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.
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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