total Revolving Funded Indebtedness and
(iii) the TTM Average Accounts Securitization Proceeds divided by TTM EBITDA (as those terms are defined in the
Credit Facility). As of December 31, 2024, our average total leverage ratio equaled 1.42 (compared to 1.39 as of
December 31, 2023) and the TTM average total indebtedness amount used in this calculation was $970.1 million.
•
Minimum Fixed Charge Coverage Ratio. On the last day of each fiscal quarter, our fixed charge ratio must be greater
than or equal to 2.25 to 1.00. Fixed Charge Ratio is the ratio of the TTM EBITDAR divided by TTM Interest Expense
paid or payable in cash plus TTM Rental Expense (as those terms are defined in the Credit Facility). As of
December 31, 2024, our fixed charge ratio equaled 5.07 (compared to 5.94 as of December 31, 2023) and TTM Rental
Expense was $104.0 million.
The Credit Facility and Term Facility limit the declaration and payment of dividends on our common stock to a manner
consistent with past practice, provided no default or event of default has occurred and is continuing, or would result from the
payment of dividends. We may declare and pay quarterly dividends so long as (i) the amount per share of such dividends is not
greater than the most recently publicly announced dividends per share and (ii) our Average Total Leverage Ratio is less than
3.25 to 1.00 both immediately before and after giving pro forma effect to such dividends. Under the Credit Facility and Term
Facility, we may repurchase shares of our common stock provided no default or event of default has occurred and is continuing,
or would result from the repurchase of shares, and our maximum average total leverage ratio (determined on a pro forma basis)
is less than 3.25 to 1.00.
Other covenants include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate,
and sell or transfer assets. Failure to comply with any of our financial covenants or any other terms of the Credit Facility and
the Term Facility could result in higher interest rates on our borrowings or the acceleration of the maturities of our outstanding
debt.
Interest Rate Swaps
We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in
variable interest rates for future interest payments on our variable rate borrowings. Interest expense related to the notional
amounts under all swap contracts is based on applicable fixed rates plus the applicable margin on the respective borrowings.
As of December 31, 2024, we had two interest rate swap contracts in place and one forward-starting interest rate swap contract,
each of which has the effect of converting our exposure to variable interest rates on a portion of our variable rate borrowings to
fixed interest rates. For more information, see Note 5 of “Notes to Consolidated Financial Statements” included in Item 8 of
this Form 10-K.
Compliance and Future Availability
As of December 31, 2024, we were in compliance with all covenants and financial ratio requirements under our Credit Facility,
our Term Facility and our Receivables Facility. We believe we will remain in compliance with all covenants and financial ratio
requirements throughout 2025.
For additional information regarding our debt arrangements, see Note 5 of “Notes to
Consolidated Financial Statements,” included in Item 8 of this Form 10-K.
Future Obligations
We have certain fixed contractual obligations and commitments that include future estimated payments for general operating
purposes. Changes in our business needs, fluctuating interest rates and other factors may result in actual payments differing
from our estimates. We cannot provide certainty regarding the timing and amounts of these payments. The following table
summarizes our obligations as of December 31, 2024 that are expected to impact liquidity and cash flow in future periods. We
believe we will be able to fund these obligations through our existing cash, cash expected to be generated from operations,
borrowings on our facilities and proceeds from any future refinancing transactions.
45
Total
Payments Due by Period
Less than
1 year
1-3 years
3-5 years
More than
5 years
Long-term debt
$
953,111
$
49,473
$
709,038
$
194,600
$
—
Operating leases
365,467
98,746
156,104
75,305
35,312
Purchase obligations
2,652
1,326
1,326
—
—
$ 1,321,230
$
149,545
$
866,468
$
269,905
$
35,312
The significant assumptions used in our determination of amounts presented in the above table are as follows:
•
Long-term debt amounts represent only the future principal payments on our debt as of December 31, 2024. Estimates
of interest payable on this debt is separately reflected in the table appearing below. For additional information
regarding our debt arrangements, see Note 5 of our “Notes to Consolidated Financial Statements,” included in Item 8
of this Form 10-K.
•
Operating lease amounts include future rental payments for our operating leases. The amounts presented are consistent
with contractual terms and are not expected to differ significantly from actual results under our existing leases. For
additional information regarding our operating leases, see Note 9 of our “Notes to Consolidated Financial Statements,”
included in Item 8 of this Form 10-K.
•
Purchase obligations include all legally binding contracts such as firm minimum commitments for inventory purchases
and software commitments. We issue inventory purchase orders in the normal course of business, which represent
authorizations to purchase that are cancellable by their terms. We do not consider our cancellable purchase orders to
be firm inventory commitments; therefore, they are excluded from the table above.
For certain of our future obligations, such as unrecognized tax benefits, uncertainties exist regarding the timing of future
payments and the amount by which these potential obligations will increase or decrease over time. As such, we have excluded
unrecognized tax benefits from the table above. See Note 7 of “Notes to Consolidated Financial Statements,” included in
Item 8 of this Form 10-K for additional discussion related to our unrecognized tax benefits. The table also excludes various
other liabilities that are not contractual in nature, including contingent liabilities, litigation accruals and contract termination
fees.
The table below contains estimated interest payments (in thousands) related to our long-term debt obligations presented in the
table above. We calculated estimates of future interest payments based on the December 31, 2024 outstanding debt balances,
using the fixed rates under our interest rate swap agreements for the applicable notional amounts and the weighted average
effective interest rates as of December 31, 2024 for the remaining outstanding balances not covered by our swap contracts. To
project the estimated interest expense to coincide with the time periods used in the table above, we projected the estimated debt
balances for future years based on the scheduled maturity dates of the Credit Facility, the Term Facility and the Receivables
Facility. Our actual interest payments could vary substantially from the amounts projected.
Total
Estimated Interest Payments Due by Period
Less than
1 year
1-3 years
3-5 years
More than
5 years
Interest
$
94,266
$
34,690
$
40,849
$
18,727
$
—
46
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks, including interest rate risk and foreign currency risk. The adverse effects of potential changes
in these market risks are discussed below. The following discussion does not consider the effects of the reduced level of overall
economic activity that could exist following such changes. Further, in the event of changes of such magnitude, we would likely
take actions to mitigate our exposure to such changes.
Interest Rate Risk
Our earnings are exposed to changes in short-term interest rates because of the variable interest rates on our debt. However, we
have entered into interest rate swap contracts to reduce our exposure to market fluctuations. For information about our debt
arrangements and interest rate swaps, see Note 5 of “Notes to Consolidated Financial Statements,” included in Item 8 of this
Form 10-K.
In 2024, there was no interest rate risk related to the notional amounts under our interest rate swap contracts. The portions of
our outstanding balances under the Credit Facility, Term Facility and the Receivables Facility that were not covered by our
interest rate swap contracts were subject to variable interest rates. To calculate the potential impact in 2024 related to interest
rate risk, we performed a sensitivity analysis assuming that we borrowed the monthly maximum available amount under the
Credit Facility, the maximum amount available under the Receivables Facility and the amount outstanding under our Term
Facility. In this analysis, we assumed that the variable interest rates for the Credit Facility and the Receivables Facility
increased by 1.0%. Based on this calculation, our pretax income would have decreased by approximately $13.5 million and
earnings per share would have decreased by approximately $0.26 per diluted share (based on the number of weighted average
diluted shares outstanding for the year ended December 31, 2024). The maximum amount available under the Credit Facility is
$1.3 billion and the maximum amount available under the Receivables Facility is $375.0 million.
Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. In this
case, we would still be obligated to pay the variable interest payments underlying our debt agreements. Additionally, failure of
our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements
if we continue to be in a net pay position.
Currency Risk
Changes in the exchange rates for the functional currencies of our international subsidiaries, as shown in the table below, may
positively or negatively impact our sales, operating expenses and earnings. Historically, we have not hedged our currency
exposure and fluctuations in exchange rates have not materially affected our operating results. While our international
operations, including Canada and Mexico, accounted for only 7% of total net sales in 2024, our exposure to currency rate
fluctuations could be material in 2025 and future years to the extent that either currency rate changes are significant or that our
international operations comprise a larger percentage of our consolidated results.
Functional Currencies
Canada
Canadian Dollar
United Kingdom
British Pound
Belgium
Euro
Croatia
Euro
France
Euro
Germany
Euro
Italy
Euro
Portugal
Euro
Spain
Euro
Mexico
Mexican Peso
Australia
Australian Dollar
47
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
49
Consolidated Statements of Income
51
Consolidated Statements of Comprehensive Income
52
Consolidated Balance Sheets
53
Consolidated Statements of Cash Flows
54
Consolidated Statements of Changes in Stockholders’ Equity
55
Notes to Consolidated Financial Statements
56
48
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Pool Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Pool Corporation (the Company) as of December 31, 2024
and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash
flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects,
the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting
principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 27, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the account or disclosure to which it relates.
49
Valuation of Goodwill
Description of
the Matter
At December 31, 2024, the Company’s goodwill was $698.9 million, including $401.6
million of goodwill relating to one reporting unit. As discussed in Note 3 of the
consolidated financial statements, goodwill is tested for impairment at least annually at the
reporting unit level. The Company’s goodwill is assigned to reporting units as of the
acquisition date.
Auditing management’s annual goodwill impairment test for this reporting unit was
complex and highly judgmental due to the estimation required to determine the fair value of
the reporting unit. In particular, the fair value estimate is sensitive to certain assumptions,
such as changes in the weighted average cost of capital, revenue growth rate, operating
margin, and terminal growth rate which are affected by expectations about future market or
economic conditions.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
controls over the Company’s goodwill impairment review process, including controls over
management’s review of the significant assumptions described above.
To test the estimated fair value of the Company’s largest reporting unit, we performed audit
procedures that included, among others, assessing methodologies and testing the significant
assumptions discussed above and the underlying data used by the Company in its analysis. We
compared the significant assumptions used by management to current industry and economic
trends and other relevant factors, such as historical results. We assessed the historical accuracy
of management’s estimates and performed sensitivity analyses of significant assumptions to
evaluate the changes in the fair value of the reporting unit that would result from changes in
the assumptions. We also involved a specialist to assist in our evaluation of the valuation
methodology applied by the Company and certain significant assumptions used in estimating
the fair value of the reporting unit. In addition, we reviewed the comparison of the
Company’s fair value of its largest reporting unit and the fair value of all other reporting units
to the Company’s market capitalization.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1994.
New Orleans, Louisiana
February 27, 2025
50
POOL CORPORATION
Consolidated Statements of Income
(In thousands, except per share data)
Year Ended December 31,
2024
2023
2022
Net sales
$ 5,310,953
$ 5,541,595
$ 6,179,727
Cost of sales
3,735,606
3,881,551
4,246,315
Gross profit
1,575,347
1,660,044
1,933,412
Selling and administrative expenses
958,143
913,477
907,629
Operating income
617,204
746,567
1,025,783
Interest and other non-operating expenses, net
50,250
58,431
40,911
Income before income taxes and equity in earnings
566,954
688,136
984,872
Provision for income taxes
132,836
165,084
236,763
Equity in earnings of unconsolidated investments, net
207
177
353
Net income
$
434,325
$
523,229
$
748,462
Earnings per share attributable to common stockholders:
Basic
$
11.37
$
13.45
$
18.89
Diluted
$
11.30
$
13.35
$
18.70
Weighted average common shares outstanding:
Basic
38,007
38,704
39,409
Diluted
38,228
38,997
39,806
Cash dividends declared per common share
$
4.70
$
4.30
$
3.80
The accompanying Notes are an integral part of these Consolidated Financial Statements.
51
POOL CORPORATION
Consolidated Statements of Comprehensive Income
(In thousands)
Year Ended December 31,
2024
2023
2022
Net income
$
434,325
$
523,229
$
748,462
Other comprehensive (loss) income:
Foreign currency translation adjustments
(16,389)
6,909
(10,028)
Unrealized (losses) gains on interest rate swaps,
net of the change in taxes of $1,285, $2,074 and $(7,802)
(3,857)
(6,222)
23,407
Total other comprehensive (loss) income
(20,246)
687
13,379
Comprehensive income
$
414,079
$
523,916
$
761,841
The accompanying Notes are an integral part of the Consolidated Financial Statements.
52
POOL CORPORATION
Consolidated Balance Sheets
(In thousands, except share data)
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
77,862
$
66,540
Receivables, net
115,835
145,723
Receivables pledged under receivables facility
199,026
197,187
Product inventories, net
1,289,300
1,365,466
Prepaid expenses and other current assets
47,091
40,444
Total current assets
1,729,114
1,815,360
Property and equipment, net
251,324
223,929
Goodwill
698,910
700,078
Other intangible assets, net
290,732
298,282
Equity interest investments
1,439
1,305
Operating lease assets
314,853
305,688
Other assets
81,812
83,426
Total assets
$
3,368,184
$
3,428,068
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
525,235
$
508,672
Accrued expenses and other current liabilities
171,194
134,676
Short-term borrowings and current portion of long-term debt
49,473
38,203
Current operating lease liabilities
98,284
89,215
Total current liabilities
844,186
770,766
Deferred income taxes
81,408
67,421
Long-term debt, net
900,883
1,015,117
Other long-term liabilities
44,959
40,028
Non-current operating lease liabilities
223,283
221,949
Total liabilities
2,094,719
2,115,281
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized;
37,691,942 shares issued and outstanding at December 31, 2024 and
38,354,829 shares issued and outstanding at December 31, 2023
38
38
Additional paid-in capital
638,615
606,177
Retained earnings
648,476
699,990
Accumulated other comprehensive (loss) income
(13,664)
6,582
Total stockholders’ equity
1,273,465
1,312,787
Total liabilities and stockholders’ equity
$
3,368,184
$
3,428,068
The accompanying Notes are an integral part of these Consolidated Financial Statements.
53
POOL CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
Year Ended December 31,
2024
2023
2022
Operating activities
Net income
$
434,325
$
523,229
$
748,462
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
36,784
31,585
30,381
Amortization
8,697
8,555
8,644
Share-based compensation
19,248
19,582
14,879
(Benefit) provision for doubtful accounts receivable, net of write-offs
(3,122)
2,197
3,580
Provision for inventory obsolescence, net of write-offs
3,048
1,930
5,869
Provision for deferred income taxes
15,739
10,359
15,169
Gains on sales of property and equipment
(1,645)
(317)
(527)
Equity in earnings of unconsolidated investments, net
(207)
(177)
(353)
Net losses (gains) on foreign currency transactions
218
(813)
48
Goodwill impairment
—
550
605
Other
(245)
200
472
Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables
29,146
10,108
19,685
Product inventories
66,201
231,240
(263,567)
Prepaid expenses and other assets
75,122
57,840
(52,815)
Accounts payable
14,429
96,128
7,597
Accrued expenses and other liabilities
(38,552)
(103,967)
(53,275)
Net cash provided by operating activities
659,186
888,229
484,854
Investing activities
Acquisition of businesses, net of cash acquired
(4,692)
(11,533)
(9,264)
Purchases of property and equipment, net of sale proceeds
(59,476)
(60,096)
(43,619)
Other investments, net
(2,001)
32
2,013
Net cash used in investing activities
(66,169)
(71,597)
(50,870)
Financing activities
Proceeds from revolving line of credit
1,517,800
1,548,618
1,917,173
Payments on revolving line of credit
(1,575,700)
(1,815,829)
(1,970,388)
Proceeds from term loan under credit facility
—
—
250,000
Payments on term loan under credit facility
(25,000)
(12,500)
—
Proceeds from asset-backed financing
727,000
552,500
220,000
Payments on asset-backed financing
(744,600)
(560,300)
(205,500)
Payments on term facility
—
(47,313)
(9,250)
Proceeds from short-term borrowings and current portion of long-term debt
8,873
19,998
28,445
Payments on short-term borrowings and current portion of long-term debt
(10,103)
(19,338)
(27,675)
Payments of deferred financing costs
(2,077)
(52)
(170)
Payments of deferred and contingent acquisition consideration
—
(551)
(1,374)
Proceeds from stock issued under share-based compensation plans
13,190
10,455
8,934
Payments of cash dividends
(179,633)
(167,461)
(150,624)
Repurchases of common stock and payments of excise tax
(306,300)
(306,359)
(471,229)
Net cash used in financing activities
(576,550)
(798,132)
(411,658)
Effect of exchange rate changes on cash and cash equivalents
(5,145)
2,449
(1,056)
Change in cash and cash equivalents
11,322
20,949
21,270
Cash and cash equivalents at beginning of year
66,540
45,591
24,321
Cash and cash equivalents at end of year
$
77,862
$
66,540
$
45,591
The accompanying Notes are an integral part of these Consolidated Financial Statements.
54
POOL CORPORATION
Consolidated Statements of Changes in Stockholders’ Equity
(In thousands)
Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Total
Shares
Amount
Balance at December 31, 2021
40,193 $
40 $
551,963 $
526,874 $
(7,484) $
1,071,393
Net income
—
—
—
748,462
—
748,462
Foreign currency translation
—
—
—
—
(10,028)
(10,028)
Interest rate swaps, net of the change
in taxes of $(7,802)
—
—
—
—
23,407
23,407
Repurchases of common stock, net of
retirements
(1,234)
(1)
—
(471,228)
—
(471,229)
Share-based compensation
—
—
14,879
—
—
14,879
Issuance of stock under share-based
compensation plans
110
—
8,934
—
—
8,934
Declaration of cash dividends
—
—
—
(150,624)
—
(150,624)
Balance at December 31, 2022
39,069
39
575,776
653,484
5,895
1,235,194
Net income
—
—
—
523,229
—
523,229
Foreign currency translation
—
—
—
—
6,909
6,909
Interest rate swaps, net of the change
in taxes of $2,074
—
—
—
—
(6,222)
(6,222)
Repurchases of common stock, net of
retirements
(862)
(1)
—
(309,262)
—
(309,263)
Share-based compensation
—
—
19,582
—
—
19,582
Issuance of stock under share-based
compensation plans
148
—
10,819
—
—
10,819
Declaration of cash dividends
—
—
—
(167,461)
—
(167,461)
Balance at December 31, 2023
38,355
38
606,177
699,990
6,582
1,312,787
Net income
—
—
—
434,325
—
434,325
Foreign currency translation
—
—
—
—
(16,389)
(16,389)
Interest rate swaps, net of the change
in taxes of $1,285
—
—
—
—
(3,857)
(3,857)
Repurchases of common stock, net of
retirements
(843)
—
—
(306,206)
—
(306,206)
Share-based compensation
—
—
19,248
—
—
19,248
Issuance of stock under share-based
compensation plans
180
—
13,190
—
—
13,190
Declaration of cash dividends
—
—
—
(179,633)
—
(179,633)
Balance at December 31, 2024
37,692 $
38 $
638,615 $
648,476 $
(13,664) $
1,273,465
The accompanying Notes are an integral part of these Consolidated Financial Statements.
55
POOL CORPORATION
Notes to Consolidated Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies
Description of Business
As of December 31, 2024, Pool Corporation and our subsidiaries (the Company, which may also be referred to as we, us or our)
operated 448 sales centers in North America, Europe and Australia from which we sell swimming pool supplies, equipment and
related leisure products, irrigation and landscape maintenance products and hardscape, tile and stone products to pool builders,
retail stores, service companies, landscape contractors and others.
We distribute products through five networks:
SCP Distributors (SCP), Superior Pool Products (Superior), Horizon Distributors (Horizon), National Pool Tile (NPT) and Sun
Wholesale Supply (Sun Wholesale).
Basis of Presentation and Principles of Consolidation
We prepared the Consolidated Financial Statements following U.S. generally accepted accounting principles (GAAP) and the
requirements of the Securities and Exchange Commission (SEC). The financial statements include all normal and recurring
adjustments that are necessary for a fair presentation of our financial position and operating results. The Consolidated Financial
Statements include the accounts of Pool Corporation and our subsidiaries. All of our subsidiaries are wholly owned. All
significant intercompany accounts and intercompany transactions have been eliminated.
Use of Estimates
To prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in
our financial statements and accompanying notes. Our most significant estimates relate to the allowance for doubtful accounts,
inventory obsolescence reserves, vendor programs, income taxes, performance-based compensation accruals and goodwill
impairment evaluations. We continually review our estimates and make adjustments as necessary, but actual results could be
significantly different from what we expected when we made these estimates.
Newly Adopted Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07,
Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which intends to improve reportable
segment disclosures by requiring enhanced disclosures about significant segment expenses, enhance interim disclosure
requirements, refine situations in which an entity can disclose multiple segment measures of profit or loss and provide advanced
segment disclosure requirements for entities with a single reportable segment, as well as other disclosure requirements. We
adopted ASU 2023-07 for the year ended December 31, 2024, and have applied the guidance retrospectively for all periods
presented within the notes to the consolidated financial statements in this Form 10-K. The adoption of this ASU only impacted
our disclosures. For additional information regarding segment information, see Note 12.
Seasonality and Weather
Our business is seasonal, and weather is one of the principal external factors affecting our business. In general, sales and net
income are highest during the second and third quarters, which represent the peak months of swimming pool use, pool and
irrigation installation and remodeling and repair activities. Sales are lower during the first and fourth quarters.
Revenue Recognition
We recognize a sale when a customer obtains control of the product, and we record the amount that reflects the consideration
we expect to receive in exchange for such product. We recognize a sale when a customer picks up product at any sales center,
when we deliver product to their premises or job sites via our trucks or when we present the product to a third-party carrier. For
bill and hold sales, we determine when the customer obtains control of the product on a case-by-case basis to determine the
amount of revenue to recognize each period.
We consider our distribution of products to represent one reportable revenue stream. Our products are similar in nature, and our
revenue recognition policy is the same across our distribution networks. Our customers share similar characteristics and
generally purchase products across all categories. We recognize revenue when our customers take control of our products. We
include shipping and handling fees billed to customers as freight out income within net sales.
56
We measure revenue as the amount of consideration we expect to receive in exchange for transferring our products.
Consideration may vary due to volume incentives and expected customer returns. We offer volume incentives to some of our
customers and account for these incentives as a reduction of sales. We estimate the amount of volume incentives earned based
on our estimate of cumulative sales for the fiscal year relative to our customers’ progress toward achieving minimum purchase
requirements. We record customer returns, including those associated with customer early buy programs, as a reduction of
sales. Based on available information related to our customers’ returns, we record an allowance for estimated returns, which
historically has not been material. We regularly review our marketing programs, coupons and customary business practices to
determine if any variable consideration exists. Other items that we record as reductions to sales include cash discounts, pricing
adjustments and credit card fees related to customer payments.
The majority of our sales transactions do not contain additional performance obligations after delivery; therefore, we do not
have multiple performance obligations for which to allocate the transaction price. We recognize shipping and handling costs
associated with outbound freight in Selling and administrative expenses.
We report sales net of tax amounts that we collect from our customers and remit to governmental authorities. These tax
amounts may include, but are not limited to, sales, use, value-added and some excise taxes.
Vendor Programs
Many of our arrangements with our vendors provide for us to receive specified amounts of consideration when we achieve any
of a number of measures. These measures are generally related to the volume level of purchases from our vendors, or our net
cost of products sold, and may include negotiated pricing arrangements. We account for vendor programs as a reduction of the
prices of the vendors’ products and as a reduction of inventory until we sell the products, at which time such considerations are
recognized as a reduction of Cost of sales on our Consolidated Statements of Income.
Throughout the year, we estimate the amount earned based on our expectation of total purchases for the fiscal year relative to
the purchase levels that mark our progress toward earning each program. We accrue vendor benefits on a monthly basis using
these estimates, provided that we determine they are probable and reasonably estimable. We continually revise these estimates
to reflect actual credits earned based on actual purchase levels and trends related to sales and purchasing mix. When we make
adjustments to our estimates, we determine whether any portion of the adjustment impacts the amount of vendor credits that are
deferred in inventory. We recognize changes in our estimates as a cumulative catch-up adjustment to the amounts recognized
to date in our Consolidated Financial Statements.
Shipping and Handling Costs
We record shipping and handling costs associated with inbound freight as cost of sales. The table below presents shipping and
handling costs associated with outbound freight, which we include in Selling and administrative expenses (in thousands):
2024
2023
2022
$
90,268
$
84,932
$
89,002
Share-Based Compensation
We record share-based compensation for stock options and other share-based awards based on the estimated fair value as
measured on the grant date. For stock option awards, we use a Black-Scholes model for estimating the grant date fair value.
For additional discussion of share-based compensation, see Note 6.
Advertising Costs
We expense advertising costs when incurred.
The table below presents advertising expense for the past three years
(in thousands):
2024
2023
2022
$
25,209
$
28,532
$
28,778
57
Income Taxes
We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options
and the lapse of restrictions on restricted stock awards. To the extent realized tax deductions exceed the amount of previously
recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit. We record all excess tax
benefits as a component of income tax benefit or expense in the income statement in the period in which stock options are
exercised or restrictions on stock awards lapse.
We record Global Intangible Low Tax Income (GILTI) on foreign earnings as period costs if and when incurred, although we
have not realized any impacts since the U.S. first imposed taxes on GILTI in December 2017.
For additional information regarding income taxes, see Note 7.
Equity Method Investments
We account for our 50% investment in Northpark Corporate Center, LLC (NCC) using the equity method of accounting.
Accordingly, we report our share of income or loss based on our ownership interest in this investment.
Earnings Per Share
We calculate basic and diluted earnings per share using the two-class method. Earnings per share under the two-class method is
calculated using net income attributable to common stockholders, which is net income reduced by earnings allocated to
participating securities. Our participating securities include share-based payment awards that contain a non-forfeitable right to
receive dividends and are considered to participate in undistributed earnings with common shareholders.
Diluted EPS reflects the dilutive effects of potentially dilutive securities, which include in-the-money outstanding stock options
and shares to be purchased under our employee stock purchase plan. Using the treasury stock method, the effect of dilutive
securities includes these additional shares of common stock that would have been outstanding based on the assumption that
these potentially dilutive securities had been issued. For additional discussion of earnings per share, see Note 8.
Foreign Currency
The functional currency of each of our foreign subsidiaries is its applicable local currency. We translate our foreign subsidiary
financial statements into U.S. dollars based on published exchange rates. We include these translation adjustments as a
component of Accumulated other comprehensive (loss) income on the Consolidated Balance Sheets. We include realized
transaction gains and losses that arise from exchange rate fluctuations in Interest and other non-operating expenses, net on the
Consolidated Statements of Income. We realized a net foreign currency transaction loss of $0.2 million in 2024, gain of $0.8
million in 2023 and loss of $0.1 million in 2022.
Fair Value Measurements
Recurring Fair Value Measurements
Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our
interest rate swap contracts and our deferred compensation plan asset and liability. The three levels of the fair value hierarchy
under the accounting guidance are described below:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active
markets.
Level 2 Inputs to the valuation methodology include:
• quoted prices for similar assets or liabilities in active markets;
• quoted prices for identical or similar assets or liabilities in inactive markets;
• inputs other than quoted prices that are observable for the asset or liability; or
• inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
58
The table below presents our assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):
Input Level
Classification
Fair Value at December 31,
2024
2023
Assets
Unrealized gains on interest rate swaps
Level 2
Prepaid expenses and other current assets
$
734
$
—
Unrealized gains on interest rate swaps
Level 2
Other assets
19,876
25,752
Deferred compensation plan asset
Level 1
Other assets
18,018
15,347
Liabilities
Deferred compensation plan liability
Level 1
Other long-term liabilities
$
18,018
$
15,347
We use significant other observable market data or assumptions (Level 2 inputs) in determining the fair value of our interest
rate swaps and forward-starting interest rate swap contracts that we believe market participants would use in pricing similar
assets or liabilities, including assumptions about counterparty risk. Our fair value estimates reflect an income approach based
on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves.
Our deferred compensation plan asset represents investments in securities (primarily mutual funds) traded in an active market
(Level 1 inputs) held for the benefit of certain employees as part our deferred compensation plan. We record an equal and
offsetting deferred compensation plan liability, which represents our obligation to participating employees. Changes in the fair
value of the plan asset and liability are reflected in Selling and administrative expenses in the Consolidated Statements of
Income. For additional discussion of our nonqualified deferred compensation plan, see Note 11.
The carrying values of cash, receivables, accounts payable and accrued liabilities approximate fair value due to the short
maturity of those instruments. The carrying value of long-term debt approximates fair value. Our determination of the
estimated fair value reflects a discounted cash flow model using our estimates, including assumptions related to borrowing rates
(Level 3 inputs).
Nonrecurring Fair Value Measurements
In addition to our assets and liabilities that we measure at fair value on a recurring basis, our assets and liabilities are also
subject to nonrecurring fair value measurements. Certain of our assets are recorded at fair value on a nonrecurring basis,
primarily assets acquired in a business combination or those subject to impairment charges. For additional discussion of
goodwill and intangible assets and impairment, see Note 3.
Derivatives and Hedging Activities
At inception, we formally designate and document our interest rate swap contracts that qualify for hedge accounting as cash
flow hedges of interest payments on variable rate borrowings. We formally assess, both at inception and at least quarterly,
whether the financial instruments used in hedging transactions are effective at offsetting changes in cash flows of the related
underlying exposure. To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, we record
the changes in the estimated fair value of our interest rate swap contracts to Accumulated other comprehensive (loss) income on
the Consolidated Balance Sheets.
Our interest rate swap contracts and forward-starting interest rate swap contracts are subject to master netting arrangements.
According to our accounting policy, we do not offset the fair values of assets with the fair values of liabilities related to these
contracts.
We recognize any differences between the variable interest rate in effect and the fixed interest rate per our swap contracts as an
adjustment to interest expense over the life of the swaps.
For our interest rate swap contracts currently in effect, a portion of the change in the estimated fair value between periods
relates to future interest expense. Recognition of the change in fair value between periods attributable to accrued interest is
reclassified from Accumulated other comprehensive (loss) income to Interest and other non-operating expenses, net on the
Consolidated Statements of Income. These amounts were not material in any period presented. For additional discussion of
our interest rate swaps, see Note 5.
59
Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash
equivalents.
Credit Risk and Allowance for Doubtful Accounts
We record trade receivables at the invoiced amounts less an allowance for doubtful accounts for estimated losses we may incur
if customers do not pay. We perform periodic credit evaluations of our customers, and we typically do not require collateral.
Consistent with industry practices, we generally require payment from our North American customers within 30 days, except
for sales under early buy programs for which we provide extended payment terms to qualified customers.
Management estimates future losses based on historical bad debts, customer receivable balances, age of customer receivable
balances, customers’ financial conditions and current and forecasted economic trends, including certain trends in the housing
market, the availability of consumer credit and general economic conditions (as commonly measured by Gross Domestic
Product or GDP). We monitor housing market trends through review of the House Price Index as published by the Federal
Housing Finance Agency, which measures the movement of single-family house prices. At the end of each quarter, we perform
a reserve analysis of all accounts with balances greater than $20,000 that are more than 60 days past due. During the year, we
write off account balances when we have exhausted reasonable collection efforts and determined that the likelihood of
collection is remote. These write-offs are charged against our allowance for doubtful accounts.
The following table summarizes the changes in our allowance for doubtful accounts for the past three years (in thousands):
2024
2023
2022
Balance at beginning of year
$
11,718
$
9,522
$
5,942
Bad debt expense
4,187
7,526
7,449
Write-offs, net of recoveries
(7,312)
(5,330)
(3,869)
Balance at end of year
$
8,593
$
11,718
$
9,522
Product Inventories and Reserve for Inventory Obsolescence
Product inventories consist primarily of goods we purchase from manufacturers to sell to our customers. We record inventory
at the lower of cost, using the moving average cost method, or net realizable value. We establish our reserve for inventory
obsolescence based on inventory with lower sales velocity and inventory with no sales for the past 12 months, which we believe
represent some exposure to inventory obsolescence. The reserve is intended to reflect the net realizable value of inventory that
we may not be able to sell at a profit.
In evaluating the adequacy of our reserve for inventory obsolescence, we consider a combination of factors including:
•
the level of inventory in relation to historical sales by product, including inventory usage based on product sales at
both the sales center and on a company-wide basis;
•
changes in customer preferences or regulatory requirements;
•
seasonal fluctuations in inventory levels;
•
geographic location; and
•
superseded products and new product offerings.
We periodically adjust our reserve for inventory obsolescence as changes occur in the above-identified factors.
The following table summarizes the changes in our reserve for inventory obsolescence for the past three years (in thousands):
2024
2023
2022
Balance at beginning of year
$
23,464
$
21,208
$
15,196
Provision for inventory write-downs
10,484
8,483
11,989
Deduction for inventory write-offs
(7,286)
(6,227)
(5,977)
Balance at end of year
$
26,662
$
23,464
$
21,208
60
Property and Equipment
Property and equipment are stated at cost. We depreciate property and equipment on a straight-line basis over the following
estimated useful lives:
Buildings
40 years
Leasehold improvements (1)
1 - 10 years
Autos and trucks
3 - 6 years
Machinery and equipment
3 - 15 years
Computer equipment
3 - 7 years
Furniture and fixtures
5 - 10 years
(1)
For substantial improvements made near the end of a lease term where we are reasonably certain the lease will be
renewed, we amortize the leasehold improvement over the remaining life of the lease including the expected renewal
period.
The table below presents depreciation expense for the past three years (in thousands):
2024
2023
2022
$
36,784
$
31,585
$
30,381
Acquisitions
We use the acquisition method of accounting and recognize assets acquired and liabilities assumed at fair value as of the
acquisition date. Any contingent assets acquired, and contingent liabilities assumed are also recognized at fair value if we can
reasonably estimate fair value during the measurement period (which cannot exceed one year from the acquisition date). We
re-measure any contingent liabilities at fair value in each subsequent reporting period. We expense all acquisition-related costs
as incurred, including any restructuring costs associated with a business combination.
Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.
Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. Our fair
value estimates are based on available historical information and on expectations and assumptions about the future, considering
the perspective of market participants. Unanticipated market or macroeconomic events and circumstances may occur, which
could affect the underlying estimates and assumptions.
If our initial acquisition accounting is incomplete by the end of the reporting period in which a business combination occurs, we
report provisional amounts for incomplete items.
Once we obtain information required to finalize the accounting for
incomplete items, we adjust the provisional amounts recognized. We make adjustments to these provisional amounts during the
measurement period.
For all acquisitions, we include the results of operations in our Consolidated Financial Statements as of the acquisition date.
For additional discussion of acquisitions, see Note 2.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the amount we paid to acquire a company over the estimated fair value of tangible assets and
identifiable intangible assets acquired less liabilities assumed. We test goodwill and other indefinite-lived intangible assets for
impairment annually as of October 1st and at any other time when impairment indicators exist.
We have the option of first analyzing qualitative factors to determine whether it is more likely than not that the fair value of a
reporting unit is less than its carrying amount. When a qualitative goodwill test is performed, we analyze factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount as a basis for
determining whether it is necessary to perform a quantitative goodwill impairment test. The evaluation of qualitative factors
includes an assessment of relevant facts, events and circumstances including but not limited to: macroeconomic conditions,
industry and market conditions, and the current and forecasted financial performance of the reporting unit. In combination with
our qualitative test, we also estimate the fair value of our reporting units by projecting company-wide future cash flows using
management’s assumptions for sales growth rates, operating margins and discount rates. Estimated earnings multiples are then
used to estimate the fair value of each reporting unit.
61
To the extent our qualitative test indicates it is more likely than not that the fair value of a reporting unit is less than the carrying
amount or for a reporting unit where we only perform a quantitative test, we perform a quantitative test using a discounted cash
flow analysis at the reporting unit level to further evaluate our initial fair value estimate. If the carrying value of the reporting
unit exceeds the fair value, we record a goodwill impairment charge for the difference, up to the carrying value of the goodwill.
We recognize any impairment loss in operating income. The assumptions used in our impairment test are considered
unobservable inputs (Level 3 inputs as defined in the accounting guidance). Since we define an operating segment as an
individual sales center and we do not have operations below the sales center level, our reporting unit is an individual sales
center. For additional discussion of goodwill and other intangible assets, see Note 3.
Receivables Securitization Facility
Our accounts receivable securitization facility (the Receivables Facility) provides for the sale of certain of our receivables to a
wholly owned subsidiary (the Securitization Subsidiary). The Securitization Subsidiary transfers variable undivided percentage
interests in the receivables and related rights to certain third-party financial institutions in exchange for cash proceeds, limited
to the applicable funding capacities.
We account for the sale of the receivable interests as a secured borrowing on our Consolidated Balance Sheets. The receivables
subject to the agreement collateralize the cash proceeds received from the third-party financial institutions. We classify the
entire outstanding balance as Long-term debt on our Consolidated Balance Sheets as we intend and have the ability to refinance
the obligations on a long-term basis. We present the receivables that collateralize the cash proceeds separately as Receivables
pledged under receivables facility on our Consolidated Balance Sheets. For additional discussion of the Receivables Facility,
see Note 5.
Self-Insurance
We are self-insured for employee health benefits, workers’ compensation coverage, property and casualty, and automobile
insurance. To limit our exposure, we also maintain excess and aggregate liability coverage. We establish self-insurance
reserves based on estimates of claims incurred but not reported and information that we obtain from third-party service
providers regarding known claims. Our management reviews these reserves based on consideration of various factors,
including but not limited to the age of existing claims, estimated settlement amounts and other historical claims data.
Accumulated Other Comprehensive (Loss) Income
The table below presents the components of our Accumulated other comprehensive (loss) income balance (in thousands):
December 31,
2024
2023
Foreign currency translation adjustments
$
(29,088)
$
(12,699)
Unrealized gains on interest rate swaps, net of tax
15,424
19,281
Accumulated other comprehensive (loss) income
$
(13,664)
$
6,582
Retained Earnings
We account for the retirement of share repurchases as a decrease to our Retained earnings on our Consolidated Balance Sheets.
As of December 31, 2024, the retained earnings reflects cumulative net income, the cumulative impact of adjustments for
changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $2.7
billion and cumulative dividends of $1.3 billion.
62
Supplemental Cash Flow Information
The following table presents supplemental disclosures to the accompanying Consolidated Statements of Cash Flows (in
thousands):
Year Ended December 31,
2024
2023
2022
Cash paid during the year for:
Interest
$
51,046
$
58,131
$
39,759
Income taxes, net of refunds
42,990
153,157
314,714
In 2024, cash paid for income taxes was lower due to a $68.5 million deferral of our third and fourth quarter estimated tax
payments, subsequently paid in February 2025, as allowed for companies impacted by Hurricane Francine.
Recent Accounting Pronouncements Pending Adoption
The following table summarizes the remaining recent accounting pronouncements that we plan to adopt in future periods:
Standard
Description
Effective Date
Effect on Financial
Statements and Other
Significant Matters
ASU 2024-03, Income
Statement-Reporting
Comprehensive
Income-Expense
Disaggregation
Disclosures (Subtopic
220-40):
Disaggregation of
Income Statement
Expenses
In November 2024, the FASB issued ASU
2024-03, Income Statement-Reporting
Comprehensive Income-Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of
Income Statement Expenses, which introduces new
disclosure requirements for public business entities
to provide more detailed information about specific
natural expense categories within their income
statements.
For annual periods
beginning after
December 15, 2026,
and interim periods
within those annual
periods beginning after
December 15, 2027.
The ASU may be
adopted on a
prospective or
retrospective basis with
early adoption
permitted.
We are currently
evaluating the effect
this standard will have
on our disclosures.
ASU 2023-09, Income
Taxes (Topic 740):
Improvements to
Income Tax
Disclosures
In December 2023, the FASB issued ASU
2023-09, Income Taxes (Topic 740): Improvements
to Income Tax Disclosures, which will require
enhancements and further transparency for decision
usefulness to various income tax disclosures, most
notably the tax rate reconciliation and income taxes
paid.
Annual periods
beginning after
December 15, 2024 on
a prospective basis and
retrospective
application is
permitted. Early
adoption is also
permitted.
We expect that the
adoption of this
standard will expand
our disclosures and do
not expect the adoption
of this standard will
have a material impact
on our consolidated
financial statements.
ASU 2023-06,
Disclosure
Improvements:
Codification
Amendments in
Response to the SEC’s
Disclosure Update and
Simplification
Initiative
In October 2023, the FASB issued ASU 2023-06,
Disclosure Improvements: Codification
Amendments in Response to the SEC’s Disclosure
Update and Simplification Initiative, which will
impact various disclosure areas, including the
statement of cash flows, accounting changes and
error corrections, earnings per share, debt, equity,
derivatives, and transfers of financial assets.
The amendments in
ASU 2023-06 will be
effective on the date
the related disclosures
are removed from
Regulation S-X or
Regulation S-K by the
SEC and will no longer
be effective if the SEC
has not removed the
applicable disclosure
requirement by June
30, 2027. Early
adoption is prohibited.
We do not expect the
adoption of this
standard to have a
material impact on our
consolidated financial
statements since we are
already subject to the
requirements under
Regulation S-X and
Regulation S-K.
63
Note 2 - Acquisitions
2024 Acquisitions
In May 2024, we acquired the distribution assets of Swimline Distributors, Inc., a wholesale distributor of swimming pool
products and supplies, adding one location in Georgia.
In January 2024, we acquired the distribution assets of Shoreline Pool Distribution, a wholesale distributor of swimming pool
products and supplies, adding one location in Mississippi.
2023 Acquisitions
In December 2023, we acquired the distribution assets of A.C. Solucoes para Piscinas, Lda., a wholesale distributor of
swimming pool equipment, chemicals and supplies, adding one location in Braga, Portugal.
In June 2023, we acquired the distribution assets of Pioneer Pool Products, Inc., a wholesale distributor of swimming pool
equipment, chemicals and supplies, adding one location in Alabama.
In May 2023, we acquired the distribution assets of Recreation Supply Company, a wholesale distributor of commercial
swimming pool products, adding one location in North Dakota.
In March 2023, we acquired the distribution assets of Pro-Water Irrigation & Landscape Supply, Inc., a wholesale distributor of
irrigation and landscape supply products, adding two locations in Arizona.
2022 Acquisitions
In April 2022, we acquired the distribution assets of Tri-State Pool Distributors, a wholesale distributor of swimming pool
equipment, chemicals and supplies, adding one location in West Virginia.
We have completed our acquisition accounting for all acquisitions discussed above, subject to adjustments for standard
holdback provisions per the terms of the purchase agreements, which are not material.
64
Note 3 - Goodwill and Other Intangible Assets
The table below presents changes in the carrying amount of goodwill and our accumulated impairment losses (in thousands):
Goodwill (gross) at December 31, 2022
$
705,987
Acquired goodwill
8,137
Foreign currency translation and other adjustments
498
Goodwill (gross) at December 31, 2023
714,622
Accumulated impairment losses at December 31, 2022
(13,994)
Goodwill impairment
(550)
Accumulated impairment losses at December 31, 2023
(14,544)
Goodwill (net) at December 31, 2023
$
700,078
Goodwill (gross) at December 31, 2023
$
714,622
Acquired goodwill
2,170
Foreign currency translation and other adjustments (1)
(3,338)
Goodwill (gross) at December 31, 2024
713,454
Accumulated impairment losses at December 31, 2023
(14,544)
Goodwill impairment
—
Accumulated impairment losses at December 31, 2024
(14,544)
Goodwill (net) at December 31, 2024
$
698,910
(1) Includes a $2.0 million reduction of goodwill for our Porpoise Pool & Patio reporting unit for the sale of two Pinch A
Penny retail stores in 2024.
The determination of our reporting units’ goodwill and intangibles fair values includes numerous assumptions that are subject
to various risks and uncertainties when performing a quantitative test. The principal assumptions, all of which are considered
Level 3 inputs, used in our cash flow analyses consisted of changes in market conditions, forecasted future operating results
(including sales growth rates and operating margins) and discount rates (including our weighted-average cost of capital).
In October 2024, we performed our annual goodwill impairment test and did not record any goodwill impairment at the
reporting unit level. As of October 1, 2024, we had 251 reporting units with allocated goodwill balances. Our most significant
goodwill balance of $401.6 million was related to our Porpoise Pool & Patio reporting unit and the next largest goodwill
balance for a reporting unit was $12.1 million. The average goodwill balance per reporting unit was $2.8 million.
In September 2023, we recorded goodwill impairment of $0.6 million, primarily related to one of our Horizon reporting units in
Texas that we previously identified as being most at risk of goodwill impairment. We had been monitoring this location’s
results, which came in below expectations at the end of the 2023 season. We performed an interim goodwill impairment
analysis, which included a discounted cash flow analysis, and determined that the estimated fair value of the reporting unit no
longer exceeded its carrying value. In October 2023, we performed our annual goodwill impairment test and did not record any
additional goodwill impairment at the reporting unit level.
We record goodwill and intangibles impairment in Selling and administrative expenses on our Consolidated Statements of
Income.
65
Other intangible assets consisted of the following (in thousands):
December 31,
Weighted
Average
Useful
Life
2024
2023
Intangibles
Gross
Accumulated
Amortization
Intangibles
Net
Intangibles
Gross
Accumulated
Amortization
Intangibles
Net
Horizon
tradename
$
8,400
$
—
$
8,400
$
8,400
$
—
$
8,400
Indefinite
Pinch A
Penny brand
name
169,000
—
169,000
169,000
—
169,000
Indefinite
National
Pool Tile
(NPT)
tradename
1,500
(1,262)
238
1,500
(1,187)
313
20
Non-
compete
agreements
6,419
(4,394)
2,025
6,206
(3,258)
2,948
4.65
Customer
relationships
109,000
(16,573)
92,427
109,000
(11,125)
97,875
20
Franchise
agreements
22,000
(3,358)
18,642
22,000
(2,254)
19,746
20
Total other
intangibles
$
316,319
$
(25,587) $
290,732
$
316,106
$
(17,824)
$
298,282
The Horizon tradename and Pinch A Penny brand name each have an indefinite useful life and are not subject to
amortization. We evaluate the useful life of these intangible assets and test for impairment annually. The NPT tradename, our
non-compete agreements, customer relationships and franchise agreements have finite useful lives, and we amortize the
estimated fair value of these agreements using the straight-line method over their respective useful lives. We have not
identified any indicators of impairment related to these assets. The useful lives for our non-compete agreements are based on
their contractual terms.
Other intangible amortization expense was $7.8 million in 2024, $7.8 million in 2023 and $7.8 million in 2022.
The table below presents estimated amortization expense for other intangible assets for the next five years (in thousands):
2025
$
7,724
2026
7,203
2027
6,850
2028
6,678
2029
6,567
66
Note 4 - Details of Certain Balance Sheet Accounts
The table below presents additional information regarding certain balance sheet accounts (in thousands):
December 31,
2024
2023
Receivables, net:
Trade accounts
$
31,472
$
60,966
Vendor programs
90,199
92,072
Other, net
2,757
4,403
Total receivables
124,428
157,441
Less: Allowance for doubtful accounts
(8,593)
(11,718)
Receivables, net
$
115,835
$
145,723
Prepaid expenses and other current assets:
Prepaid expenses
$
42,904
$
31,175
Other current assets
4,187
9,269
Prepaid expenses and other current assets
$
47,091
$
40,444
Property and equipment, net:
Land
$
24,474
$
24,077
Buildings
58,744
56,181
Leasehold improvements
90,337
81,114
Autos and trucks
144,556
127,381
Machinery and equipment
126,606
109,532
Computer equipment
36,707
34,192
Furniture and fixtures
10,042
9,935
Fixed assets in progress
15,012
14,653
Total property and equipment
506,478
457,065
Less: Accumulated depreciation
(255,154)
(233,136)
Property and equipment, net
$
251,324
$
223,929
Accrued expenses and other current liabilities:
Salaries and payroll deductions
$
18,956
$
23,378
Performance-based compensation
18,312
30,346
Taxes payable
87,848
21,209
Other current liabilities
46,078
59,743
Accrued expenses and other current liabilities
$
171,194
$
134,676
67
Note 5 - Debt
The table below presents the components of our debt (in thousands):
December 31,
2024
2023
Variable rate debt
Current portion of long-term debt:
Australian credit facility
$
11,973
$
13,203
Current portion of term loans under credit facility
37,500
25,000
Short-term borrowings and current portion of long-term debt
49,473
38,203
Long-term portion:
Revolving credit facility
194,600
252,500
Term loans under credit facility
425,000
462,500
Term facility
109,937
109,937
Receivables securitization facility
174,100
191,700
Less: financing costs, net
2,754
1,520
Long-term debt, net
900,883
1,015,117
Total debt
$
950,356
$ 1,053,320
Credit Facility
On September 30, 2024, we entered into the Third Amended and Restated Credit Agreement (the “Amended Agreement”) by
and among Pool Corporation, as U.S. Borrower, SCP Distributors Canada Inc., as Canadian Borrower, SCP International, Inc.,
as Euro Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and certain other lenders party thereto.
The Amended Agreement amends and restates the terms of the Company’s predecessor revolving credit facility principally by
increasing its borrowing capacity from $750.0 million to $800.0 million and extending its maturity date from September 25,
2026 to September 30, 2029.
Our Credit Facility provides for $1.3 billion in borrowing capacity, consisting of a $800.0 million revolving credit facility and a
$500.0 million term loan facility. The Credit Facility also includes sublimits for the issuance of swingline loans and standby
letters of credit.
Our term loans under the credit facility require quarterly amortization payments beginning in September 2023 aggregating to
20% of the original principal amount of the loan during the third, fourth and fifth years of the loan, with all remaining principal
due on September 25, 2026. All other terms of these term loans are substantially similar to those governing revolving credit
loans under the Credit Agreement.
All obligations under the Credit Agreement are guaranteed on an unsecured basis by substantially all of our existing and future
domestic subsidiaries. The Credit Agreement also contains various customary affirmative and negative covenants and events of
default. The occurrence of any of these events of default would permit the lenders to, among other things, require immediate
payment of all amounts outstanding under the Credit Agreement.
At December 31, 2024, there was $657.1 million outstanding, including a $462.5 million term loan, $15.1 million in standby
letter of credits outstanding, and $590.3 million available for borrowing under the Credit Facility. The weighted average
effective interest rate for the Credit Facility as of December 31, 2024 was approximately 4.0%, excluding commitment fees and
including the impact of our interest rate swaps.
Revolving and term borrowings under the Credit Facility bear interest, at our option, at either of the following and, in each case,
plus an applicable margin:
a.
a base rate, which is the highest of (i) the Agent’s prime rate, (ii) the Federal Funds Rate plus 0.500% and (iii)
Adjusted Term SOFR (defined below) for a one-month tenor in effect on such day plus 1.000%; or
b.
Adjusted Term SOFR, the rate per annum equal to Term SOFR for such calculation plus the Term SOFR adjustment
of 0.10%.
68
Borrowings by the Canadian Borrower bear interest, at the Canadian Borrower’s option, at either of the following and, in each
case, plus an applicable margin:
a.
a base rate, which is the greatest of (i) the Canadian Reference Bank prime rate and (ii) the Canadian Dealer Offered
Rate (CDOR) plus 1.000%; or
b.
CDOR.
Borrowings by the Euro Borrower bear interest at the Adjusted Eurocurrency rate plus an applicable margin.
Borrowings under any swingline loans under the Credit Facility bear interest, at our option, at either of the following and, in
each case, plus an applicable margin:
a.
the Term SOFR Swingline Rate, the greater of (i) Adjusted Term SOFR for a period equal to one month (commencing
on the date of determination of such interest rate) and (ii) a floor rate specified in the Credit Agreement; or
b.
a base rate, which is the highest of (i) the Agent’s prime rate, (ii) the Federal Funds Rate plus 0.500% and (iii)
Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.000%.
The interest rate margins on the borrowings and letters of credit issued under the Credit Agreement are based on our leverage
ratio and will range from 0.000% to 0.425% on Base Rate, Canadian Base Rate and Base Rate swingline loans and from
0.910% to 1.425% on CDOR, Adjusted Term SOFR, Adjusted Eurocurrency rate and Term SOFR Swingline Rate loans (with
all such rates being calculated in accordance with the terms and by reference to the definitions specified in the Credit
Agreement). We are also required to pay an annual facility fee with respect to the lenders’ aggregate revolving credit
agreement, the amount of which is based on our leverage ratio.
Term Facility
On December 30, 2019, we along with certain of our subsidiaries entered into a $185.0 million term facility (the “Term
Facility”) with Bank of America, N.A. pursuant to a credit agreement subsequently amended on October 12, 2021, among us, as
Borrower and Bank of America, N.A., as the Lender. On June 30, 2023, we entered into the Second Amendment to Credit
Agreement (the “Term Facility Agreement”) among us, as Borrower, the Guarantors party thereto and Bank of America, N.A.
as Lender. The amendment updated the index used for the Base Rate from LIBOR to Term SOFR (with all such terms being
defined within the Term Facility Agreement). The Term Facility matures on December 30, 2026.
Under the Term Facility, we are required to make quarterly amortization payments in installments of 1.250% of the Term
Facility on the last business day of each quarter. We may prepay amounts outstanding under the Term Facility without penalty
other than interest breakage costs. In June 2023, we made a prepayment on the Term Facility of $45.0 million with $32.4
million applied against the remaining quarterly installments and the remainder applied against the amount due at maturity.
Our obligations under the Term Facility are guaranteed on an unsecured basis by substantially all of our existing and future
domestic subsidiaries. The Term Facility Agreement contains various customary affirmative and negative covenants and events
of default. The occurrence of any of these events of default would permit the lenders to, among other things, require immediate
payment of all amounts outstanding under the Term Facility Agreement.
At December 31, 2024, the Term Facility had an outstanding balance of $109.9 million at a weighted average effective interest
rate of 5.6%.
Borrowings under the Term Facility bear interest, at our option, at either of the following and, in each case, plus an applicable
margin:
a.
a base rate, which is the greatest of (i) the rate per annum equal to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of
New York on the business day next succeeding such day plus 0.50%, (ii) Bank of America’s “prime rate,” or (iii) the
Term SOFR Rate (defined below) plus 1.00%; or
b.
the Term SOFR Rate, which is the greater of (i) the rate per annum equal to the Term SOFR Screen Rate administered
by CME Group Benchmark Administration Limited or any successor administrator plus the SOFR adjustment of
0.10% or (ii) a floor rate specified in the Term Facility Agreement.
69
The interest rate margins on the borrowings under the Term Facility are based on our leverage ratio and will range from 0.000%
to 0.625% on Base Rate borrowings and 1.000% to 1.625% on Adjusted Term SOFR Rate borrowings (with all such rates being
calculated in accordance with the terms and by reference to the definitions specified in the Term Facility Agreement).
Receivables Securitization Facility
On October 31, 2024, our subsidiaries entered into the Joinder and Amendment No. 13 to the Receivables Purchase Agreement
by and among Superior Commerce LLC, as Seller, SCP Distributors LLC, as the Servicer, the purchasers from time to time
party thereto (the “Purchasers”), and Wells Fargo Bank, National Association, as Administrative Agent (as amended, the
“Amended Receivables Purchase Agreement”). The Amended Receivables Purchase Agreement amended our receivable
securitization facility principally to extend the facility termination date to October 30, 2026 and increase the maximum facility
limit to $375.0 million in the months of April through May. The funding capacity during the remaining months of year ranges
from $210.0 million to $350.0 million. Amounts outstanding under the Receivables Facility bear interest at Term SOFR plus
an applicable margin of 0.85%. We classify the entire outstanding balance as Long-term debt on our Consolidated Balance
Sheets as we intend and have the ability to refinance the obligations on a long-term basis.
The Receivables Facility provides for the sale of certain of our receivables to a wholly owned subsidiary (the “Securitization
Subsidiary”). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related
rights to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities.
Upon payment of the receivables by customers, rather than remitting to the financial institutions the amounts collected, we
retain such collections as proceeds for the sale of new receivables until payments become due to the financial institutions.
The Receivables Facility is subject to terms and conditions (including representations, covenants and conditions precedent)
customary for transactions of this type. Additionally, an amortization event will occur if we fail to meet certain covenants,
including maintaining a maximum average total leverage ratio (average total funded debt/EBITDA) of 3.25 to 1.00 and a
minimum fixed charge coverage ratio (EBITDAR/cash interest expense plus rental expense) of 2.25 to 1.00.
At December 31, 2024, there was $174.1 million outstanding under the Receivables Facility at a weighted average effective
interest rate of 5.3%, excluding commitment fees.
We also pay an unused fee on the excess of the facility limit over the average daily capital outstanding. The unused fee is
0.25% if utilization is less than 50% or 0.35% otherwise. We pay this fee monthly in arrears.
Australian Seasonal Credit Facility
In the second quarter of 2017, Pool Systems Pty. Ltd. (PSL) entered into a credit facility to fund expansion and supplement
working capital needs. The credit facility provides a borrowing capacity of AU$20.0 million.
Cash Pooling Arrangement
Certain of our foreign subsidiaries entered into a cash pooling arrangement with a financial institution for cash management
purposes. This arrangement allows the participating subsidiaries to withdraw cash from the financial institution to the extent
that aggregate cash deposits held by these subsidiaries are available at the financial institution. To the extent the aggregate of
the participating subsidiaries is in an overdraft position, such overdrafts are recorded as short-term borrowings under a
committed cash overdraft facility. These borrowings bear interest at a variable rate based on 3-month Euro Interbank Offered
Rate (EURIBOR), plus a fixed margin. Our borrowing capacity under this overdraft facility is €14.0 million.
Maturities of Long-Term Debt
The table below presents maturities of long-term debt, excluding unamortized deferred financing costs, for the next five years
(in thousands):
2025
$
49,473
2026
709,037
2027
—
2028
—
2029
194,600
70
Interest Rate Swaps
Our interest rate swaps in effect during the year were previously forward-starting and converted the variable interest rate to a
fixed interest rate on a portion of our variable rate borrowings. Interest expense related to the notional amounts under our swap
contracts was based on the fixed rates plus the applicable margin on our variable rate borrowings. Changes in the estimated fair
value of these interest rate swap contracts were recorded to Accumulated other comprehensive (loss) income on the
Consolidated Balance Sheets.
We currently have two interest rate swap contracts in place. The following table provides additional details related to these
swap contracts:
Derivative
Inception Date
Effective Date
Termination Date
Notional
Amount
(in millions)
Fixed
Interest
Rate
Interest rate swap 1
February 5, 2020
February 26, 2021
February 28, 2025
$150.0
1.3260%
Interest rate swap 2
March 9, 2020
September 29, 2022
February 26, 2027
$150.0
0.6690%
We have entered into an additional forward-starting interest rate swap contract to extend the hedged period for future interest
payments on a portion of our variable rate borrowings. The following table provides details related to our forward-starting
interest rate swap contract:
Derivative
Inception Date
Effective Date
Termination Date
Notional
Amount
(in millions)
Fixed
Interest
Rate
Forward-starting interest rate swap
March 9, 2020
February 28, 2025
February 26, 2027
$150.0
0.7630%
Two of our interest rate swap contracts terminated on September 29, 2022. The following table provides additional details
related to these former swap contracts:
Derivative
Inception Date
Effective Date
Termination Date
Notional
Amount
(in millions)
Fixed
Interest
Rate
Former interest rate swap 1
May 7, 2019
November 20, 2020
September 29, 2022
$75.0
2.0925%
Former interest rate swap 2
July 25, 2019
November 20, 2020
September 29, 2022
$75.0
1.5500%
The net difference between interest paid and interest received related to our swap agreements resulted in an interest benefit of
$12.7 million in 2024, $12.2 million in 2023 and $0.8 million in 2022.
Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. In this
case, we would still be obligated to pay the variable interest payments underlying our debt agreements. Additionally, failure of
our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements
if we continue to be in a net pay position.
Financial and Other Covenants
The Credit Facility and Term Facility limit the declaration and payment of dividends on our common stock to a manner
consistent with past practice, provided no default or event of default has occurred and is continuing, or would result from the
payment of dividends. We may declare and pay quarterly dividends so long as (i) the amount per share of such dividends is not
greater than the most recently publicly announced dividends per share and (ii) our Average Total Leverage Ratio is less than
3.25 to 1.00 both immediately before and after giving pro forma effect to such dividends. Under the Credit Facility and Term
Facility, we may repurchase shares of our common stock provided no default or event of default has occurred and is continuing,
or would result from the repurchase of shares, and our maximum average total leverage ratio (determined on a pro forma basis)
is less than 3.25 to 1.00.
Other covenants include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate,
and sell or transfer assets. Failure to comply with any of our financial covenants or any other terms of the Credit Facility and
the Term Facility could result in higher interest rates on our borrowings or the acceleration of the maturities of our outstanding
debt.
71
As of December 31, 2024, we were in compliance with all covenants and financial ratio requirements related to the
Credit Facility, the Term Facility and the Receivables Facility.
Deferred Financing Costs
We capitalize financing costs we incur related to implementing and amending our debt arrangements. We record these costs as
a reduction of Long-term debt, net on our Consolidated Balance Sheets and amortize them over the contractual life of the
related debt arrangements. The table below summarizes changes in deferred financing costs for the past two years (in
thousands):
December 31,
2024
2023
Deferred financing costs:
Balance at beginning of year
$
4,264
$
4,212
Financing costs deferred
2,077
52
Write-off of fully amortized deferred financing costs
(1,326)
—
Balance at end of year
5,015
4,264
Less: Accumulated amortization
(2,261)
(2,744)
Deferred financing costs, net of accumulated amortization
$
2,754
$
1,520
Note 6 - Share-Based Compensation
Share-Based Plans
Current Plan
In May 2007, our shareholders approved the 2007 Long-Term Incentive Plan (the 2007 LTIP), which authorizes the
Compensation Committee of our Board of Directors (the Board) to grant non-qualified stock options and restricted stock
awards to employees, directors, consultants or advisors.
In May 2016, our shareholders approved an amendment and
restatement of the 2007 Long-Term Incentive Plan (the Amended 2007 LTIP) and increased the number of shares that may be
issued to a total of 9,315,000 shares. As of December 31, 2024, we had 3,877,023 shares available for future issuance including
803,009 shares that may be issued as restricted stock.
Stock options granted under the Amended 2007 LTIP have an exercise price equal to our stock’s closing market price on the
grant date and expire ten years from the grant date. Restricted stock awards granted under the Amended 2007 LTIP are issued
at no cost to the grantee. Both stock options and restricted stock awards vest over time depending on an employee’s length of
service with the company. Share-based awards to our employees generally vest either five years from the grant date or on a
three/five year split vest schedule, where half of the awards vest three years from the grant date and the remainder of the awards
vest five years from the grant date. Share-based awards to our non-employee directors vest one year from the grant date.
PS-1 Awards
Restricted stock awards granted to our employees from 2016 to 2023 contain performance-based criteria in addition to the
service-based vesting criteria described above. The awards provide for a three-year performance period for the metric to be
achieved. If the performance metric fails to be met, it may be extended by one or two years; however, if it is not met by the end
of the extended performance period, then all shares of performance-based restricted stock will be immediately forfeited and
canceled. For each of the performance-based grants from 2016 through 2022, we achieved the performance condition in the
initial three-year performance period. For the performance-based grants in 2023, we have concluded that the performance
condition is probable to be attained in the initial three-year performance period.
PS-2 Awards
Certain restricted stock awards granted to our employees from 2023 and 2024 contain performance-based criteria in addition to
the service-based vesting criteria described above. The awards provide for a three-year performance period for the metric to be
achieved. If the performance condition is not met, all shares of the performance-based restricted stock will be immediately
forfeited and canceled. We have not recognized any expense for these performance-based grants in 2023 or 2024.
72
Stock Option Awards
The following table summarizes stock option activity under our share-based plans for the year ended December 31, 2024:
Shares
Weighted
Average
Exercise
Price
Weighted Average
Remaining
Contractual Term
(Years)
Aggregate
Intrinsic
Value
Balance at December 31, 2023
570,722
$
173.13
Granted
28,312
391.62
Less: Exercised
122,300
87.89
Forfeited
7,955
336.98
Balance at December 31, 2024
468,779
$
205.78
4.18
$ 67,440,657
Exercisable at December 31, 2024
297,612
$
127.83
2.39
$ 63,540,112
The following table presents information about stock options outstanding and exercisable at December 31, 2024:
Outstanding
Stock Options
Exercisable
Stock Options
Range of Exercise
Prices
Shares
Weighted Average
Remaining
Contractual Term
(Years)
Weighted
Average
Exercise
Price
Shares
Weighted
Average
Exercise
Price
$69.85 to $117.04
178,578
1.18
$
89.24
178,578
$
89.24
$117.05 to $328.39
165,584
4.57
205.67
116,858
181.84
$328.40 to $515.41
124,617
7.98
372.92
2,176
393.69
468,779
4.18
$
205.78
297,612
$
127.83
The following table summarizes the cash proceeds and tax benefits realized from the exercise of stock options:
Year Ended December 31,
(in thousands, except share amounts)
2024
2023
2022
Options exercised
122,300
90,439
71,737
Cash proceeds
$
10,749
$
8,368
$
6,247
Intrinsic value of options exercised
$
36,198
$
23,356
$
21,976
Tax benefits realized
$
9,049
$
5,839
$
5,494
We estimated the fair value of employee stock option awards at the grant date based on the assumptions summarized in the
following table:
Year Ended December 31,
(Weighted average)
2024
2023
2022
Expected volatility
32.0 %
31.0 %
28.9 %
Expected term
8.1 years
7.4 years
7.1 years
Risk-free interest rate
4.29 %
4.01 %
2.92 %
Expected dividend yield
1.15 %
1.15 %
1.15 %
Grant date fair value
$ 149.37
$ 130.74
$ 116.56
We calculated expected volatility over the expected term of the awards based on the historical volatility of our common
stock. We use weekly price observations for our historical volatility calculation because we believe this provides the most
appropriate measurement of volatility given the trading patterns of our common stock. We estimated the expected term based
on the vesting period of the awards and our historical exercise activity for awards with similar characteristics. The risk-free
interest rate is based on the U.S. Treasury zero-coupon issues with a remaining term approximating the expected term of the
option. We determined the expected dividend yield based on the dividends we anticipate paying over the expected term.
73
For purposes of recognizing share-based compensation expense, we ratably expense the estimated fair value of employee stock
options over the options’ requisite service period. The requisite service period for our share-based awards is either the vesting
period, or if shorter, the period from the grant date to the date the employee becomes eligible to retire under our share-based
award agreements. We recognize compensation cost for awards with graded vesting using the graded vesting recognition
method. We estimate a forfeiture rate to calculate our share-based compensation expense for our share-based awards based on
an analysis of actual forfeitures. We continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture
experience, analysis of employee turnover and other factors.
The following table presents the total share-based compensation expense for stock option awards for the past three years (in
thousands):
2024
2023
2022
Option grants share-based compensation expense
$
4,387
$
4,618
$
3,413
Option grants share-based compensation tax benefits
1,097
1,154
853
At December 31, 2024, the unamortized compensation expense related to stock option awards totaled $7.4
million. We anticipate recognizing this expense over a weighted average period of 2.6 years.
Restricted Stock Awards
The table below presents restricted stock award activity under our share-based plans for the year ended December 31, 2024:
Shares
Weighted
Average
Grant Date
Fair Value
Balance unvested at December 31, 2023
203,637
$
306.79
Granted (at market price) (1)
57,434
391.72
Less: Vested
49,512
209.14
Forfeited
7,106
369.83
Balance unvested at December 31, 2024
204,453
$
351.56
(1)
The majority of these shares contain performance-based vesting conditions.
At December 31, 2024, the unamortized compensation expense related to the restricted stock awards totaled
$22.0 million. We anticipate recognizing this expense over a weighted average period of 2.2 years.
The table below presents the total number of restricted stock awards that vested for the past three years and the related fair
value of those awards (in thousands, except share amounts):
2024
2023
2022
Restricted stock awards - shares vested
49,512
58,705
78,931
Fair value of restricted stock awards vested
$
19,241
$
20,906
$
37,258
The following table presents the total share-based compensation expense for restricted stock awards for the past three years
(in thousands):
2024
2023
2022
Restricted stock awards share-based compensation expense
$
14,436
$
14,487
$
11,024
Employee Stock Purchase Plan
We maintain the Pool Corporation Amended and Restated Employee Stock Purchase Plan (the ESPP), which was last approved
by the Board and our stockholders in 2016. Under the ESPP, employees who meet minimum age and length of service
requirements may purchase stock at 85% of the lower of:
a.
the closing price of our common stock at the end of a six month plan period ending either July 31 or January 31; or
b.
the average of the beginning and ending closing prices of our common stock for such six month period.
74
No more than 956,250 shares of our common stock may be issued under the ESPP. For the two six month offering periods in
each of the last three years, our employees purchased the following aggregate number of shares:
2024
2023
2022
7,707
7,640
7,658
The grant date fair value for the most recent ESPP purchase period ended July 31, 2024 was $56.11 per share. Share-based
compensation expense related to our ESPP was $0.4 million in 2024, $0.5 million in 2023 and $0.5 million in 2022.
Note 7 - Income Taxes
Income before income taxes and equity in earnings is attributable to the following jurisdictions (in thousands):
Year Ended December 31,
2024
2023
2022
United States
$
553,533
$
662,138
$
919,461
Foreign
13,421
25,998
65,411
Total
$
566,954
$
688,136
$
984,872
The provision for income taxes consisted of the following (in thousands):
Year Ended December 31,
2024
2023
2022
Current:
Federal
$
97,251
$
120,122
$
164,135
State and other
19,846
34,603
57,459
Total current provision for income taxes
117,097
154,725
221,594
Deferred:
Federal
9,199
9,929
13,592
State and other
6,540
430
1,577
Total deferred provision for income taxes
15,739
10,359
15,169
Provision for income taxes
$
132,836
$
165,084
$
236,763
A reconciliation of the U.S. federal statutory tax rate to our effective tax rate on Income before income taxes and equity in
earnings is as follows:
Year Ended December 31,
2024
2023
2022
Federal statutory rate
21.00 %
21.00 %
21.00 %
Change in valuation allowance
0.20
0.05
(0.02)
Stock-based compensation
(1.55)
(0.97)
(1.09)
Other, primarily state income tax rate
3.78
3.91
4.15
Total effective tax rate
23.43 %
23.99 %
24.04 %
In 2024, several countries in which we operate have adopted the Global Anti-Base Erosion Model Rules (Pillar Two), which
generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and
Development (OECD) Pillar Two Framework. The Pillar Two directive did not have a material effect on our financial
statements for the year ended December 31, 2024. We are continuing to evaluate the potential effect on future periods and will
monitor additional guidance as it is released.
We reduce federal and state income taxes payable by the tax benefits associated with the exercise of deductible nonqualified
stock options and the lapse of restrictions on deductible restricted stock awards. To the extent realized tax deductions exceed
the amount of previously recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit.
We record all excess tax benefits or deficiencies as income tax benefit or expense in the income statement. We recorded excess
tax benefits of $8.8 million to our income tax provision in 2024, $6.7 million in 2023 and $10.8 million in 2022.
75
The table below presents the components of our deferred tax assets and liabilities (in thousands):
December 31,
2024
2023
Deferred tax assets:
Product inventories
$
13,625
$
11,764
Trade discounts on purchases
1,044
—
Accrued expenses
824
4,724
Leases
74,108
73,874
Share-based compensation
10,844
9,977
Uncertain tax positions
4,133
3,753
Net operating losses
2,336
1,447
Other
4,843
4,716
Total non-current
111,757
110,255
Less: Valuation allowance
(2,255)
(1,133)
Component reclassified for net presentation
(108,583)
(107,733)
Total non-current, net
919
1,389
Total deferred tax assets
919
1,389
Deferred tax liabilities:
Trade discounts on purchases
—
2,112
Prepaid expenses
9,380
6,610
Leases
73,583
73,092
Intangible assets, primarily goodwill
73,334
60,902
Depreciation
28,541
26,000
Interest rate swaps
5,153
6,438
Total non-current
189,991
175,154
Component reclassified for net presentation
(108,583)
(107,733)
Total non-current, net
81,408
67,421
Total deferred tax liabilities
81,408
67,421
Net deferred tax liability
$
80,489
$
66,032
At December 31, 2024, certain of our international subsidiaries had tax loss carryforwards totaling approximately $7.9 million,
which expire in various years after 2025. Deferred tax assets related to the tax loss carryforwards of these international
subsidiaries were $2.3 million as of December 31, 2024 and $1.4 million as of December 31, 2023. We have recorded a
corresponding valuation allowance of $2.1 million and $1.0 million in the respective years.
As of December 31, 2024, United States income taxes were not provided on earnings or cash balances of our foreign
subsidiaries, outside of the provisions of the transition tax from U.S. tax reform enacted in December 2017. As we have
historically invested or expect to invest the undistributed earnings indefinitely to fund current cash flow needs in the countries
where held, additional income tax provisions may be required. Determining the amount of unrecognized deferred tax liability
on these undistributed earnings and cash balances is not practicable due to the complexity of tax laws and regulations and the
varying circumstances, tax treatments and timing of any future repatriation.
76
The following table summarizes the activity related to uncertain tax positions for the past three years (in thousands):
2024
2023
2022
Balance at beginning of year
$ 17,871
$ 15,489
$ 13,297
Increases for tax positions taken during a prior period
—
—
275
Increases for tax positions taken during the current period
4,517
4,457
5,264
Decreases resulting from the expiration of the statute of limitations
2,709
2,075
3,347
Balance at end of year
$ 19,679
$ 17,871
$ 15,489
The total amount of unrecognized tax benefits that, if recognized, would decrease the effective tax rate was $15.5 million at
December 31, 2024 and $14.1 million at December 31, 2023.
We record interest expense related to unrecognized tax benefits in Interest and other non-operating expenses, net, while we
record related penalties in Selling and administrative expenses on our Consolidated Statements of Income. For unrecognized
tax benefits, we had interest expense of $0.8 million in 2024 and $0.4 million in 2023 and interest income of $0.1 million in
2022. Accrued interest related to unrecognized tax benefits was approximately $2.7 million at December 31, 2024 and $1.9
million at December 31, 2023.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, we
are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before
2021.
77
Note 8 - Earnings Per Share
We calculate basic and diluted earnings per share using the two-class method. Earnings per share under the two-class method is
calculated using net income attributable to common stockholders, which is net income reduced by the earnings allocated to
participating securities. Our participating securities include share-based payment awards that contain a non-forfeitable right to
receive dividends and are considered to participate in undistributed earnings with common shareholders.
Participating
securities excluded from weighted average common shares outstanding were 206,000 for the year ended December 31, 2024,
207,000 for the year ended December 31, 2023 and 221,000 for the year ended December 31, 2022.
The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted
average shares outstanding (in thousands, except per share data):
Year Ended December 31,
2024
2023
2022
Net income
$
434,325
$
523,229
$
748,462
Amounts allocated to participating securities
(2,250)
(2,771)
(4,151)
Net income attributable to common stockholders
$
432,075
$
520,458
$
744,311
Weighted average common shares outstanding:
Basic
38,007
38,704
39,409
Effect of dilutive securities:
Stock options and employee stock purchase plan
221
293
397
Diluted
38,228
38,997
39,806
Earnings per share attributable to common stockholders:
Basic
$
11.37
$
13.45
$
18.89
Diluted
$
11.30
$
13.35
$
18.70
Anti-dilutive stock options excluded from diluted earnings per share
computations (1)
57
64
34
(1)
Since these options have exercise prices that are higher than the average market prices of our common stock, including
them in the calculation would have an anti-dilutive effect on earnings per share.
Note 9 - Commitments and Contingencies
Lease Commitments
We lease facilities for our corporate and administrative offices, sales centers and centralized shipping locations under operating
leases that expire in various years through 2036. Most of our leases contain five-year terms with renewal options that allow us
to extend the lease term beyond the initial period, subject to terms agreed upon at lease inception. Based on our leasing
practices and contract negotiations, we determined that we are not reasonably certain to exercise the renewal options and, as
such, we have not included optional renewal periods in our measurement of operating lease assets, liabilities and expected lease
terms. We exclude short-term leases from our Consolidated Balance Sheets and combine lease and non-lease components.
For leases with step rent provisions whereby the rental payments increase incrementally over the life of the lease, we recognize
expense on a straight-line basis determined by the total lease payments over the lease term. To the extent we determine that
future obligations related to real estate taxes, insurance and other lease components are variable, we exclude them from the
measurement of our operating lease assets and liabilities.
Some of our real estate agreements include rental payments adjusted periodically for inflation. Our lease agreements do not
contain any material residual value guarantees or material restrictive covenants.
78
The table below presents rent expense associated with facility and vehicle operating leases for the past three years (in
thousands):
Lease Cost
Classification
2024
2023
2022
Operating lease cost (1)
Selling and administrative
expenses
$ 106,404
$
92,939
$
81,750
Variable lease cost
Selling and administrative
expenses
27,474
24,535
22,326
(1)
Includes short-term lease cost, which is not material.
Based on our lease portfolio as of December 31, 2024, the table below sets forth the approximate future lease payments related
to operating leases with initial terms of one year or more (in thousands):
2025
$
98,746
2026
86,531
2027
69,573
2028
47,549
2029
27,756
Thereafter
35,312
Total lease payments
365,467
Less: interest
43,900
Present value of lease liabilities
$
321,567
To calculate the present value of our lease liabilities, we determined our incremental borrowing rate based on the effective
interest rate on our Credit Facility adjusted for a collateral feature similar to that of our leased properties, as we are unable to
derive implicit rates from our existing leases.
The table below presents the weighted-average remaining lease term (years) of our operating leases and the weighted-average
discount rate used in the above calculation:
Lease Term and Discount Rate for Operating Leases
December 31,
2024
2023
2022
Weighted-average remaining lease term (years)
4.65
4.81
5.08
Weighted-average discount rate
4.56 %
4.04 %
3.05 %
The table below presents the amount of cash paid for amounts included in the measurement of lease liabilities and lease assets
obtained in exchange for lease obligations (in thousands):
Year Ended
December 31,
2024
2023
2022
Operating cash flows for lease liabilities
$
96,267
$
84,703
$
75,281
Operating lease assets obtained in exchange for
operating lease obligations
89,239
107,869
91,622
79
Contingencies
From time to time, we are subject to various claims and litigation arising in the ordinary course of business, including product
liability, personal injury, commercial, contract and employment matters. Each quarter, we evaluate developments related to
claims and litigation and record a liability if we deem a loss to be probable and estimable. When evaluating these matters for
accrual and disclosure, we consider factors such as historical experience, specific facts and claims asserted, the likelihood we
will prevail and the magnitude of any potential loss. The outcome of any litigation is inherently unpredictable. Based on
currently available facts, we do not believe that the ultimate resolution of any of these claims and litigation matters will have a
material adverse impact on our financial condition, results of operations or cash flows. We do not believe our exposure for any
of these matters is material for disclosure, either individually or in the aggregate.
Note 10 - Related Party Transactions
We lease corporate and administrative offices from NCC, an entity we have held a 50% ownership interest in since 2005. NCC
owns and operates an office building in Covington, Louisiana. We lease corporate and administrative offices from NCC,
occupying approximately 60,000 square feet of office space, and we pay rent of $0.1 million per month. Our lease term ends
May 2025. We expect to renew this lease in the second quarter of 2025.
The table below presents rent expense associated with this lease for the past three years (in thousands):
2024
2023
2022
NCC
$
1,222
$
1,222
$
1,222
Note 11 - Employee Benefit Plans
We offer a 401(k) savings and retirement plan, which is a defined contribution plan that provides benefits for substantially all
employees who meet length of service requirements.
Eligible employees are able to contribute up to 75% of their
compensation, subject to the federal dollar limit. For plan participants, we provide a matching contribution. We contribute a
total maximum match on employee contributions of up to 4% of their compensation, with a 100% match on the first 3% of
compensation deferred and a 50% match on deferrals between 3% and 5% of compensation. We also offer retirement plans for
certain of our international entities. The plan funding is calculated as a percentage of the employee’s earnings and in
compliance with local laws and practices. The related expense is not material and is included in the table below.
We have a nonqualified deferred compensation plan that allows certain employees who occupy key management positions to
defer salary and bonus amounts. This plan also provides a matching contribution similar to that provided under our 401(k) plan
to the extent that a participant’s contributions to the 401(k) plan are limited by IRS deferral and compensation limitations. The
total combined company matching contribution provided to a participant under the 401(k) plan and the nonqualified deferred
compensation plan for any one year may not exceed 4% of a participant’s salary and bonus. The employee and company
matching contributions are invested in certain equity and fixed income securities based on individual employee elections.
The table below sets forth our contributions for the past three years (in thousands):
2024
2023
2022
Defined contribution and international retirement plans $
10,953
$
10,973
$
10,230
Deferred compensation plan
238
218
283
Note 12 - Segment Information
Since all of our sales centers have similar operations and share similar economic characteristics, we aggregate our sales centers
into a single reportable segment and one reportable revenue stream. These similarities include (i) the nature of our products and
services, (ii) the types of customers we sell to and (iii) the distribution methods we use. Our chief operating decision maker
(CODM) is our president and chief executive officer. Our CODM evaluates each sales center based on individual performance
that includes both financial and operational measures. These measures include operating income, accounts receivable and
inventory management criteria.
A bottom-up approach is used to develop the operating budget for each individual sales center. Our CODM makes resource
allocation decisions primarily on a sales center-by-sales center basis. No single sales center meets any of the quantitative
thresholds (10% of revenues, profit or assets) for separately reporting information about an operating segment. We do not track
sales by product lines and product categories on a consolidated basis. We lack readily available financial information due to the
80
number of our product lines and product categories and the fact that we make ongoing changes to product classifications within
these groups, thus making it impracticable to report our sales by product category.
Our segment derives revenue from sales centers in North America, Europe and Australia that sell swimming pool supplies,
equipment and related leisure products, irrigation and landscape maintenance products and hardscape, tile and stone products to
pool builders, retail stores, service companies, landscape contractors and others. No single customer accounted for 10% or
more of our sales. The accounting policies for our segment are the same as those described in Note 1.
The table below presents segment revenue, operating expenses and operating income and reconciles segment operating income
to consolidated income before taxes and equity in earnings (in thousands):
Year Ended December 31,
2024
2023
2022
Net sales
$
5,310,953
$
5,541,595
$
6,179,727
Cost of sales
3,735,606
3,881,551
4,246,315
Gross profit
1,575,347
1,660,044
1,933,412
Compensation expenses
486,824
477,971
495,860
Freight out expenses
90,268
84,932
89,002
Other selling and administrative expenses
381,051
350,574
322,767
Operating income
617,204
746,567
1,025,783
Reconciliation:
Interest and other non-operating expenses, net
50,250
58,431
40,911
Income before income taxes and equity in earnings $
566,954
$
688,136
$
984,872
The tables below present supplemental information for our segment (in thousands):
Year Ended December 31,
2024
2023
2022
Depreciation
$
36,784
$
31,585
$
30,381
Amortization
8,697
8,555
8,644
Goodwill impairment
—
550
605
December 31,
2024
2023
Receivables, net
$
115,835
$
145,723
Receivables pledged under receivables facility
199,026
197,187
Product inventories, net
1,289,300
1,365,466
The table below presents net sales by geographic region, with international sales translated into U.S. dollars at prevailing
exchange rates, for the past three years (in thousands):
Year Ended December 31,
2024
2023
2022
United States
$
4,936,981
$
5,126,308
$
5,674,909
International
373,972
415,287
504,818
$
5,310,953
$
5,541,595
$
6,179,727
81
The table below presents net property and equipment by geographic region, with international property and equipment balances
translated into U.S. dollars at prevailing exchange rates, for the past three years (in thousands):
December 31,
2024
2023
2022
United States
$
241,891
$
215,109
$
185,117
International
9,433
8,820
8,592
$
251,324
$
223,929
$
193,709
82
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934 (the Act). The rules refer to the controls and other procedures designed to ensure that information required to be disclosed
in reports that we file or submit under the Act is (1) recorded, processed, summarized and reported within the time periods
specified in the Commission’s rules and forms and (2) accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure. As of December 31, 2024, management, including the CEO and CFO, performed an evaluation of the effectiveness
of our disclosure controls and procedures. Based on that evaluation, management, including the CEO and CFO, concluded that
as of December 31, 2024, our disclosure controls and procedures were effective.
We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
generally accepted accounting principles. Based on the most recent evaluation, we have concluded that no change in our
internal control over financial reporting occurred during the last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
83
Management’s Report on Internal Control Over Financial Reporting
Pool Corporation’s management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal
control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of published financial statements. All internal control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Any evaluation or projection of effectiveness to future periods is also subject to risk that
controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Pool Corporation’s management assessed the effectiveness of our internal control over financial reporting as of December 31,
2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in the Internal Control-Integrated Framework (2013 Framework). Based on this assessment,
management has concluded that, as of December 31, 2024, Pool Corporation’s internal control over financial reporting was
effective.
The independent registered public accounting firm that audited the Consolidated Financial Statements included in Item 8 of this
Form 10-K has issued a report on Pool Corporation’s internal control over financial reporting. This report appears below.
84
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Pool Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Pool Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Pool Corporation (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated
statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the
period ended December 31, 2024, and the related notes and our report dated February 27, 2025 expressed an unqualified
opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New Orleans, Louisiana
February 27, 2025
85
Item 9B. Other Information
During the quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange
Act) adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are
defined in Item 408(a) of Regulation SK).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to Pool Corporation’s 2025 Proxy Statement to be filed with
the SEC.
We have a Code of Business Conduct and Ethics (the Code) that applies to all of our employees, officers and directors, and is
available on our website at www.poolcorp.com. Any substantive amendments to the Code, or any waivers granted to any
directors or executive officers, including our principal executive officer, principal financial officer or principal accounting
officer and controller, will be disclosed on our website and remain there for at least 12 months.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to Pool Corporation’s 2025 Proxy Statement to be filed with
the SEC.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to Pool Corporation’s 2025 Proxy Statement to be filed with
the SEC.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to Pool Corporation’s 2025 Proxy Statement to be filed with
the SEC.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to Pool Corporation’s 2025 Proxy Statement to be filed with
the SEC.
86
PART IV.
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this report:
(1) Consolidated Financial Statements:
Page
Report of Independent Registered Public Accounting Firm
49
Consolidated Statements of Income
51
Consolidated Statements of Comprehensive Income
52
Consolidated Balance Sheets
53
Consolidated Statements of Cash Flows
54
Consolidated Statements of Changes in Stockholders’ Equity
55
Notes to Consolidated Financial Statements
56
(2) Financial Statement Schedules.
All schedules are omitted because they are not applicable or are not required
or because the required information is provided in our Consolidated Financial
Statements or accompanying Notes included in Item 8 of this Form 10-K.
(3) The exhibits listed in the Index to Exhibits.
Item 16. Form 10-K Summary
None.
87
INDEX TO EXHIBITS
No.
Description
Filed/
Furnished
with this
Form 10-K
Incorporated by Reference
Form
File No.
Date Filed
3.1
Restated Certificate of Incorporation of the Company.
10-Q
000-26640
08/09/2006
3.2
Amended and Restated By-laws of the Company.
8-K
000-26640
10/25/2023
4.1
Form of certificate representing shares of common
stock of the Company.
8-K
000-26640
05/19/2006
4.2
Description of the Securities of Pool Corporation
Registered Under Section 12 of the Securities and
Exchange Act of 1934.
10-K
000-26640
02/27/2024
10.1
* Pool Corporation Amended and Restated Employee
Stock Purchase Plan.
8-K
000-26640
05/06/2016
10.2
* Pool Corporation Amended and Restated 2007 Long-
Term Incentive Plan.
8-K
000-26640
05/06/2016
10.3
* Form of Performance-Based Restricted Stock
Agreement under the Pool Corporation Amended and
Restated 2007 Long-Term Incentive Plan (2024 PS-2).
X
10.4
* Form of Stock Option Agreement for Employees under
the Amended and Restated 2007 Long-Term Incentive
Plan.
X
10.5
* Form of Restricted Stock Agreement for Employees
under the Amended and Restated 2007 Long-Term
Incentive Plan.
X
10.6
* Form of Performance-Based Restricted Stock
Agreement under the Pool Corporation Amended and
Restated 2007 Long-Term Incentive Plan (2023 PS-2).
X
10.7
* Form of Performance-Based Restricted Stock
Agreement under the Pool Corporation Amended and
Restated 2007 Long-Term Incentive Plan (PS-1).
10-K
000-26640
02/25/2022
10.8
* Form of Stock Option Agreement for Directors under
the Amended and Restated 2007 Long-Term Incentive
Plan.
8-K
000-26640
05/06/2009
10.9
* Form of Restricted Stock Agreement for Directors
under the Amended and Restated 2007 Long-Term
Incentive Plan.
8-K
000-26640
05/06/2009
10.10
* Form of Employment Agreement for Executive
Officers, Including CEO.
X
10.11
* Nonqualified Deferred Compensation Plan Basic Plan
Document, dated March 1, 2005.
10-Q
000-26640
04/29/2005
10.12
* Nonqualified Deferred Compensation Plan Adoption
Agreement by and among SCP Distributors, L.L.C.,
Superior Pool Products, L.L.C. and Cypress, Inc., dated
March 1, 2005.
10-Q
000-26640
04/29/2005
10.13
* Trust Agreement by and among SCP Distributors,
L.L.C., Superior Pool Products, L.L.C. and Cypress,
Inc. and T. Rowe Price Trust Company, dated March 1,
2005, establishing a trust relating to Registrant’s
Nonqualified Deferred Compensation Plan.
10-Q
000-26640
04/29/2005
10.14
* Pool Corporation Executive Officer Annual Incentive
Plan.
10-K
000-26640
02/27/2019
10.15
* Pool Corporation Strategic Plan Incentive Program.
10-K
000-26640
02/25/2022
Incorporated by Reference
Filed/
Furnished
with this
No.
Description
Form 10-K
Form
File No.
Date Filed
10.16
Third Amended and Restated Credit Agreement dated
as of September 30, 2024, by and among Pool
Corporation, as U.S. Borrower, SCP Distributors
Canada Inc., as Canadian Borrower, SCP International,
Inc., as Euro Borrower, Wells Fargo Bank, National
Association, as administrative Agent, and certain other
lenders party thereto.
8-K
000-26640
10/02/2024
10.17
Receivables Sale and Contribution Agreement, dated
as of October 11, 2013, between SCP Distributors
LLC, Horizon Distributors, Inc., Superior Pool
Products LLC and Poolfx Supply LLC, as Originators
and Superior Commerce LLC, as Buyer.
8-K
000-26640
10/17/2013
10.18
Joinder and Amendment No. 13 to the Receivables
Purchase Agreement, effective October 31, 2024,
among Superior Commerce LLC, as Seller, SCP
Distributors LLC, as the Servicer, the Purchasers from
time to time party thereto, and Wells Fargo Bank,
National Association, as Administrative Agent,
including Exhibit A/B containing the Receivables
Purchase Agreement, as amended and restated through
October 31, 2024.
8-K
000-26640
11/05/2024
10.19
Performance Undertaking, dated as of October 11,
2013, by and between Pool Corporation and Superior
Commerce LLC in respect of the Receivables Sale and
Contribution Agreement.
8-K
000-26640
10/17/2013
10.20
Credit Agreement, dated as of December 30, 2019,
among Pool Corporation as the Borrower, Certain
Subsidiaries of the Borrower Party Hereto, as the
Guarantors, and Bank of America, N.A., as the Lender.
8-K
000-26640
01/02/2020
10.21
as amended by First Amendment to Credit Agreement
dated October 12, 2021.
10-Q
000-26640
10/28/2021
10.22
as amended by Second Amendment to Credit
Agreement dated June 30, 2023.
8-K
000-26640
07/05/2023
10.23
as amended by Third Agreement to Credit Agreement
dated September 30, 2024.
10-Q
000-26640
10/30/2024
19.1
Pool Corporation Insider Trading Policy.
10-K
000-26640
02/27/2024
21.1
Subsidiaries of the registrant.
X
23.1
Consent of Ernst & Young LLP.
X
31.1
Certification by Chief Financial Officer pursuant to
Rule 13a-14(a) and 15d-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2
Certification by Chief Executive Officer pursuant to
Rule 13a-14(a) and 15d-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1
Certification by Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
X
97.1
Pool Corporation Clawback Policy.
10-K
000-26640
02/27/2024
101.INS
+ Inline XBRL Instance Document - the instance
document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline
XBRL document
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101.SCH + Inline XBRL Taxonomy Extension Schema Document
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101.CAL + Inline XBRL Taxonomy Extension Calculation
Linkbase Document
X
Incorporated by Reference
Filed/
Furnished
with this
No.
Description
Form 10-K
Form
File No.
Date Filed
101.DEF + Inline XBRL Taxonomy Extension Definition
Linkbase Document
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101.LAB + Inline XBRL Taxonomy Extension Label Linkbase
Document
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101.PRE + Inline XBRL Taxonomy Extension Presentation
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104
+ Cover Page Interactive Data File (formatted in Inline
XBRL and contained in Exhibit 101)
X
*
Indicates a management contract or compensatory plan or arrangement
+
Attached as Exhibit 101 to this report are the following items formatted in iXBRL (Inline Extensible Business Reporting
Language):
1.
Consolidated Statements of Income for the years ended December 31, 2024, December 31, 2023 and December 31, 2022;
2.
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, December 31, 2023 and
December 31, 2022;
3.
Consolidated Balance Sheets at December 31, 2024 and December 31, 2023;
4.
Consolidated Statements of Cash Flows for the years ended December 31, 2024, December 31, 2023 and December 31,
2022;
5.
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2024, December 31, 2023
and December 31, 2022; and
6.
Notes to Consolidated Financial Statements.
[This page intentionally left blank]
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized on February 27, 2025.
POOL CORPORATION
John E. Stokely, Chair of the Board
and Lead Independent Director
By:
/s/ JOHN E. STOKELY
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant in the capacities indicated on February 27, 2025.
Signature:
Title:
John E. Stokely
/s/ JOHN E. STOKELY
Chair of the Board and Lead Independent Director
Peter D. Arvan
/s/ PETER D. ARVAN
President, Chief Executive Officer and Director (principal
executive officer)
Melanie M. Housey Hart
/s/ MELANIE M. HOUSEY HART
Senior Vice President and Chief Financial Officer (principal
financial officer)
Walker F. Saik
/s/ WALKER F. SAIK
Chief Accounting Officer and Corporate Controller
(principal accounting officer)
Martha S. Gervasi
/s/ MARTHA S. GERVASI
Director
James D. Hope
/s/ JAMES D. HOPE
Director
Kevin M. Murphy
/s/ KEVIN M. MURPHY
Director
Debra S. Oler
/s/ DEBRA S. OLER
Director
Manuel J. Perez de la Mesa
/s/ MANUEL J. PEREZ DE LA MESA
Director
Carlos A. Sabater
/s/ CARLOS A. SABATER
Director
David G. Whalen
/s/ DAVID G. WHALEN
Director
[This page intentionally left blank]
SH A R EH O L DER
I N FO R MAT I O N
S EC FILIN GS / IN V E S TO R CO N TACT
Pool Corporation reports filed with or furnished to the
Securities and Exchange Commission are available without
charge to shareholders upon written request. These
requests and other investor inquiries should be directed
to Investor Relations at the company’s corporate
address below.
S H A R E H O LDE R S ’ M E E TIN G
The Annual Shareholders’ Meeting of Pool Corporation will
be held on Wednesday, April 30, 2025, at 9:00 a.m., Central
Time. This year’s Annual Meeting will be a virtual meeting
via live webcast on the Internet. Shareholders of record as
of March 12, 2025, will be entitled to vote at this meeting.
S TO CK LIS TIN G
Pool Corporation’s common stock is traded on the Nasdaq
Global Select Market under the symbol POOL.
CO M PA N Y A DDR E S S
POOL CORPORATION
109 Northpark Boulevard
Covington, LA 70433-5001
Phone: 985.892.5521
www.poolcorp.com
R EGIS T R A R A N D TR A N S FE R AGEN T
COMPUTERSHARE TRUST COMPANY, N.A.
P.O. Box 43006
Providence, RI 02940-3006
Phone: 877.373.6374
www.computershare.com
Inquiries regarding stock transfers, lost certificates
or address changes should be directed to
Computershare at the above address.
IN DE PE N DE N T R EGIS TE R E D
PUBLIC ACCO UN TIN G FIR M
ERNST & YOUNG LLP New Orleans, LA
O UT S IDE S ECUR ITIE S CO UN S E L
JONES WALKER LLP New Orleans, LA
(1) Executive Officer
(2) Chair, Audit Committee
(3) Member, Audit Committee
(4) Chair, Compensation Committee
(5) Member, Compensation Committee
(6) Chair, Nominating and
Corporate Governance Committee
(7) Member, Nominating and
Corporate Governance Committee
(8) Chair, Strategic Planning Committee
(9) Member, Strategic Planning Committee
This annual report contains certain forward-looking statements, as defined by the federal
securities laws. These forward-looking statements are not guarantees of future results, are
based on current expectations only and are subject to risk and uncertainties. Actual events and
results may differ materially from those anticipated by us in those statements due to several
factors, including those disclosed in our filings with the Securities and Exchange Commission.
COMPANY OFFICERS
AND DIRECTORS
OFFI CERS
PETER D. ARVAN (1)
President and Chief Executive Officer
MELANIE M. HART (1)
Senior Vice President, Chief Financial Officer and Treasurer
CAROLYNE “KENDALL” K. LARGE
Vice President, Marketing
TODD R. MARSHALL
Vice President and Chief Information Officer
JENNIFER M. NEIL (1)
Senior Vice President, Secretary and Chief Legal Officer
JONATHAN P. PECHON
Vice President, Supply Chain
WALKER F. SAIK (1)
Chief Accounting Officer and Corporate Controller
KENNETH G. ST. ROMAIN (1)
Senior Vice President
LUTHER A. WILLEMS
Vice President and Chief Human Resources Officer
DONNA K. WILLIAMS
Vice President, Field Implementation
B OARD OF DI RECTORS
JOHN E. STOKELY
Chair of the Board
Retired, Former President, Chief Executive Officer
and Chairman of Richfood Holdings, Inc.
MANUEL J. PEREZ DE LA MESA
Vice Chair of the Board
Retired, Former President and Chief Executive Officer
of Pool Corporation
PETER D. ARVAN
President and Chief Executive Officer
MARTHA “MARTY” S. GERVASI (4), (9)
Retired, Former Chief Human Resources Officer
of The Hartford Financial Services Group
JAMES “JIM” D. HOPE (2), (7)
Retired, Former Executive Vice President and Chief Financial
Officer of Performance Food Group Company
KEVIN M. MURPHY (5)
President and Chief Executive Officer at Ferguson
Enterprises Inc.
DEBRA S. OLER (5), (8)
Retired, Former Senior Vice President/President North
American Sales and Service of W.W. Grainger, Inc.
CARLOS A. SABATER (3), (7)
Retired, Former Senior Global Partner at Deloitte
& Touche LLP
DAVID G. WHALEN (3), (6), (9)
Retired, Former President and Chief Executive Officer
of A.T. Cross Company
E XP E R I E NC E TH E
D I FF E R E N CE
VALU E | R ETURN | O PPO RTUNIT IE S
PROPRIETARY
BRANDS
BEST-IN-CLASS
CUSTOMER TOOLS
INNOVATIVE
TECHNOLOGY
POOL CORPORATION | 109 Northpark Boulevard, Covington, LA 70433-5001
Phone: 985.892.5521 | www.poolcorp.com
@poolcorp