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Management attributed stable 2025 revenue of $5.3 billion to resilient maintenance demand, which offset a mid-single-digit decline in new U.S. pool construction.
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The decline in new pool starts to approximately 60,000 units represents a 40% drop from 2022 levels, reflecting broader macroeconomic pressures on discretionary construction activity.
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Gross margin expansion to 29.7% was driven by disciplined pricing strategies, supply chain efficiencies, and the growth of higher-margin exclusive brands.
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Operational focus shifted from rapid facility expansion to ‘capacity absorption,’ prioritizing value extraction from the existing network of 456 sales centers.
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Digital transformation reached a record 15% of annual sales, with the POOL360 platform’s AI features enhancing customer engagement and operational agility.
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Regional performance was impacted by tough year-over-year comparisons in Florida due to prior-year hurricane recovery, while Texas showed early signs of recovery late in the year.
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Management highlighted a ‘pent-up demand’ thesis, suggesting that deferred upgrades and projects will return to the market once consumer confidence stabilizes.
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The 2026 guidance assumes new pool construction remains flat at approximately 60,000 units, with growth driven by maintenance and market share gains.
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Net sales are projected to grow in the low single-digit range, supported by a 1% to 2% pricing benefit from vendor cost pass-throughs.
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Diluted EPS is expected to range between $10.85 and $11.15, assuming no significant recovery in discretionary spending trends.
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Operating margin improvement is anticipated through network optimization, though gains will be partially offset by a $10 million to $15 million increase in incentive compensation.
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Capital allocation will prioritize reinvesting 1% to 1.5% of net sales into the business and allocating $25 million to $50 million for opportunistic acquisitions.
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Inventory levels increased 13% to $1.45 billion as a proactive strategy to secure products ahead of estimated 2026 cost increases.
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Self-insured medical costs are rising significantly above general inflation rates, creating a persistent headwind for operating expenses.
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The 2026 tax rate is estimated at 25%, with management noting no projected benefit from ASU tax items in the upcoming year.
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A ‘focus list’ strategy is being applied to underperforming branches to drive profitability through better customer engagement and cost-to-serve efficiencies.
