POOL CORP (POOL)

OVERVIEW

Financial Results

Second quarter ended June 30, 2026 compared to the second quarter ended June 30, 2025

Net sales increased 2% to $1.8 billion in the second quarter of 2026. The increase reflected benefits from inflation, steady maintenance activity and improved sales of building materials amid a muted discretionary spending environment.

Gross profit increased 1% to $540.8 million. Gross margin decreased 30 basis points to 29.7% from 30.0% in the same period of 2025, primarily due to elevated inbound freight costs and changes in customer mix. These headwinds were partially offset by benefits from supply chain initiatives.

Selling and administrative expenses (operating expenses) increased 4% to $273.1 million from $262.5 million in the same period in 2025, primarily driven by $8.3 million of CEO transition costs. CEO transition costs comprise $6.3 million of non-cash share-based compensation expense for awards previously granted but not fully amortized and $2.0 million of cash transition costs. Adjusting for the impact of CEO transition costs, operating expenses increased 1% to $264.8 million.

Operating income decreased 2% to $267.7 million compared to $272.7 million in the same period last year. Adjusted operating income increased 1% to $275.9 million.

Net income decreased 3% to $188.1 million from $194.3 million in the second quarter of 2025. Adjusted net income increased 1% to $195.7 million compared to $194.2 million in the three months ended June 30, 2025.

Earnings per diluted share was $5.17 in both periods. Adjusted earnings per diluted share increased 4% to $5.38 compared to $5.17 in 2025.

See “Results of Operations” below for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures.

References to product line and product category data throughout this report generally reflect data related to the North American swimming pool market, as this data is more readily available for analysis and represents the largest component of our operations.

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In this Form 10-Q and other of our public disclosures, we 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.

Financial Position and Liquidity

As of June 30, 2026, total net receivables, including pledged receivables, increased 11% compared to June 30, 2025, primarily due to higher sales in June 2026. Our days sales outstanding (DSO), as calculated on a trailing four quarters basis, was 27.6 days at June 30, 2026 and 25.8 days at June 30, 2025. Our allowance for doubtful accounts balance was $8.5 million at June 30, 2026 and $8.3 million at June 30, 2025.

Our inventory balance was $1.4 billion at June 30, 2026, an increase of $48.5 million, or 4%, from June 30, 2025. The 4% year-over-year increase in inventory is down from the 14% increase reported in the first quarter of 2026, as we sell through our peak-season stocking levels. Our inventory levels reflect the impact of inflation and the addition of new and acquired sales centers over the past twelve months. Our inventory reserve was $24.1 million at June 30, 2026 and $27.7 million at June 30, 2025. Our inventory turns, as calculated on a trailing four quarters basis, was 2.6 times at June 30, 2026 and 2.8 times at June 30, 2025.

Total debt outstanding increased $110.8 million to $1.3 billion at June 30, 2026, which helped to fund $266.7 million of open market share repurchases over the past twelve months.

For additional information, see “Liquidity and Capital Resources” below.

Current Trends and Outlook

For a detailed discussion of trends impacting us through 2025, see the “Current Trends and Outlook” section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2025 Annual Report on Form 10-K.

We expect sales for the full year of 2026 to increase by a low single-digit percentage compared to 2025.

We project gross margin for the full year of 2026 to be approximately 30 basis points below our 2025 gross margin of 29.7%. We expect our gross margin to be negatively impacted by higher inbound freight cost in the current year, partially offset by benefits from effective supply chain management, advantageous pricing strategies and increased private label sales. The prior year comparison is also impacted by margin benefit from mid-season price increases in the prior year. Our actual gross margin will depend on changes in product and customer mix and on amounts and timing of sales and inflationary price increases.

We expect to leverage our existing infrastructure and strategically manage discretionary spending while providing for a modest recovery in incentive compensation compared to the prior year. We project operating expenses for 2026 will increase approximately 3% compared to 2025, or 2% to 3% without the $8.3 million of CEO transition costs.

In 2026, we expect our effective tax rate will approximate 25.0% without the impact of Accounting Standards Update ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. Under ASU 2016-09, 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 recorded a $0.7 million, or $0.02 per diluted share, tax benefit from ASU 2016-09 for the six months ended June 30, 2026.

For 2026, we project diluted EPS in the range of $10.66 to $10.96, or $10.87 to $11.17, excluding the impact of CEO transition costs and including the impact of year-to-date tax GAAP benefits of $0.02. We may recognize additional tax benefits related to stock option exercises in 2026 from grants that expire in future years. We have not included any expected tax benefits in our full year guidance beyond what we have recognized as of June 30, 2026.

During 2026, we expect to continue to use cash for the payment of cash dividends as and when declared by our Board of Directors (Board) and to fund opportunistic share repurchases at our discretion.

The forward-looking statements in the foregoing section and elsewhere in this report are based on current market conditions and our current business plans, speak only as of the filing date of this report, are based on several assumptions and are subject to significant risks and uncertainties, including the risks detailed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 within the “Forward-Looking Statements” section.

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RESULTS OF OPERATIONS

As of June 30, 2026, we conducted operations through 455 sales centers in North America, Europe and Australia. For the three and six months ended June 30, 2026, approximately 95% of our net sales were from our operations in North America.

The following table presents information derived from the Consolidated Statements of Income expressed as a percentage of net sales:

Note: Due to rounding, percentages presented in the table above may not add to Operating income or Income before income taxes and equity in earnings.

We have included the results of operations from acquisitions in 2025, as further discussed in Note 3, in our consolidated results since the acquisition dates.

For definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures, see page 20.

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 are consolidated 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-Q as our base business results for the three and six months ended June 30, 2026 closely approximated consolidated results. Excluded sales centers contributed less than 1% to the change in our reported net sales.

The table below summarizes the changes in our sales center count during the first six months of 2026:

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Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025

Net Sales

Net sales of $1.8 billion in the second quarter of 2026 increased 2% compared to the second quarter of 2025. This growth was supported by inflationary price increases, steady maintenance volumes and improved sales of building materials.

The following factors impacted our sales growth during the quarter and are listed in order of estimated magnitude:

•
a benefit of approximately 3% from inflationary product cost increases;

•
stable maintenance-related demand; and

•
building materials products growth (see discussion below), which helped offset overall declines in discretionary product sales.

In the second quarter of 2026, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, increased 3% versus the same period last year, and collectively represented approximately 29% of net sales for the period. Sales of building materials, which are primarily used in new pool construction and remodeling, increased 4% compared to the same period in 2025 and represented approximately 12% of net sales in the second quarter of 2026.

Gross Profit

Gross profit increased 1% in the second quarter of 2026 compared to the second quarter of 2025. Gross margin decreased 30 basis points to 29.7% from 30.0% in the second quarter of 2025, driven primarily by higher inbound freight costs and an unfavorable shift in customer mix, partially offset by supply chain initiatives.

Operating Expenses

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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.

2025 FINANCIAL OVERVIEW

Financial Results

Net sales were $5.3 billion for 2025, comparable to 2024 net sales. Sales of non‑discretionary products were steady throughout the year. In the back half of the year, we noticed improved sales trends for discretionary products.

Gross margin was 29.7% in 2025 and 2024. Gross margin in 2024 included a 20 basis points benefit from the reversal of $12.6 million for estimated import taxes. Without this benefit included in our 2024 gross margin, our 2025 gross margin improved 20 basis points, reflecting positive impacts from price increases and disciplined supply chain management.

Selling and administrative expenses (operating expenses) increased 4% to $992.3 million in 2025 compared to $958.1 million in 2024. The growth in expenses was primarily driven by incremental investments in our technology initiatives and sales center network expansion, as well as inflationary impacts, particularly on base wages and facility costs.

Operating income of $580.2 million for the year was 6% lower than $617.2 million in 2024.

Net income decreased to $406.4 million in 2025 compared to $434.3 million in 2024. Without the impact of the 2024 import tax reversal discussed above, 2025 operating income was 4% lower than in 2024.

Earnings per diluted share declined 4% to $10.85 in 2025 compared to $11.30 in 2024, which included a $0.25 benefit from the import tax reversal discussed above. We recorded a $4.6 million, or $0.12 per diluted share, tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in 2025 compared to an $8.8 million, or $0.23 per diluted share, tax benefit in 2024. Adjusting for the impact from ASU 2016-09 in both years, earnings per diluted share decreased 3% to $10.73 in 2025 compared to $11.07 in 2024. 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 $365.9 million in 2025. Our cash flows were impacted by working capital investments, including increases in inventory and $68.5 million in federal tax payments from 2024 that were deferred into 2025 due to relief granted by the IRS. The deferred tax payment increased operating cash flows in 2024 and decreased operating cash flows in 2025. Our 2025 operating cash flows helped to fund $184.9 million of quarterly cash dividend payments to shareholders and net capital expenditures and acquisitions of $67.2 million.

Total net receivables, including pledged receivables, increased 10% compared to December 31, 2024, primarily due to higher sales in December 2025. Our allowance for doubtful accounts was $8.0 million at December 31, 2025 and $8.6 million at December 31, 2024. Our days sales outstanding ratio, as calculated on a trailing four quarters basis, was 26.3 days at December 31, 2025 and at December 31, 2024.

Our inventory balance increased 13% to $1.5 billion at December 31, 2025 compared to $1.3 billion at December 31, 2024. This growth was primarily driven by increased purchasing ahead of price increases. Our inventory balance also reflects increases from inflation (including mid-season vendor price increases) and the addition of new and acquired sales centers. Our reserve for inventory obsolescence was $23.9 million at December 31, 2025 compared to $26.7 million at December 31, 2024. Our inventory turns, as calculated on a trailing four quarters basis, were 2.7 times at December 31, 2025 and 2.8 times at December 31, 2024.

Total debt outstanding of $1.2 billion at December 31, 2025 increased $249.1 million compared to December 31, 2024, primarily to fund open market share repurchases of $341.1 million in 2025 and working capital needs.

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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, these trends moderated resulting in lagging new pool construction and remodeling activities. Based on industry data, we estimate that new in-ground pool construction units decreased 3% to 5% from 62,000 units in 2024 to just below 60,000 units in 2025.

As in 2024, market conditions during the majority of 2025 were challenged by generally higher interest rates than the recent past, and product cost and labor inflation, which led to consumer hesitancy on discretionary spending and some cyclical suppression of demand. These market conditions impacted new pool construction and remodeling projects, particularly in the first half of the year. Throughout the year, non-discretionary maintenance product sales were stable. As lower housing turnover and market conditions encourage consumers to stay in their homes longer, 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, 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 2026 based on reasonable expectations for industry demand, pricing and inflationary conditions, variable expense reductions, realization of our digital transformation initiatives and leverage of existing investments in our business. We also plan to broaden our geographic presence by opening 5 to 8 new sales centers in 2026 and by making selective acquisitions if and 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 2026:

•
We expect sales to be a low single digit increase compared to 2025, impacted by the following factors and assumptions:

o
normal weather patterns for 2026;

o
slight growth in sales of pool maintenance products;

o
consistent new construction units to 2025;

o
flat to slightly up renovation and remodel activity;

o
inflationary product cost increases, which generally pass through to customers, of approximately 1% to 2%; and

o
the same number of selling days each quarter compared to 2025.

•
We project gross margin for the full year of 2026 to be similar to our 2025 gross margin of 29.7%. We expect our gross margin to benefit from effective supply chain management, advantageous pricing strategies and increased private label sales. Our actual gross margin will depend on changes in product and customer mix and on amounts and timing of sales and inflationary price increases.

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•
We expect to leverage our existing infrastructure and strategically manage discretionary spending. We project that our operating expenses in 2026 will be impacted by the following factors:

o
an increase of approximately $10.0 million to $15.0 million as performance-based compensation normalizes;

o
$5.0 million of spend to add greenfields to our sales center network;

o
utilization of technological solutions to enhance capacity creation;

o
inflationary increases in areas such as labor and occupancy costs with some offsets from our efficiency initiatives; and

o
leverage from enhanced profitability efforts at our recent greenfield locations.

In 2026, 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, 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 recorded a $4.6 million benefit in our provision for income taxes for the year ended December 31, 2025 related to ASU 2016-09.

We project that 2026 earnings will be in the range of $10.85 to $11.15 per diluted share. Our 2026 guidance does not include any estimated unrealized tax benefits related to stock option exercises, stock option expirations or restricted stock awards vesting in 2026. We expect to continue to use cash for the payment of dividends as and when declared by our Board and to fund opportunistic share repurchases at our discretion over the next year.

The forward-looking statements in this Current Trends and Outlook section and elsewhere in this report are based on current market conditions and our current business plans, speak only as of the filing date of this report, are based on several assumptions and 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; 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.

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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

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