Former Regional Director at POOLCORP
Jeff has over 30 years experience in the swimming pool industry working on both the manufacturer and the distributor side of the industry. He started his career at Hayward, a leading pool manufacturer, before joining POOLCORP where he was responsible for 3 distribution facilities and 6 sales centres in the Northeast region. he enjoyed 15 years at POOLCORP and is now working on the chemical manufacturing side of the industry.Read moreView Profile Page
In Practise Notes
- Dealers are booked out well into 2023
- Shift to fibreglass pools could increase the size of the market in the long-run
- 2020/21 seems to have pulled forward future demand which could cause a significant decline in new installations from 2023/4
- Recurring chemical sales stabilises revenue in downturns. POOL's chemicals are mainly private label
- Interesting perspective on POOL culture change since Manny retired
- How Heritage entered the market and could threaten POOL
- Why POOL acquired Pinch a Penny to enter the retail game
Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.
Jeff can we take a step back to 2006 and can you provide some context to the peak market for swimming pools back then and when you first joined POOLCORP?
From 2000 to 2006, I worked for Imperial Manufacturing and Distribution who manufactured steel wall vinyl liner pools, some plastic steps and another division made spas. As home equity became free and people found all this money, we exploded. I managed three distribution facilities in New York State proper and down through the Mid-Atlantic, and we also sold to other distributors in those markets; my region went from $17 to $55 million in six years. Pool builders who would normally build 30 pools were now building over 100 per year, so it was a license to print money for many of these companies. Once the economic down turn hit, those numbers were cut in half. Obviously, there are clientele who always have money, and we maintain some of that dealer base, but by and large, it was gutted. At that point, I was working for the spa division for Imperial, which also obviously took a major down turn. I had gotten an opportunity to work for POOLCORP, initially as their 'pool kit specialist' but that quickly became division sales manager and two years later, in 2008, I became regional manager.
How do you compare the peak environment in 2005/2006, with 200,000 installations per year, to today, pushing up from 110,000 or potentially more this year?
The easiest metric I can equate it to is most reputable large dealers are completely sold out for 2022 and are selling into 2023. That trend began as Covid hit in March, April and May of 2020. In 2005/2006 that never happened; there was always capacity. You had more dealers in 2005/2006 that could spread the wealth, and labor wasn't quite as tight as it is now. Even with those two caveats in the mix, the fact that if you look at every segment of our industry, whether it's above ground pools, vinyl in ground, fiberglass or gunite, they are all sold out for all of this year, as they were last year, which has never happened before.
People rely on PK data, which is who POOLCORP uses, but I think their numbers are erroneous. The example I can use is, four years ago they said 200 pools were built in Rochester, New York. There's one dealer alone who built 200 pools prior to the pandemic in Rochester and there's another five or six guys who are also building in that market. I've covered that market for 30 years so I think PK data is a little wonky and I don't know where they pull all of their info from – if it's building permits or from elsewhere – but that info is not dialed in as it claims to be.
Could it actually be a bigger market with more installations than POOLCORP's data suggests?
How sustainable is the current installation rate of 115,000 pools per year?
I attended the Dallas Trade Show in November and our biggest trade show in Atlantic City, New Jersey, which is primarily focused in the Northeast. We had a relatively weak attendance, but knowing the dealers and manufacturers like Imperial or Latham or Leisure on the fiberglass side, the general consensus is we're going to see some return to normalcy mid-2023 and then taper back to what we were used to prior to the pandemic. We all see it kind of maintaining itself for another 12 to 18 months and we might squeeze all of 2023 out of it, but the assumption is that we are going to slow down at some point in 2023.
POOLCORP claimed pre GFC, 2005/2006 was 210,000 installations a year, which declined to 50,000 in the midst of the crisis. Post crisis, it's jumped to 100,000, so do you see a 10%, 20% or 30% decline in installations after 2023 as a return to normalcy?
I would think we would be somewhere in that ball park. The only thing that I would debate is, once we rolled out in 2006 and we got into normal again, in 2017 to 2020 pre-pandemic, we were in that 120,000 pool range; we experienced new construction of 5% to 7% year over year increase with some inflation built in. Your install number will be closer to that 180,000 to 200,000 for last year when we shake everything out. It gets back to when I recall, in 2006, working for a manufacturer, our lead time on manufacturing in-ground vinyl liners was 15 to 20 days, which is a long time to wait for a liner. That same company, with increased capacity and better machinery to manufacture vinyl liners, took 45 days last year which is simply unheard of.