Pool (NASDAQ:POOL) reported a modest increase in second-quarter 2026 sales while maintaining its adjusted earnings outlook, as recurring maintenance demand and gains in building materials helped offset continued weakness in new pool construction and discretionary spending.
President and CEO John Watwood, speaking on his first earnings call in the role, said the company’s distribution model remains supported by a large installed base of pools, recurring maintenance revenue and a broad branch network that is “difficult to replicate.” He said PoolCorp’s strategy remains focused on growing customer share, increasing network density and improving execution across markets.
Sales Rise 2% as Maintenance Demand Holds Up
PoolCorp reported second-quarter net sales of $1.8 billion, up 2% from a year earlier. CFO Melanie Hart said pricing contributed 3% to sales growth as the company lapped prior-year mid-season vendor price increases.
Watwood said the company benefited from “healthy recurring maintenance demand” tied to its installed base of pools. Building materials sales increased 4%, which he attributed to the company’s national pool trend showrooms, product breadth and support for builders. Equipment sales rose 3% on price and repair-related demand, while chemicals declined 2% because of lower pricing.
Geographically, Europe was a bright spot, with sales up 11% on strong demand and improving sentiment. Watwood said warmer weather and greater consumer investment in backyards contributed to the strength. Seasonal markets grew 6%.
However, PoolCorp continued to face softness in year-round markets. Watwood said sales in California, Texas and Arizona declined by mid-single digits, while Florida was down 1%. He said much of the drag came from the company’s Horizon irrigation and landscape business, which is concentrated in those markets and pressured by slowing residential projects. U.S. pool permits were tracking down low single digits year to date, and discretionary demand remained measured.
Sales to retail customers declined 1%, while Pinch A Penny franchise sales were flat. The company said POOL360, its digital platform, reached 18% of sales, a record level of adoption.
Margins Pressured by Freight and Customer Mix
Gross profit increased 1% to $541 million, while gross margin declined 30 basis points year over year to 29.7%. Hart said product mix was neutral, but higher inbound freight costs and an unfavorable customer mix weighed on margins. She said the company saw a higher portion of sales from larger customers, which generally carry lower margins.
“The decline was driven primarily by inbound freight costs, which we were not able to fully recoup in selling price this quarter, and by unfavorable customer mix,” Hart said.
Supply chain gains partially offset those pressures. Hart pointed to progress in private label, exclusive products and expanded building materials offerings. In response to analyst questions, she said inbound freight was “by far the most significant component” of the gross margin pressure.
The company now expects full-year gross margin to be approximately 30 basis points below the prior year, compared with its previous expectation for margins to be in line. Hart said the revised outlook reflects the second quarter’s weight in the full-year results and the continued impact of higher freight and customer mix.
Expense Discipline Supports Earnings
PoolCorp reported operating expenses of $273 million, up 4% from a year earlier. Adjusted operating expenses increased 1%, excluding an $8.3 million one-time charge primarily tied to the non-cash acceleration of unvested equity grants related to the CEO transition.
Adjusted operating income increased 1% to $276 million, with an adjusted operating margin of 15.1%. Reported operating income fell 2% to $268 million. Adjusted net income rose 1% to $196 million, while reported net income declined 3% to $188 million.
Adjusted diluted earnings per share were $5.38, up from $5.17 a year earlier. Reported diluted EPS was $5.17 in both periods.
Hart said the company made progress on expense discipline during the quarter, reducing adjusted operating expense growth from 5% in the first quarter to 1% in the second quarter. She said capacity absorption helped keep compensation and outbound freight costs well managed.
Guidance Maintained on Adjusted Basis
PoolCorp maintained its underlying adjusted earnings guidance range of $10.87 to $11.17 per share. Including the $0.21 impact from CEO transition expenses, the company updated its diluted EPS range to $10.66 to $10.96.
For the full year, the company expects low single-digit top-line growth, with approximately 2% to 3% from pricing. Hart said pricing benefits are expected to moderate in the second half as the company laps last year’s mid-season price increases. Demand expectations include slight growth in maintenance, some incremental remodel activity and pool builds that remain soft but stable.
Adjusted operating expenses are expected to increase approximately 2% to 3% for the full year, including some incentive compensation recovery from the prior year. Interest expense is still estimated at $49 million to $51 million, and the full-year tax rate is forecast at approximately 25%.
Hart said the company expects cash from operations to come in around 100% of net income for the year. PoolCorp returned capital to shareholders through $93 million in dividends and approximately $86 million in share repurchases year to date. The company has $580 million remaining under its share repurchase authorization.
CEO Outlines Strategic Priorities
Watwood outlined four priorities for the company: sales excellence, pricing and supply chain discipline, operational execution, and disciplined mergers and acquisitions. He said the company is focused on equipping sales teams with talent, training and tools, improving chemical and building materials execution, growing private label and proprietary brands, and getting recently opened greenfield locations to their full potential.
On mergers and acquisitions, Watwood said PoolCorp remains focused on tuck-in deals and opportunities that fit the core business, including product-category-specific opportunities, provided they meet strategic, cultural and financial criteria.
Watwood said the company has opened fewer new sales centers this year as it focuses on profitability at locations opened over the past several years. During the quarter, PoolCorp added one location in a key U.S. pool market and closed one Horizon location.
In response to analyst questions about market share, Watwood said PoolCorp has opportunities in building materials, chemicals and other categories by improving customer and supplier connectivity. “We listen to what the market’s telling us, we adjust, we execute on that,” he said. “I think our ability to go gain share is substantial.”
Watwood said the company is operating in a market that appears to be stabilizing, though he noted that a return to stronger long-term growth would require more help from the broader market. PoolCorp plans to provide its next update when it reports third-quarter 2026 results on Oct. 22.
About Pool (NASDAQ:POOL)
Pool Corporation is a leading wholesale distributor of swimming pool supplies, equipment, and related outdoor living products. Headquartered in Covington, Louisiana, the company serves a diverse customer base that includes service professionals, independent retailers, high-volume builders, and national retail chains. Pool Corporation’s extensive branch network enables it to maintain strong local customer relationships while leveraging its scale to source products efficiently from manufacturers around the world.
The company’s product portfolio spans pool and spa chemicals, water treatment equipment, pumps, filters, heaters, automation and control systems, liners, safety covers, and cleaning accessories.
