Pool Corp (POOL)

“We're not going to just do deals to do deals, we're going to do deals that make sense, not just for the short-term to drive EPS, because that's a very, very low hurdle. We're looking at driving long and concerned about long-term organic growth. We're concerned about long-term return on invested capital.”

“We are very long-term oriented. We're not looking at buying something and then selling it later. We're looking at buying something and keeping it in perpetuity. So therefore, our thought process may very well be different than somebody else that may be focused on a more buy at X price and sell at X price.” 

Manny Perez de la Mesa, former CEO

Historically, Americans have always been passionate about pools. At the beginning of the 20th century, some hotel chains began to advertise their services boasting their pools, but the golden age of residential pools did not begin until after the Second World War. Under the G.I. Bill, millions of American families took advantage of the favorable conditions for the construction of new homes and decided to move from their downtown apartments to houses in the suburbs. There was a significant migration to the Sun Belt, which accounts for a large part of the pool industry today. Since then, the installed pool base in the U.S. has grown steadily, accelerating especially during the last two decades thanks to the aforementioned trends, but also to a greater interest in enjoying outdoor spaces. Greater flexibility to work from home or to adopt a hybrid work schedule have accelerated investments to improve recreational home areas.

Pool Corp is the world's leading distributor (in terms of sales) of supplies and equipment for pools, irrigation and landscape. Unlike large chains such as Leslie's or Home Depot, Pool is a pure B2B distributor and doesn’t sell directly to consumers. Pool dominates the highly fragmented U.S. industry, where there are no other big players (the company is 20 times bigger than the second-largest competitor) and scale plays a determining role. This market is especially interesting due to growth prospects (there are 80 million single-family homes in the U.S., but an installed pool base of just over 5.5 million). Demographic patterns and migrations to the South and to both coasts of the country are structural tailwinds that will drive organic growth over the next decade.