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    POOL
    Earnings call· Jun 2026(Q2 FY26)

    POOL CORP POOL

    Jul 23, 2026 Source

    Executive summary

    POOL Corporation Q2 FY26 — Strategic Focus Amidst Mixed Market Conditions

    POOL Corporation delivered resilient Q2 FY26 results, with net sales up 2% driven by recurring maintenance and building materials, despite muted new pool construction and discretionary demand. New CEO John Watwood outlined four strategic priorities focused on sales excellence and operational efficiency, aiming to leverage existing investments. Gross margin faced pressure from higher inbound freight and customer mix, leading to a revised full-year outlook, though adjusted EPS guidance was reaffirmed.

    Highlights

    5

    • Net sales grew 2% in Q2 FY26, reflecting resilience in recurring maintenance.

    • Building materials sales grew 4%, outperforming other categories.

    • POOL360 digital platform adoption reached a record 18% of sales.

    • Europe sales grew 11% on strong demand and improving sentiment.

    • Adjusted diluted EPS increased 4% to $5.38 per share in Q2 FY26.

    Concerns

    5

    • Gross margin declined 30 basis points year-over-year to 29.7% due to higher inbound freight and unfavorable customer mix.

    • New pool construction remained muted, with U.S. pool permits tracking down low single digits year-to-date.

    • Discretionary demand was measured, leading to mid-single-digit sales declines in California, Texas, and Arizona, and a 1% decline in Florida.

    • Chemicals sales declined 2% due to pricing pressures.

    • The Horizon irrigation and landscape business experienced further pressure from slowing residential projects.

    Guidance & targets

    9
    CategoryTargetConfidence
    Adjusted EPS
    $10.87 to $11.17 per share
    high materiality
    High
    Full-year Gross Margin
    approximately 30 basis points below prior year
    high materiality
    High
    Full-year Adjusted Operating Expenses
    increase of approximately 2% to 3%
    medium materiality
    High
    Full-year Interest Expense
    $49 million and $51 million
    low materiality
    High
    Full-year Tax Rate
    approximately 25%
    low materiality
    High
    Full-year Weighted Average Shares Outstanding
    approximately 36.4 million
    low materiality
    High
    Full-year Top Line Growth
    low single-digit
    high materiality
    Medium
    Full-year Top Line Growth from Pricing
    approximately 2% to 3%
    medium materiality
    Medium
    Full-year Diluted EPS (Reported)
    $10.66 to $10.96
    high materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Building Materials
    Outperformance reflects national full trend showrooms, product breadth, and team support for builders.
    		—4%——
    Europe
    Strong demand and improving sentiment, benefiting from hot weather and backyard investment.
    		—11%——
    California, Texas, Arizona
    Impacted by soft new construction and discretionary demand, and pressure on Horizon business.
    		—mid-single digits decline——
    Florida
    Impacted by soft new construction and discretionary demand, and pressure on Horizon business.
    		—1% decline——
    Seminal markets
    Grew despite overall market softness.
    		—6%——
    Equipment
    Driven by price and repair-related demand.
    		—3%——
    Chemicals
    Declined due to pricing.
    		—2% decline——
    Sales to retail customers
    Early buy season was strong, but Q2 saw a slight decline.
    		—1% decline——
    Pinch A Penny franchise sales
    Sales were flat year-over-year.
    		—flat——

    Operational metrics

    16
    Net sales growth
    2%YoY
    Q2 FY26

    Reflects resilience, strength in recurring maintenance, and share gains in building materials.

    POOL360 sales penetration
    18%record
    Q2 FY26

    Deepening customer engagement and extending reach.

    US pool permits
    low single digits declineYoY
    YTD

    Muted new pool construction activity.

    Adjusted operating expense growth
    1%YoY
    Q2 FY26

    Reflects focus on capacity absorption, compensation, and outbound freight.

    Operating expenses (reported)
    $273 millionup 4% YoY
    Q2 FY26

    Excludes one-time $8.3 million charge for CEO transition.

    Adjusted operating income
    $276 millionup 1% YoY
    Q2 FY26

    Operating margin of 15.1%.

    Operating income (reported)
    $268 milliondown 2% YoY
    Q2 FY26

    Includes CEO transition costs.

    Interest and other expenses
    $2 million increaseYoY
    Q2 FY26

    Driven by higher average debt outstanding.

    Adjusted net income
    $196 millionup 1% YoY
    Q2 FY26

    Excludes CEO transition costs.

    Total debt
    $1.3 billionincrease of $111 million over past 12 months
    as of June 30

    Represents peak debt levels for seasonal stocking.

    Weighted average effective interest rate
    4.3%down from 4.7% last year
    Q2 FY26

    Benefit from swap agreements.

    Debt leverage ratio
    1.78xwithin expected range
    Q2 FY26

    Within target range.

    Dividends paid
    $93 million
    YTD

    Part of capital return to shareholders.

    Share repurchases executed
    $86 million
    YTD

    Part of capital return to shareholders.

    Share repurchase authorization
    $580 millionremaining
    as of April

    Board increased authorization in April.

    CEO transition expenses
    $0.21
    Q2 FY26

    Impacted reported EPS.

    Industry KPIs

    8
    MetricValueDetails
    EPS$5.38 (adjusted diluted)per share
    Revenue$1.8 billionUSD
    Inventory$1.4 billionUSD
    Net income$196 million (adjusted)USD
    Gross margin29.7%%
    Operating margin15.1% (adjusted)%
    Operating income EBIT$276 million (adjusted)USD
    Share buyback capital return$86 million (executed YTD)USD

    Risks & headwinds

    5
    Soft new construction and discretionary demandCurrent quarter, expected to continue

    US pool permits tracking down low single digits YTD; sales in CA, TX, AZ down mid-single digits; FL down 1%.

    Mitigation: Focus on recurring maintenance business, building materials, and operational efficiency.

    Higher inbound freight costsQ2 FY26, expected to persist

    Primary pressure on gross margin, contributing to 30 bps YoY decline.

    Mitigation: Actively working to offset, but full recoupment not immediate.

    Unfavorable customer mixQ2 FY26, potentially ongoing due to industry roll-ups

    Contributed to 30 bps YoY gross margin decline.

    Mitigation: Offset through product categories with better margins (e.g., private label), and expectation of smaller customers returning with market recovery.

    Chemical pricing dragQ2 FY26, expected to continue for full year

    Chemicals sales declined 2%.

    Mitigation: Focus on private label and proprietary brands.

    Horizon business pressureQ2 FY26, expected to continue

    Contributed to mid-single digit declines in key markets.

    Mitigation: Investing in the business with a new leader, expecting improvement in 2027.

    What to watch in Q3 FY26

    5

    Gross Margin Trajectory

    Q3 FY26
    Current29.7% in Q2 FY26, down 30 bps YoY. Full-year expected 30 bps below prior year.
    TargetStabilization or improvement, particularly regarding inbound freight costs.

    Why it matters

    Gross margin is a key profitability driver, and management is actively working to offset current pressures.

    Given the second quarter's weight in the year, we now expect full year gross margin approximately 30 basis points below prior year versus in line previously.

    Q&A highlights

    6

    Asked about attractive M&A areas and fine-tuning actions for sales force/branch economics under the new CEO's priorities.

    John Watwood stated M&A focus is on tuck-ins and product category-specific opportunities, requiring strategic, cultural, and financial fit. For operational execution, he noted investments are being refined, but major changes are deferred until after the peak season.

    “M&A is opportunistic. So you got to have a willing buyer, you got to have a willing seller, and all the other stars have to align, so you take that as you can get it.”

    asked by David Manthey · answered by John Watwood

    2 min read5 chapters

    Detailed Narrative

    01

    CEO Transition and Strategic Priorities

    John Watwood, in his first earnings call as CEO, outlined four strategic priorities: sales excellence, pricing and supply chain discipline, operational execution, and growth through disciplined M&A. He emphasized leveraging the existing network and refining current operations rather than significant new investments, with a focus on customer experience and productivity. He noted that the company has a strong foundation and capacity to adjust to market needs.

    02

    Market Dynamics and Demand Trends

    The company experienced resilience in recurring maintenance and building materials, offsetting softness in new construction and discretionary demand. New pool construction permits were down low single digits year-to-date, and discretionary spending was measured, particularly in year-round markets like California, Texas, and Arizona, which saw mid-single-digit declines. Florida declined 1%, while 'seminal markets' grew 6%.

    03

    Gross Margin Pressures

    Gross margin decreased by 30 basis points year-over-year to 29.7%, primarily due to higher inbound freight costs that could not be fully recouped and an unfavorable customer mix with a higher proportion of sales from larger customers. Management is actively working to offset these pressures but expects them to persist through the year, leading to a revised full-year gross margin outlook.

    04

    Operational Efficiency and Network Expansion

    POOLCORP remains focused on productivity, adding only one new location and closing one Horizon location. The greenfields opened in prior years are ramping up and improving performance, though they still have room to mature. The company aims to leverage existing investments in process improvements and digital tools like POOL360, which reached 18% adoption, to drive efficiency.

    05

    Horizon and Europe Performance

    The Horizon irrigation and landscape business faced significant pressure due to slowing residential projects, particularly in key markets. In contrast, Europe sales grew 11% on strong demand and improving sentiment, benefiting from a 'mini COVID' effect where people are investing in their backyards rather than taking vacations.

    AI-generated summary of the company’s earnings call. Not investment advice.