In 2018, Manny Perez retired as CEO of POOLCORP (POOL) after 20 years of leading the company. Prior to joining POOL, he worked at another high-quality B2B distributor: Watsco. In fact, Manny said he left Watsco because of more favorable dynamics in the swimming pool market, namely a more fragmented supply and demand and only a 10% penetration of pools of US single-family households.

Manny clearly had great judgement as in the 20 years to FY 2018, POOL’s sales and FCF per share compounded ~12% per year and the stock has returned 22.7% per year.

The pool industry still benefits from such favorable attributes, but we believe there are three more recent developments that could define a very different competitive landscape today.

We interviewed a Former POOLCORP executive with over 30 years experience in the swimming pool industry to explore potential competitive threats to POOL.

Succession planning for long standing CEOs is always difficult, especially for relationship-based service businesses like pool distribution. Although Peter Arvan, POOL’s current CEO, was hired and trained by Manny, it seems his management style is slightly different:

Peter Arvan is a different CEO from Manny Perez. Everything is more metrically-driven and he wants people of like mind versus people who know and understand the industry and all its nuances… Manny was an interesting guy who I got to know well. He had been there for 20 years until he retired, so that was his baby and not everything was black and white…It was a relationship business to him, whereas Peter Arvan is metrically-driven, so what works in Dallas should work in Syracuse and there's not a lot of conversation. - Former Regional Director at POOLCORP

As POOL continues to professionalize and focus on metrics, a PE-owned building products distributor has rolled up several well-renowned family-owned distributors to create the second largest pool distributor in the US.

We never thought, in a million years, that Bel-Aqua would sell. Their service levels are uber high; great pricing, great people. Everybody who works there loves to work there. The next thing you knew, it was three acquisitions in a row for Heritage, in the span of about five days. No one could believe it, but it makes sense. - Former Regional Director at POOLCORP
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