Pool — Financial Results
Revenue Held Steady, But Profits Declined as Costs Rose
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Net sales | $5.29B | $5.31B | ~0% |
| Operating income | $580.2M | $617.2M | -6% |
| Net income | $406.4M | $434.3M | -6% |
| Earnings per diluted share | $10.85 | $11.30 | -4% |
Sales were essentially flat year-over-year, held up by steady demand for non-discretionary maintenance products (chemicals, basic supplies pool owners must buy regardless of conditions). However, operating expenses jumped 4% to $992.3 million, driven by technology investments and new sales center openings, which squeezed profits. The earnings drop looks worse than it is on a like-for-like basis — 2024 included a one-time $12.6 million import tax reversal; stripping that out, the underlying decline in operating income was closer to 4%.
Discretionary Spending Weakness Weighed on the Business All Year
Higher interest rates and general consumer caution suppressed demand for bigger-ticket discretionary items — pool construction, remodeling, and renovation — throughout most of 2025. New in-ground pool construction is estimated to have declined 3% to 5%, falling from roughly 62,000 units in 2024 to just below 60,000 units. The company noted improvement in discretionary trends in the second half of the year, but the recovery was not enough to offset the weak first half.
Inventory Rose 13% as the Company Bought Ahead of Price Increases
| Metric | Dec 31, 2025 | Dec 31, 2024 | Change |
|---|---|---|---|
| Inventory balance | $1.5B | $1.3B | +13% |
| Inventory turns (trailing 12 months) | 2.7x | 2.8x | Slight decline |
The company deliberately built up inventory ahead of expected supplier price increases (cost increases passed on from vendors). While this is a calculated move to protect margins, it ties up cash and slightly slowed how quickly inventory is being sold through. The reserve for obsolete inventory actually shrank slightly, suggesting management is comfortable with the quality of what is on shelves.
The Company Took on More Debt to Fund Share Buybacks
Total debt rose by $249.1 million to $1.2 billion, primarily to fund $341.1 million in share repurchases during 2025. Operating cash flow also fell sharply — from $659.2 million in 2024 to $365.9 million in 2025 — partly because $68.5 million in federal taxes that were deferred from 2024 (due to IRS relief) had to be paid in 2025. The company's leverage ratio (debt relative to earnings) rose to 1.67 from 1.42, still well within the maximum covenant limit of 3.25, leaving meaningful financial flexibility.
2026 Guidance Points to Modest Recovery, Not a Breakout Year
Management expects low single-digit sales growth in 2026, with flat to slightly improved pool construction and renovation activity. Earnings per diluted share guidance of $10.85–$11.15 is roughly flat to modestly above 2025's $10.85. One notable headwind: performance-based compensation is expected to increase by $10–$15 million as bonuses "normalize" — implying 2025 payouts were below target. The company plans to open 5–8 new sales centers and continue its technology investment program.