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Sweeping Legislation Benefits Poolcorp(POOL)

February 12, 2009

Analysis of:VGB Act Uncertainty Hits Residential Side | www.poolspanews.com

While comparing a swimming pool to a car is more than a stretch of imagination, it will be a helpful exercise for the layperson, in order to better comprehend the implications of the new law that went into effect December 19, 2008.  Please know and understand that virtually every existing inground swimming pool and spa--except for those possibly installed within the last year--commercial and residential, will be required to retrofit the main drain to comply with the new law.  This retrofit procedure, both the component and the process, will be somewhat akin to replacing every air filter on every automobile in the U.S.--without opening the hood. 

Opportunistic Poolcorp (POOL) Grabs Marketshare

February 4, 2009

Analysis of:Poolcorp buys Spanish Distributor | poolspanews.com

Sound, long term financial health and economic resiliency was brandished quietly by Poolcorp(POOL) in this recent acquisition of Spanish distributor, Proplas.  The deal was finalized and signed on Oct 1, 2008.  Taking advantage of the slumping worldwide economy to purchase at a bargain price and gain a better foothold in a heretofore minority position, Poolcorp has wisely increased their market share in this Western European onclave.  Expanding market share in a down market is not only a smart tactical move, it is commensuarte with Poolcorp's overall strategy to improve minority market share whenever it makes good sense to do so.  Having the financial clout to casually complete this acquisition, when crony-like, regional industry competitors are struggling to simply keep their nose above the chlorinated water line, Poolcorp continues to exhibit more of their industry leading muscle flexing.

Poolcorp(POOL) Adjusting to the Landscape

January 15, 2009

Analysis of:Poolcorp ConferenceAddresses Market Downturn | www.poolspanews.com

This piece is important to investors because it draws a clear outline of where the industry has been, where it is now and where it might be headed in the near and long term future.  Representatives from Poolcorp(POOL) indicate at their annual conference that today this tiny, leisure industry is off more than 65% from the historical highs of 2005, with home equity extraction back at 1998 levels.  Nearly every sun belt pool guy agrees with the Poolcorp spokesperson, when they say that we are still in a declining market. However many pool industry veterans who are still standing in this economy, reluctantly yearn for the industry to auger through the sandy bottom and finally hit rock in the first half of 2009--thereby setting the stage for a rather inauspicious return to normalized growth in 2010. Adjusting to the new business landscape is vital, as new pool contracts go the way of the Dodo bird and maintenance, repair and replacement elbows its way to center stage for those that remain.

Too small to make a big splash?

July 24, 2007

Analysis of:Private Equity Firm Buys Balboa and G/G | www.poolspanews.com

The importance of this article brings to our attention the growing trend of outside investors entering the pool and spa industry.  Nearly 30 years of leading the way in electronic controls for a variety of leisure products has paid off handsomely for privately held Balboa Instruments in this acquisition by Quad-C Management, based in Charlottesville, VA.  However, the sale of Balboa signals yet an even more significant indicator, as more and more investors from outside the pool and spa industry are entering the business through the purchase of higher profile, quality companies.  Earlier this year, Apollo Management, LP, finalized its purchase of Jacuzzi Brands Inc. for $1.25 billion.  In 2006, The Carlyle Group partnered with Zodiac to acquire Water Pik Technologies Inc. parent company of Jandy, to name just two acquisitions in the last 12 months.

Poolcorp navigates rough water

April 30, 2007

Analysis of:Pool Needs A Refill | www.fool.com

The Fool makes a good argument for Poolcorp's need to pass out the motion sickness meds as the distribution leader continues to navigate the rough water of a changing consumer market.

However, I am not buying the Fool's position that the big box stores, Wal-Mart (NYSE:WMT), Home Depot (NYSE:HD), Lowe's (NYSE:LOW), Target (NYSE:TGT), or Sears Holdings (Nasdaq:SHLD) are not much of a threat to Poolcorp's marketplace.  The pool distributor's management is exerting far too much energy prodding their customer base to extend their hours of operation on the weekends to believe the Fool entirely.  Poolcorp has publicly stated on numerous occasions over the past three years, that up to 70% of all swimming pool retail sales occur between Friday afternoon and Sunday afternoon.  The big box stores are getting the biggest share of this piece of the pie, as they are the most visible and they are simply open for business.  

Secondly, the relatively youthful segment of Poolcorp--Complimentary Products (commodity components of swimming pool construction, i.e. cement, steel, plumbing, etc.) places them without any serious competitor in the swimming pool industry, but squarely in the gun sights of folks like Home Depot and Lowes.   Poolcorp is betting that by providing a one stop shopping opportunity to their existing customer/pool builder, that they can change his buying habits and prevent him from making that big box purchase.  Good plan, with some admirable recent past growth.  Let's see how they execute.

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