10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 0-26640

 

POOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware		36-3943363
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
109 Northpark Boulevard,
Covington,	Louisiana	70433-5001
(Address of principal executive offices)		(Zip Code)

(985) 892-5521

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	POOL	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.          Yes x    No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                        Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ☐    No x

As of April 24, 2023, there were 39,038,250 shares of common stock outstanding.

POOL CORPORATION

Form 10-Q

For the Quarter Ended March 31, 2023

TABLE OF CONTENTS

			Page
PART I.  FINANCIAL INFORMATION
	Item 1.  Financial Statements (Unaudited)
		Consolidated Statements of Income	1
		Consolidated Statements of Comprehensive Income	2
		Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Cash Flows	4
		Consolidated Statements of Changes in Stockholders’ Equity	5
		Notes to Consolidated Financial Statements	6
	Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations		12
	Item 3.  Quantitative and Qualitative Disclosures about Market Risk		25
	Item 4.  Controls and Procedures		25
PART II.  OTHER INFORMATION
	Item 1.  Legal Proceedings		26
	Item 1A.  Risk Factors		26
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		26
	Item 6.  Exhibits		27
SIGNATURE			28

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

POOL CORPORATION

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data) 

	Three Months Ended
	March 31,
	2023		2022
Net sales	$	1,206,774	$	1,412,650
Cost of sales	837,019		965,461
Gross profit	369,755		447,189
Selling and administrative expenses	223,984		211,466
Operating income	145,771		235,723
Interest and other non-operating expenses, net	15,835		5,198
Income before income taxes and equity in earnings	129,936		230,525
Provision for income taxes	28,273		51,322
Equity in earnings of unconsolidated investments, net	36		58
Net income	$	101,699	$	179,261
Earnings per share attributable to common stockholders:
Basic	$	2.60	$	4.46
Diluted	$	2.58	$	4.41
Weighted average common shares outstanding:
Basic	38,877		39,932
Diluted	39,189		40,392
Cash dividends declared per common share	$	1.00	$	0.80

The accompanying Notes are an integral part of the Consolidated Financial Statements.

1

POOL CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended
	March 31,
	2023		2022
Net income	$	101,699	$	179,261
Other comprehensive (loss) income:
Foreign currency translation gain (loss)	2,469		(214)
Unrealized (loss) gain on interest rate swaps, net of the change in taxes of $1,269 and $(3,866)	(3,809)		11,598
Total other comprehensive (loss) income	(1,340)		11,384
Comprehensive income	$	100,359	$	190,645

The accompanying Notes are an integral part of the Consolidated Financial Statements.

2

POOL CORPORATION

Consolidated Balance Sheets

(In thousands, except share data)

	March 31,		March 31,		December 31,
	2023		2022		2022
	(Unaudited)		(Unaudited)		(Audited)
Assets
Current assets:
Cash and cash equivalents	$	26,470	$	35,365	$	45,591
Receivables, net	163,048		195,951		128,247
Receivables pledged under receivables facility	401,123		483,976		223,201
Product inventories, net	1,686,683		1,641,155		1,591,060
Prepaid expenses and other current assets	27,875		42,310		30,892
Total current assets	2,305,199		2,398,757		2,018,991
Property and equipment, net	200,997		180,504		193,709
Goodwill	693,242		688,350		691,993
Other intangible assets, net	303,753		310,848		305,450
Equity interest investments	1,206		1,184		1,248
Operating lease assets	274,428		260,285		269,608
Other assets	84,004		42,213		84,438
Total assets	$	3,862,829	$	3,882,141	$	3,565,437
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	739,749	$	685,946	$	406,667
Accrued expenses and other current liabilities	126,093		179,552		168,521
Short-term borrowings and current portion of long-term debt	33,080		21,265		25,042
Current operating lease liabilities	78,498		71,685		75,484
Total current liabilities	977,420		958,448		675,714
Deferred income taxes	57,868		40,944		58,759
Long-term debt, net	1,332,670		1,483,808		1,361,761
Other long-term liabilities	37,623		32,940		35,471
Non-current operating lease liabilities	200,498		191,723		198,538
Total liabilities	2,606,079		2,707,863		2,330,243
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 39,032,631, 40,110,126 and 39,069,419 shares issued and outstanding at March 31, 2023, March 31, 2022 and December 31, 2022, respectively	39		40		39
Additional paid-in capital	586,595		558,755		575,776
Retained earnings	665,561		611,583		653,484
Accumulated other comprehensive income	4,555		3,900		5,895
Total stockholders’ equity	1,256,750		1,174,278		1,235,194
Total liabilities and stockholders’ equity	$	3,862,829	$	3,882,141	$	3,565,437

The accompanying Notes are an integral part of the Consolidated Financial Statements.

3

POOL CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended
	March 31,
	2023		2022
Operating activities
Net income	$	101,699	$	179,261
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	7,632		7,663
Amortization	2,135		2,192
Share-based compensation	4,923		3,657
Equity in earnings of unconsolidated investments, net	(36)		(58)
Other	2,732		5,777
Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables	(211,015)		(303,400)
Product inventories	(96,011)		(306,582)
Prepaid expenses and other assets	(5,786)		(23,330)
Accounts payable	332,800		287,449
Accrued expenses and other liabilities	(35,870)		(60,738)
Net cash provided by (used in) operating activities	103,203		(208,109)
Investing activities
Acquisition of businesses, net of cash acquired	(1,760)		—
Purchases of property and equipment, net of sale proceeds	(15,570)		(9,159)
Other investments, net	(230)		—
Net cash used in investing activities	(17,560)		(9,159)
Financing activities
Proceeds from revolving line of credit	256,079		564,288
Payments on revolving line of credit	(376,895)		(604,960)
Proceeds from term loan under credit facility	—		250,000
Proceeds from asset-backed financing	151,200		155,000
Payments on asset-backed financing	(51,100)		(50,000)
Payments on term facility	(2,313)		(2,313)
Proceeds from short-term borrowings and current portion of long-term debt	3,011		10,277
Payments on short-term borrowings and current portion of long-term debt	(1,223)		(784)
Payments of deferred and contingent acquisition consideration	(551)		(1,374)
Proceeds from stock issued under share-based compensation plans	5,896		3,135
Payments of cash dividends	(39,073)		(32,132)
Purchases of treasury stock	(50,549)		(62,420)
Net cash (used in) provided by financing activities	(105,518)		228,717
Effect of exchange rate changes on cash and cash equivalents	754		(405)
Change in cash and cash equivalents	(19,121)		11,044
Cash and cash equivalents at beginning of period	45,591		24,321
Cash and cash equivalents at end of period	$	26,470	$	35,365

The accompanying Notes are an integral part of the Consolidated Financial Statements.

4

POOL CORPORATION

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands)

	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Earnings		Income		Total
Balance at December 31, 2022	39,069	$	39	$	575,776	$	653,484	$	5,895	$	1,235,194
Net income	—	—		—		101,699		—		101,699
Foreign currency translation	—	—		—		—		2,469		2,469
Interest rate swaps, net of the change in taxes of $1,269	—	—		—		—		(3,809)		(3,809)
Repurchases of common stock, net of retirements	(144)	—		—		(50,549)		—		(50,549)
Share-based compensation	—	—		4,923		—		—		4,923
Issuance of stock under share-based compensation plans	108	—		5,896		—		—		5,896
Declaration of cash dividends	—	—		—		(39,073)		—		(39,073)
Balance at March 31, 2023	39,033	$	39	$	586,595	$	665,561	$	4,555	$	1,256,750

	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Earnings		Income		Total
Balance at December 31, 2021	40,193	$	40	$	551,963	$	526,874	$	(7,484)	$	1,071,393
Net income	—	—		—		179,261		—		179,261
Foreign currency translation	—	—		—		—		(214)		(214)
Interest rate swaps, net of the change in taxes of $(3,866)	—	—		—		—		11,598		11,598
Repurchases of common stock, net of retirements	(138)	—		—		(62,420)		—		(62,420)
Share-based compensation	—	—		3,657		—		—		3,657
Issuance of stock under share-based compensation plans	55	—		3,135		—		—		3,135
Declaration of cash dividends	—	—		—		(32,132)		—		(32,132)
Balance at March 31, 2022	40,110	$	40	$	558,755	$	611,583	$	3,900	$	1,174,278

The accompanying Notes are an integral part of the Consolidated Financial Statements.

5

POOL CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Summary of Significant Accounting Policies

Pool Corporation (the Company, which may be referred to as we, us or our) prepared the unaudited interim Consolidated Financial Statements following U.S. generally accepted accounting principles (GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim financial information. As permitted under those rules, we have condensed or omitted certain footnotes and other financial information required for complete financial statements. 

The interim Consolidated Financial Statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. All significant intercompany accounts and intercompany transactions have been eliminated.

A description of our significant accounting policies is included in our 2022 Annual Report on Form 10-K. You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2022 Annual Report on Form 10-K.  The results for our three-month period ended March 31, 2023, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2023.

Income Taxes

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards. To the extent realized tax deductions exceed the amount of previously recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit. We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on restricted stock awards lapse. We recorded excess tax benefits of $4.8 million in the first quarter of 2023 compared to $7.3 million in the first quarter of 2022.

Retained Earnings

We account for the retirement of treasury shares as a reduction of Retained earnings. As of March 31, 2023, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $2.2 billion and cumulative dividends of $980.1 million.

Accumulated Other Comprehensive Income

The table below presents the components of our Accumulated other comprehensive income balance (in thousands):

	March 31,				December 31,
	2023		2022		2022
Foreign currency translation adjustments	$	(17,139)	$	(9,794)	$	(19,608)
Unrealized gains on interest rate swaps, net of tax	21,694		13,694		25,503
Accumulated other comprehensive income	$	4,555	$	3,900	$	5,895

6

Recent Accounting Pronouncements Pending Adoption

The following table summarizes recent accounting pronouncements that we plan to adopt in future periods:

Standard	Description	Effective Date	Effect on Financial Statements and Other Significant Matters
ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ASU 2021-01, Reference Rate Reform (Topic 848): Scope ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848	ASU 2020-04, Reference Rate Reform (Topic 848), provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships and sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which refined the scope of ASC 848 and clarified some of its guidance as it relates to recent rate reform activities. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extended the date for using optional expedients and exceptions to December 31, 2024.	The provisions of these updates are available until December 31, 2024.	In 2022, we adopted the hedge accounting expedient related to the probability of forecasted transactions to assert probability of the hedged interest regardless of any expected modification related to reference rate reform. We may apply other elections as applicable. We do not expect that there will be a material impact to the financial statements as a result of adopting any of the optional expedient or exceptions from these ASUs.

7

Note 2 – Earnings Per Share

We calculate basic and diluted earnings per share using the two-class method. Earnings per share under the two-class method is calculated using net income attributable to common stockholders, which is net income reduced by the earnings allocated to participating securities. Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders. Participating securities excluded from weighted average common shares outstanding were 213,000 for the three months ended March 31, 2023 and 239,000 for the three months ended March 31, 2022.

The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except per share data):

	Three Months Ended
	March 31,
	2023		2022
Net income	$	101,699	$	179,261
Amounts allocated to participating securities	(548)		(1,051)
Net income attributable to common stockholders	$	101,151	$	178,210
Weighted average common shares outstanding:
Basic	38,877		39,932
Effect of dilutive securities:
Stock options and employee stock purchase plan	312		460
Diluted	39,189		40,392
Earnings per share attributable to common stockholders:
Basic	$	2.60	$	4.46
Diluted	$	2.58	$	4.41
Anti-dilutive stock options excluded from diluted earnings per share computations (1)	64		1

(1)Since these options have exercise prices that are higher than the average market prices of our common stock, including them in the calculation would have an anti-dilutive effect on earnings per share.

Note 3 – Acquisitions

In March 2023, we acquired the distribution assets of Pro-Water Irrigation & Landscape Supply, Inc., a wholesale distributor of irrigation and landscape supply products, adding two locations in Arizona.

In April 2022, we acquired the distribution assets of Tri-State Pool Distributors, a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in West Virginia.

We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material.

8

Note 4 – Fair Value Measurements and Interest Rate Swaps

Recurring Fair Value Measurements

Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts, our deferred compensation plan asset and liability and contingent consideration related to recent acquisitions. The three levels of the fair value hierarchy under the accounting guidance are described below:

Level 1    Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2     Inputs to the valuation methodology include:

•quoted prices for similar assets or liabilities in active markets;

•quoted prices for identical or similar assets or liabilities in inactive markets;

•inputs other than quoted prices that are observable for the asset or liability; or

•inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3    Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The table below presents our assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):

			Fair Value at March 31,
	Input Level	Classification	2023		2022
Assets
Unrealized gains on interest rate swaps	Level 2	Other assets	$	28,970	$	18,817
Deferred compensation plan asset	Level 1	Other assets	14,014		18,338
Liabilities
Contingent consideration liabilities	Level 3	Accrued expenses and other current liabilities	$	—	$	600
Unrealized losses on interest rate swaps	Level 2	Accrued expenses and other current liabilities	—		514
Deferred compensation plan liability	Level 1	Other long-term liabilities	14,014		18,338

Interest Rate Swaps

We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our variable rate borrowings. 

We use significant other observable market data or assumptions (Level 2 inputs) in determining the fair value of our interest rate swap contracts and forward-starting interest rate swap contract that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk.  Our fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves.

We recognize any differences between the variable interest rate in effect and the fixed interest rates per our swap contracts as an adjustment to interest expense over the life of the swaps. To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, we record the changes in the estimated fair value of our interest rate swap contracts to Accumulated other comprehensive income on the Consolidated Balance Sheets.

We currently have two swap contracts in place. These swap contracts were previously forward-starting and convert the variable interest rate to a fixed interest rate on a portion of our variable rate borrowings. Interest expense related to the notional amounts under these swap contracts is based on the fixed rates plus the applicable margin on a portion of our variable rate borrowings. Changes in the estimated fair value of these interest rate swap contracts are recorded to Accumulated other comprehensive income on the Consolidated Balance Sheets.

9

The following table provides additional details related to these swap contracts:

Derivative	Inception Date	Effective Date	Termination Date	Notional Amount (in millions)	Fixed Interest Rate
Interest rate swap 1	February 5, 2020	February 26, 2021	February 28, 2025	$150.0	1.3800%
Interest rate swap 2	March 9, 2020	September 29, 2022	February 26, 2027	$150.0	0.7400%

For the interest rate swap contracts in effect at March 31, 2023, a portion of the change in the estimated fair value between periods relates to future interest expense. Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive income on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income. These amounts were not material in the three-month periods ended March 31, 2023 or March 31, 2022.

We have entered into a forward-starting interest rate swap contract to extend the hedged period for future interest payments on a portion of our variable rate borrowings. The following table provides details related to our forward-starting interest rate swap contract:

Derivative	Inception Date	Effective Date	Termination Date	Notional Amount (in millions)	Fixed Interest Rate
Forward-starting interest rate swap	March 9, 2020	February 28, 2025	February 26, 2027	$150.0	0.8130%

Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. In this case, we would still be obligated to pay the variable interest payments underlying our debt agreements.  Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we were in a net pay position.

Our interest rate swap contracts and forward-starting interest rate swap contract are subject to master netting arrangements. According to our accounting policy, we do not offset the fair values of assets with the fair values of liabilities related to these contracts.

Other

Our deferred compensation plan asset represents investments in securities (primarily mutual funds) traded in an active market (Level 1 inputs) held for the benefit of certain employees as part our deferred compensation plan. We record an equal and offsetting deferred compensation plan liability, which represents our obligation to participating employees. Changes in the fair value of the plan asset and liability are reflected in Selling and administrative expenses in the Consolidated Statements of Income.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments. The carrying value of our long-term debt approximates its fair value.  Our determination of the estimated fair value reflects a discounted cash flow model using our estimates, including assumptions related to borrowing rates (Level 3 inputs).

Nonrecurring Fair Value Measurements

In addition to our assets and liabilities that we measure at fair value on a recurring basis, our assets and liabilities are also subject to nonrecurring fair value measurements. Generally, our assets are recorded at fair value on a nonrecurring basis as a result of impairment charges or business combinations. In the three months ended March 31, 2023 and March 31, 2022, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

10

Note 5 – Debt

The table below presents the components of our debt (in thousands):

	March 31,
	2023		2022
Variable rate debt
Short-term borrowings	$	3,011	$	10,854
Current portion of long-term debt:
Australian credit facility	11,319		10,411
Current portion of term loans under credit facility	18,750		—
Short-term borrowings and current portion of long-term debt	$	33,080	$	21,265
Long-term portion:
Revolving credit facility	398,895		532,253
Term loan under credit facility	481,250		500,000
Term facility	154,938		164,188
Receivables securitization facility	299,600		290,000
Less: financing costs, net	2,013		2,633
Long-term debt, net	1,332,670		1,483,808
Total debt	$	1,365,750	$	1,505,073

Our accounts receivable securitization facility (the “Receivables Facility”) provides for the sale of certain of our receivables to a wholly-owned subsidiary (the “Securitization Subsidiary”). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities.

We account for the sale of the receivable interests as a secured borrowing on our Consolidated Balance Sheets. The receivables subject to the agreement collateralize the cash proceeds received from the third-party financial institutions. We classify the entire outstanding balance as Long-term debt, net on our Consolidated Balance Sheets as we intend and have the ability to refinance the obligations on a long-term basis. We present the receivables that collateralize the cash proceeds separately as Receivables pledged under receivables facility on our Consolidated Balance Sheets.

11

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the accompanying interim Consolidated Financial Statements and notes, the Consolidated Financial Statements and accompanying notes in our 2022 Annual Report on Form 10-K and with Management’s Discussion and Analysis in our 2022 Annual Report on Form 10-K.  

For a discussion of our base business calculations, see the Results of Operations section below.

Forward-Looking Statements

This report contains forward-looking information that involves risks and uncertainties.  Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of earnings and other financial performance measures, statements of management’s expectations regarding our strategic, operational and capital allocation plans and objectives, management's views on industry, economic, competitive, technological and regulatory conditions and other forecasts of trends and other matters. Forward-looking statements speak only as of the date of this filing, and we undertake no obligation to publicly update or revise such statements to reflect new circumstances or unanticipated events as they occur.  You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate,” “estimate,” “expect,” “intend,” “believe,” “will likely result,” “outlook,” “project,” “may,” “can,” “plan,” “target,” “potential,” “should” and other words and expressions of similar meaning.

No assurance can be given that the expected results in any forward-looking statement will be achieved, and actual results may differ materially due to one or more factors, including the sensitivity of our business to weather conditions; changes in the economic conditions, consumer discretionary spending, the housing market, inflation or interest rates; our ability to maintain favorable relationships with suppliers and manufacturers; the extent to which home-centric trends associated with the pandemic will moderate or reverse; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; changes in the regulatory environment; new or additional taxes, duties or tariffs; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in our 2022 Annual Report on Form 10-K, as updated by our subsequent filings with the U.S. Securities and Exchange Commission.  For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

OVERVIEW

Financial Results

In the first quarter of 2023, differing weather conditions contributed to variability in our results across geographies. Our southern markets experienced more typical weather during the quarter and generated encouraging results. However, higher precipitation and cooler temperatures suppressed results in our western markets, hampering new pool construction activities and sales of maintenance-related products. These conditions continued into late March where we saw a considerable impact on our biggest sales month of the quarter.

Net sales decreased 15% in the first quarter of 2023 to $1.2 billion compared to $1.4 billion in the first quarter of 2022 following 33% net sales growth in the first quarter of 2022 and 57% growth in the first quarter of 2021. Weather conditions were generally favorable in our southern markets, where Texas and Florida, our two largest markets in the South, realized combined base business sales in line with 2022. In contrast, results were unfavorably impacted by unusually wet and cold weather in the western U.S., including California and Arizona, two of our largest markets, where base business sales were down a combined 21% from last year. We estimate that sales were also negatively impacted 2% from lower customer early buy activity in the first quarter of 2023 versus the first quarter of 2022 and 1% from continued softness in our European markets.

Gross profit decreased 17% to $369.8 million in the first quarter of 2023 from $447.2 million in the same period of 2022. Consistent with our expectations, gross margin decreased 110 basis points to 30.6% in the first quarter of 2023 compared to 31.7% in the first quarter of 2022.

Selling and administrative expenses (operating expenses) increased 6% to $224.0 million in the first quarter of 2023 compared to $211.5 million in the first quarter of 2022. Our largest expense growth drivers during the quarter related to higher rent and facility costs, the return of in-person customer-facing retail events and investments in customer-focused projects. As a percentage of net sales, operating expenses increased to 18.6% in the first quarter of 2023 compared to 15.0% in the same period of 2022.

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Operating income in the first quarter of 2023 decreased 38% to $145.8 million from a tough comparison of $235.7 million in the same quarter last year but was 13% higher than operating income in the first quarter of 2021 of $129.0 million. Operating margin was 12.1% in the first quarter of 2023 compared to 16.7% in the first quarter of 2022.

Interest and other non-operating expenses, net for the first quarter of 2023 increased $10.6 million compared to the first quarter of 2022, primarily reflecting higher average interest rates between periods.

We recorded a $4.8 million tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in the quarter ended March 31, 2023, compared to a tax benefit of $7.3 million realized in the same period of 2022. This resulted in a $0.12 per diluted share tax benefit compared to an $0.18 per diluted share tax benefit realized in the same period of 2022.

Net income decreased 43% to $101.7 million in the first quarter of 2023 compared to $179.3 million in the first quarter of 2022. Earnings per diluted share decreased 41% to $2.58 in the first quarter of 2023 compared to $4.41 in the same period of 2022. Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 42% to $2.46 compared to $4.23 in the first quarter of 2022.

References to product line and product category data throughout this report generally reflect data related to the North American swimming pool market, as this data is more readily available for analysis and represents the largest component of our operations.

Financial Position and Liquidity

As of March 31, 2023, total net receivables, including pledged receivables, decreased 17% compared to March 31, 2022, driven by our sales trends. Our days sales outstanding (DSO), as calculated on a trailing four quarters basis, was 26.5 days at March 31, 2023 and 26.4 days at March 31, 2022. Our allowance for doubtful accounts balance was $9.0 million at March 31, 2023 and $6.0 million at March 31, 2022.

Net inventory levels increased 3% compared to levels at March 31, 2022, which compares to the 19% increase that we reported as of December 31, 2022 (compared to December 31, 2021). We are pleased with the progress in utilizing our strategic inventory buys and believe that we are appropriately stocked to ensure product availability during the swimming pool season and to support our new locations. Our inventory reserve was $24.5 million at March 31, 2023 and $19.8 million at March 31, 2022. Our inventory turns, as calculated on a trailing four quarters basis, were 2.5 times at March 31, 2023 and 3.1 times at March 31, 2022.

Total debt outstanding at March 31, 2023 was $1.4 billion compared to $1.5 billion at March 31, 2022 as we have used operating cash flows to make payments on our debt balances. We have utilized debt proceeds over the past twelve months primarily to fund share repurchases and investments in working capital.

Current Trends and Outlook

For a detailed discussion of trends through 2022, see the Current Trends and Outlook section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2022 Annual Report on Form 10-K.  

Based on our results to-date and trends observed into the second quarter, we now expect sales for the full year of 2023 to be down in the mid-single digits compared to 2022 versus the flat to down 3% from our initial projections disclosed in our 2022 Annual Report on Form 10-K. Our 2022 Annual Report on Form 10-K outlines the details of our initial projections. Our overall expectations related to renovation and remodel activity, our Horizon business, and European business remain relatively unchanged. However, we now believe that it is possible that new pool construction could decline up to 30% based on less available buildable days and current permit trends. Maintenance revenue is also expected to see a 1% lower increase than previously expected, from the use of less consumables stemming from the unfavorable weather in the first quarter.

As previously disclosed in our 2022 Annual Report on Form 10-K, we project gross margin for the full year of 2023 to be in line with our long-term outlook of approximately 30.0% with higher gross margin in the first half of 2023 compared to the latter half of the year as we sell through inventory purchased prior to recent price increases.

We plan to leverage our existing infrastructure and manage discretionary spending to limit expense growth between plus or minus 2% compared to the full year of 2022.

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We project that our annual effective tax rate (without the benefit from ASU 2016-09) for 2023 will approximate 25.3% to 25.5%. We expect our effective tax rate will fluctuate from quarter to quarter due to ASU 2016-09, particularly in periods when employees elect to exercise their vested stock options or when restrictions on share-based awards lapse. We recorded a $4.8 million, or $0.12 per diluted share, tax benefit from ASU 2016-09 for the three months ended March 31, 2023. We may recognize additional tax benefits related to stock option exercises in 2023 from grants that expire in future years. We have not included any expected tax benefits in our guidance beyond what we have recognized as of March 31, 2023.

We expect 2023 diluted EPS in the range of $14.62 to $16.12, including the impact of year-to-date tax benefits of $0.12. We expect to continue to use cash for the payment of cash dividends as and when declared by our Board and to fund opportunistic share repurchases through the remainder of 2023.

The forward-looking statements in the foregoing section are based on current market conditions, speak only as of the filing date of this report, are based on several assumptions, and are subject to significant risks and uncertainties. See “Cautionary Statement for Forward-Looking Statements.”

RESULTS OF OPERATIONS

As of March 31, 2023, we conducted operations through 427 sales centers in North America, Europe and Australia. For the three months ended March 31, 2023, approximately 95% of our net sales were from our operations in North America.

The following table presents information derived from the Consolidated Statements of Income expressed as a percentage of net sales:

	Three Months Ended
	March 31,
	2023		2022
Net sales	100.0	%	100.0	%
Cost of sales	69.4		68.3
Gross profit	30.6		31.7
Selling and administrative expenses	18.6		15.0
Operating income	12.1		16.7
Interest and other non-operating expenses, net	1.3		0.4
Income before income taxes and equity in earnings	10.8	%	16.3	%

Note: Due to rounding, percentages presented in the table above may not add to Operating income or Income before income taxes and equity in earnings.

We have included the results of operations from acquisitions in 2023 and 2022 in our consolidated results since the acquisition dates.

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Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The following table breaks out our consolidated results into the base business component and the excluded component (sales centers excluded from base business):

(Unaudited)	Base Business						Excluded						Total
(in thousands)	Three Months Ended						Three Months Ended						Three Months Ended
	March 31,						March 31,						March 31,
	2023			2022			2023			2022			2023			2022
Net sales	$	1,130,353		$	1,337,685		$	76,421		$	74,965		$	1,206,774		$	1,412,650
Gross profit	339,597			416,167			30,158			31,022			369,755			447,189
Gross margin	30.0		%	31.1		%	39.5		%	41.4		%	30.6		%	31.7		%
Operating expenses	204,922			195,909			19,062			15,557			223,984			211,466
Expenses as a % of net sales	18.1		%	14.6		%	24.9		%	20.8		%	18.6		%	15.0		%
Operating income	134,675			220,258			11,096			15,465			145,771			235,723
Operating margin	11.9		%	16.5		%	14.5		%	20.6		%	12.1		%	16.7		%

In our calculation of our base business results, we have excluded the following acquisitions for the periods identified:

Acquired	Acquisition Date	Net Sales Centers Acquired	Periods Excluded
Pro-Water Irrigation & Landscape Supply, Inc.	March 2023	2	March 2023
Tri-State Pool Distributors	April 2022	1	January - March 2023
Porpoise Pool & Patio, Inc.	December 2021	1	January - March 2023 and January - March 2022
Wingate Supply, Inc.	December 2021	1	January - February 2023 and January - February 2022

When calculating our base business results, we exclude sales centers that are acquired, closed or opened in new markets for a period of 15 months. We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that are consolidated with acquired sales centers.

We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales.  After 15 months of operations, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.

The table below summarizes the changes in our sales center count during the first three months of 2023:

December 31, 2022	420
Acquired locations	2
New locations	5
March 31, 2023	427

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Net Sales

	Three Months Ended
	March 31,
(in millions)	2023		2022		Change
Net sales	$	1,206.8	$	1,412.7	$	(205.9)	(15)%

Net sales and base business net sales decreased 15% in the first quarter of 2023 compared to the first quarter of 2022 following 33% net sales growth in the first quarter of 2022 and 57% growth in the first quarter of 2021. In the first quarter of 2023, differing weather conditions contributed to variability in our results across geographies. Our southern markets experienced more typical weather during the quarter and generated encouraging results. However, higher precipitation and cooler temperatures suppressed results in our western markets, including California and Arizona, two of our largest markets, hampering new pool construction activities and sales of maintenance-related products.

We faced several challenges during the quarter, with unfavorable weather being the most significant. The following factors impacted our sales during the quarter and are listed in order of estimated magnitude.

•We estimate that unfavorable weather conditions in the first quarter negatively impacted sales by approximately 5%.

•Net sales benefited approximately 4% to 5% from inflationary product cost increases, which compares to a benefit of 10% to 12% in the first quarter of 2022.

•Sales were also negatively impacted 2% from lower customer early buy activity in the first quarter of 2023 versus the first quarter of 2022 and 1% from continued softness in our European markets.

Net sales in our North American seasonal markets, representing 38% of our total base business net sales in the first quarter of 2023, decreased 23% compared to the first quarter of 2022 as these markets are more sensitive to weather conditions, particularly in the shoulders of the season when unfavorable weather delays the openings of swimming pools. Comparatively, net sales in our year-round markets, representing 57% of our total base business net sales in the first quarter of 2023, decreased 9% compared to the first quarter of 2022 as differing weather conditions led to varied results across our four largest markets. Weather conditions were generally favorable in our southern markets, where Texas and Florida realized combined base business sales in line with 2022. In contrast, results were negatively impacted by unusually wet and cold weather in the western U.S., including California and Arizona, where base business sales were down a combined 21% from last year.

Related to our product sales, following a period of significant growth over the past three years, we observed a decline in volumes of discretionary products sold as new construction activities moderated and were further impacted by unfavorable weather conditions and macroeconomic impacts. This is evidenced by lower sales for product offerings such as equipment and building materials. In the first quarter of 2023, base business sales of equipment, which includes swimming pool heaters, pumps, lights, filters and automation, decreased 14% compared to the same period last year, and collectively represented approximately 30% of net sales for the period. Sales of building materials decreased 7% compared to the first quarter of 2022 and represented approximately 14% of net sales in the first quarter of 2023.

Sales to specialty retailers that sell swimming pool supplies and customers who service large commercial installations are included in the appropriate existing product categories, and sales trends in these areas are reflected in the discussion above. Base business sales to retail customers decreased 16% in the first quarter of 2023 compared to the first quarter of 2022 and represented approximately 10% of our net sales for the first quarter of 2023. Including the impact of our December 2021 acquisition of Porpoise Pool & Patio, sales to retail customers decreased 12% and represented approximately 14% of our net sales. Sales to commercial swimming pool customers increased 12% in the first quarter of 2023 compared to the first quarter of 2022 and represented approximately 5% of our net sales for the first quarter of 2023.

Net sales in Europe, representing 4% of our total net sales in the first quarter of 2023, declined 25% compared to the first quarter of 2022, impacted by continued macroeconomic uncertainty from the war in Ukraine and increased fuel prices.

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Gross Profit

	Three Months Ended
	March 31,
(in millions)	2023			2022			Change
Gross profit	$	369.8		$	447.2		$	(77.4)	(17)%
Gross margin	30.6		%	31.7		%

Gross margin decreased 110 basis points to 30.6% in the first quarter of 2023 compared to the first quarter of 2022 when gross margin increased 330 basis points to 31.7% (over the same period in 2021). Our prior year gross margin benefited from higher levels of inflation and price increases, while gross margin in the first quarter of 2023 began to trend more in line with our longer-term annual gross margin outlook of 30.0%. Gross margin in the first quarter of 2023 also reflected continued benefits from sales of strategic lower cost inventory purchases ahead of recent vendor price increases.

Operating Expenses

	Three Months Ended
	March 31,
(in millions)	2023			2022			Change
Selling and administrative expenses	$	224.0		$	211.5		$	12.5	6%
Operating expenses as a % of net sales	18.6		%	15.0		%

Operating expenses increased 6% in the first quarter of 2023 compared to the first quarter of 2022. Our largest expense growth drivers during the quarter related to higher rent and facility costs, increased labor costs, the return of in-person customer-facing retail events and investments in customer-focused projects. These increases were partially offset by lower performance-based compensation expense.

Interest and Other Non-Operating Expenses, Net

Interest and other non-operating expenses, net for the first quarter of 2023 increased $10.6 million compared to the first quarter of 2022. Our weighted average effective interest rate increased to 4.8% in the first quarter of 2023 from 1.5% in the first quarter of 2022 on average outstanding debt of $1.3 billion in both periods.

Income Taxes

Our effective income tax rate was 21.8% for the three months ended March 31, 2023 compared to 22.3% for the three months ended March 31, 2022. We recorded a $4.8 million tax benefit from ASU 2016-09 in the quarter ended March 31, 2023 compared to a tax benefit of $7.3 million realized in the same period last year. Without the benefit from ASU 2016-09 in both periods, our effective tax rate was 25.5% for the first quarter of 2023 and 25.4% for the first quarter of 2022.

Net Income and Earnings Per Share

Net income decreased 43% to $101.7 million in the first quarter of 2023 compared to $179.3 million in the first quarter of 2022. Earnings per diluted share decreased 41% to $2.58 in the first quarter of 2023 compared to $4.41 in the same period of 2022. Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 42% to $2.46 in the first quarter of 2023 compared to $4.23 in the first quarter of 2022. See the reconciliation of GAAP to non-GAAP measures below.

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Reconciliation of Non-GAAP Financial Measures

The non-GAAP measures described below should be considered in the context of all of our other disclosures in this Form 10-Q.

Adjusted Diluted EPS

We have included adjusted diluted EPS, a non-GAAP financial measure, as a supplemental disclosure, because we believe this measure is useful to management, investors and others in assessing our period-to-period operating performance.

Adjusted diluted EPS is a key measure used by management to demonstrate the impact of tax benefits from ASU 2016-09 on our diluted EPS and to provide investors and others with additional information about our potential future operating performance to supplement GAAP measures.

We believe this measure should be considered in addition to, not as a substitute for, diluted EPS presented in accordance with GAAP, and in the context of our other disclosures within this Form 10-Q. Other companies may calculate this non-GAAP financial measure differently than we do, which may limit its usefulness as a comparative measure.

The table below presents a reconciliation of diluted EPS to adjusted diluted EPS.

(Unaudited)	Three Months Ended
	March 31,
	2023		2022
Diluted EPS	$	2.58	$	4.41
ASU 2016-09 tax benefit	(0.12)		(0.18)
Adjusted diluted EPS	$	2.46	$	4.23

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Seasonality and Quarterly Fluctuations

Our business is seasonal. In general, sales and operating income are highest during the second and third quarters, which represent the peak months of both swimming pool use and installation and irrigation and landscape installations and maintenance. Sales are lower during the first and fourth quarters. In 2022, we generated approximately 59% of our net sales and 67% of our operating income in the second and third quarters of the year.

We typically experience a build-up of product inventories and accounts payable during the winter months in anticipation of the peak selling season.  Excluding borrowings to finance acquisitions and share repurchases, our peak borrowing usually occurs during the second quarter, primarily because extended payment terms offered by our suppliers typically are payable in April, May and June, while our peak accounts receivable collections typically occur in June, July and August.

The following table presents certain unaudited quarterly data for the first quarter of 2023, the four quarters of 2022 and the fourth, third and second quarters of 2021.  We have included income statement and balance sheet data for the most recent eight quarters to allow for a meaningful comparison of the seasonal fluctuations in these amounts.  In our opinion, this information reflects all normal and recurring adjustments considered necessary for a fair presentation of this data.  The results of any one or more quarters are not necessarily a good indication of results for an entire fiscal year or of continuing future trends for a variety of reasons, including the seasonal nature of our business and the impact of new and acquired sales centers.

(Unaudited)	QUARTER
(in thousands)	2023		2022								2021
	First		Fourth		Third		Second		First		Fourth		Third		Second
Statement of Income Data
Net sales	$	1,206,774	$	1,095,920	$	1,615,339	$	2,055,818	$	1,412,650	$	1,035,557	$	1,411,448	$	1,787,833
Gross profit	369,755		315,731		503,687		666,804		447,189		322,376		441,899		551,685
Operating income	145,771		107,295		263,877		418,888		235,723		127,891		237,276		338,586
Net income	101,699		71,863		190,055		307,283		179,261		107,609		184,665		259,695
Balance Sheet Data
Total receivables, net	$	564,171	$	351,448	$	549,796	$	756,585	$	679,927	$	376,571	$	476,150	$	585,566
Product inventories, net	1,686,683		1,591,060		1,539,572		1,579,101		1,641,155		1,339,100		1,043,407		894,654
Accounts payable	739,749		406,667		442,226		604,225		685,946		398,697		414,156		439,453
Total debt	1,365,750		1,386,803		1,512,545		1,595,398		1,505,073		1,183,350		362,819		423,116

We expect that our quarterly results of operations will continue to fluctuate depending on the timing and amount of revenue contributed by new and acquired sales centers.  Based on our peak summer selling season, we generally open new sales centers and close or consolidate sales centers, when warranted, either in the first quarter before the peak selling season begins or in the fourth quarter after the peak selling season ends.

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Weather is one of the principal external factors affecting our business.  The table below presents some of the possible effects resulting from various weather conditions.

Weather		Possible Effects
Hot and dry	•	Increased purchases of chemicals and supplies
		for existing swimming pools
	•	Increased purchases of above-ground pools and
		irrigation and lawn care products
Unseasonably cool weather or extraordinary amounts	•	Fewer pool and irrigation and landscape
of rain		installations
	•	Decreased purchases of chemicals and supplies
	•	Decreased purchases of impulse items such as
		above-ground pools and accessories
Unseasonably early warming trends in spring/late cooling	•	A longer pool and landscape season, thus positively
trends in fall		impacting our sales
(primarily in the northern half of the U.S. and Canada)
Unseasonably late warming trends in spring/early cooling	•	A shorter pool and landscape season, thus negatively
trends in fall		impacting our sales
(primarily in the northern half of the U.S. and Canada)

Weather Impacts on 2023 and 2022 Results

Weather conditions varied across the contiguous United States throughout the first quarter of 2023. Conditions were generally favorable in our southern markets, where sales benefited from warmer weather and below-average precipitation. In contrast, results were unfavorably impacted by unusually wet and cold weather in the western U.S., particularly in California and Arizona, which are two of our largest markets. Comparatively, in the first quarter of 2022, overall weather conditions were generally favorable, and sales benefited from above-average temperatures along much of the west and the east coast, although Texas experienced cooler-than-normal temperatures.

CRITICAL ACCOUNTING ESTIMATES

We prepare our Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (GAAP), which require management to make estimates and assumptions that affect reported amounts and related disclosures. Management identifies critical accounting estimates as:

•those that require the use of assumptions about matters that are inherently and highly uncertain at the time the estimates are made; and

•those for which changes in the estimates or assumptions, or the use of different estimates and assumptions, could have a material impact on our consolidated results of operations or financial condition.

Management has discussed the development, selection and disclosure of our critical accounting estimates with the Audit Committee of our Board.  For a description of our critical accounting estimates that require us to make the most difficult, subjective or complex judgments, please see our 2022 Annual Report on Form 10-K.  We have not changed any of these policies from those previously disclosed in that report.

Recent Accounting Pronouncements

See Note 1 of “Notes to Consolidated Financial Statements,” included in Part I, Item 1 of this Form 10-Q for discussion of recent accounting pronouncements.

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LIQUIDITY AND CAPITAL RESOURCES

Liquidity is defined as the ability to generate adequate amounts of cash to meet short-term and long-term cash needs. We assess our liquidity in terms of our ability to generate cash to fund our operating activities, taking into consideration the seasonal nature of our business. Significant factors which could affect our liquidity include the following:

•cash flows generated from operating activities;

•the adequacy of available bank lines of credit;

•the quality of our receivables;

•acquisitions;

•dividend payments;

•capital expenditures;

•changes in income tax laws and regulations;

•the timing and extent of share repurchases; and

•the ability to attract long-term capital with satisfactory terms.

Our primary capital needs are seasonal working capital obligations, debt repayment obligations and other general corporate initiatives, including acquisitions, opening new sales centers, dividend payments and share repurchases. Our primary working capital obligations are for the purchase of inventory, payroll, rent, other facility costs and selling and administrative expenses. Our working capital obligations fluctuate during the year, driven primarily by seasonality and the timing of inventory purchases. Our primary sources of working capital are cash from operations supplemented by bank borrowings, which have historically been sufficient to support our growth and finance acquisitions. We have funded our capital expenditures and share repurchases in substantially the same manner.

We prioritize our use of cash based on investing in our business, maintaining a prudent capital structure, including a modest amount of debt, and returning cash to our shareholders through dividends and share repurchases. Our specific priorities for the use of cash are as follows:

•capital expenditures primarily for maintenance and growth of our sales center network, technology-related investments and fleet vehicles;

•inventory and other operating expenses;

•strategic acquisitions executed opportunistically;

•payment of cash dividends as and when declared by our Board;

•repayment of debt to maintain an average total target leverage ratio (as defined below) between 1.5 and 2.0; and

•repurchases of our common stock under our Board-authorized share repurchase program.

We focus our capital expenditure plans principally on the needs of our sales centers, and in recent years have increased our spending on information technology. Historically, our capital expenditures have averaged roughly 1.0% of net sales. Capital expenditures were 0.7% of net sales in 2022 and 2021 and 0.6% of net sales in 2020. Since 2020, our capital expenditures as a percentage of net sales were lower than our historical average primarily due to our significant sales growth. Based on management’s current plans, we project capital expenditures in 2023 will approximate 1.0% of net sales.

Sources and Uses of Cash

The following table summarizes our cash flows (in thousands):

	Three Months Ended
	March 31,
	2023		2022
Operating activities	$	103,203	$	(208,109)
Investing activities	(17,560)		(9,159)
Financing activities	(105,518)		228,717

Net cash provided by operations improved to $103.2 million for the first three months of 2023 from net cash used in operations of $208.1 million for the first three months of 2022, primarily driven by positive changes in working capital, particularly as we sell through our prior year strategic inventory purchases, partially offset by lower net income.

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Net cash used in investing activities for the first three months of 2023 increased compared to the first three months of 2022, primarily due to a $6.4 million increase in capital expenditures and $1.8 million of cash used for the acquisition of a business in the first quarter of 2023.

Net cash used in financing activities was $105.5 million for the first three months of 2023 compared to net cash provided by financing activities of $228.7 million for the first three months of 2022, primarily reflecting $21.2 million of net debt payments in the first three months of 2023 versus $321.5 million of net debt proceeds in the first three months of 2022 and an increase in dividends paid of $6.9 million, partially offset by an $11.9 million decrease in share repurchases between periods.

Future Sources and Uses of Cash

To supplement cash from operations as our primary source of working capital, we plan to continue to utilize our three major credit facilities, which are the Amended and Restated Revolving Credit Facility (the Credit Facility), the Term Facility (the Term Facility) and the Receivables Securitization Facility (the Receivables Facility). For additional details regarding these facilities, see the summary descriptions below and more complete descriptions in Note 5 of our "Notes to Consolidated Financial Statements,” included in Part II, Item 8 in our 2022 Annual Report on Form 10-K and Note 5 of “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Form 10-Q.

Credit Facility

Our Credit Facility provides for $1.25 billion in borrowing capacity consisting of a $750.0 million five-year unsecured revolving credit facility and a $500.0 million term loan facility. The Credit Facility also includes sublimits for the issuance of swingline loans and standby letters of credit. We pay interest on revolving and term loan borrowings under the Credit Facility at a variable rate based on the one month London Interbank Offered Rate (LIBOR), plus an applicable margin. The term loan requires quarterly amortization payments beginning in September 2023 aggregating to 20% of the original principal amount of the loan during the third, fourth and fifth years of the loan, with all remaining principal due on the Credit Facility maturity date of September 25, 2026. We intend to continue to use the Credit Facility for general corporate purposes, for future share repurchases and to fund future growth initiatives.

At March 31, 2023, there was $398.9 million of revolving borrowings outstanding, a $500.0 million term loan, a $4.8 million standby letter of credit outstanding and $346.3 million available for borrowing under the Credit Facility.  The weighted average effective interest rate for the Credit Facility as of March 31, 2023 was approximately 4.6%, excluding commitment fees.

Term Facility

Our Term Facility provides for $185.0 million in borrowing capacity and matures on December 30, 2026. Proceeds from the Term Facility were used to pay down the Credit Facility in December 2019, adding borrowing capacity for future share repurchases, acquisitions and growth-oriented working capital expansion. We pay interest on borrowings under the Term Facility at a variable rate based on the one month LIBOR, plus an applicable margin. The Term Facility is repaid in quarterly installments of 1.250% of the Term Facility on the last business day of each quarter beginning in the first quarter of 2020. We classify the entire outstanding balance as Long-term debt on our Consolidated Balance Sheets as we intend and have the ability to refinance the obligations on a long-term basis. The total of the quarterly payments through maturity will be equal to 33.75% of the Term Facility with the final principal repayment, equal to 66.25% of the Term Facility, due on the maturity date. We may prepay amounts outstanding under the Term Facility without penalty other than interest breakage costs.

At March 31, 2023, there was $154.9 million outstanding under the Term Facility with a weighted average effective interest rate of 6.0%.

Receivables Securitization Facility

Our two-year accounts receivable securitization facility (the Receivables Facility) offers us a lower-cost form of financing. Under this facility, we can borrow up to $350.0 million between April through August and from $210.0 million to $340.0 million during the remaining months of the year. The Receivables Facility matures on November 1, 2024. We classify the entire outstanding balance as Long-term debt on our Consolidated Balance Sheets as we intend and have the ability to refinance the obligations on a long-term basis.

The Receivables Facility provides for the sale of certain of our receivables to a wholly-owned subsidiary (the Securitization Subsidiary). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights

22

to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities. Upon payment of the receivables by customers, rather than remitting to the financial institutions the amounts collected, we retain such collections as proceeds for the sale of new receivables until payments become due.

At March 31, 2023, there was $299.6 million outstanding under the Receivables Facility at a weighted average effective interest rate of 5.7%, excluding commitment fees.

Financial Covenants

Financial covenants of the Credit Facility, Term Facility and Receivables Facility include maintenance of a maximum average total leverage ratio and a minimum fixed charge coverage ratio, which are our most restrictive financial covenants.  As of March 31, 2023, the calculations of these two covenants are detailed below:

•Maximum Average Total Leverage Ratio. On the last day of each fiscal quarter, our average total leverage ratio must be less than 3.25 to 1.00.  Average Total Leverage Ratio is the ratio of the sum of (i) Total Non-Revolving Funded Indebtedness as of such date, (ii) the trailing twelve months (TTM) Average Total Revolving Funded Indebtedness and (iii) the TTM Average Accounts Securitization Proceeds divided by TTM EBITDA (as those terms are defined in the Credit Facility). As of March 31, 2023, our average total leverage ratio equaled 1.48 (compared to 1.37 as of December 31, 2022) and the TTM average total indebtedness amount used in this calculation was $1.5 billion.

•Minimum Fixed Charge Coverage Ratio. On the last day of each fiscal quarter, our fixed charge ratio must be greater than or equal to 2.25 to 1.00.  Fixed Charge Ratio is the ratio of the TTM EBITDAR divided by TTM Interest Expense paid or payable in cash plus TTM Rental Expense (as those terms are defined in the Credit Facility).  As of March 31, 2023, our fixed charge ratio equaled 7.96 (compared to 9.57 as of December 31, 2022) and TTM Rental Expense was $83.2 million.

The Credit Facility and Term Facility limit the declaration and payment of dividends on our common stock to a manner consistent with past practice, provided no default or event of default has occurred and is continuing, or would result from the payment of dividends.  We may declare and pay quarterly dividends so long as (i) the amount per share of such dividends is not greater than the most recently publicly announced amount of dividends per share and (ii) our Average Total Leverage Ratio is less than 3.25 to 1.00 both immediately before and after giving pro forma effect to such dividends. Under the Credit Facility and Term Facility, we may repurchase shares of our common stock provided no default or event of default has occurred and is continuing, or would result from the repurchase of shares, and our maximum average total leverage ratio (determined on a pro forma basis) is less than 3.25 to 1.00.  

Other covenants in each of our credit facilities include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate, and sell or transfer assets.  Failure to comply with any of our financial covenants or any other terms of our credit facilities could result in, among other things, higher interest rates on our borrowings or the acceleration of the maturities of our outstanding debt.

Interest Rate Swaps

We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our variable rate borrowings.   Interest expense related to the notional amounts under all swap contracts is based on the fixed rates plus the applicable margin on the respective borrowings.

As of March 31, 2023, we had two interest rate swap contracts in place and one forward-starting interest rate swap contract, each of which has the effect of converting our exposure to variable interest rates on a portion of our variable rate borrowings to fixed interest rates. For more information, see Note 4 of “Notes to Consolidated Financial Statements” included in Part I, Item 1 of this Form 10-Q.

Compliance and Future Availability

As of March 31, 2023, we were in compliance with all material covenants and financial ratio requirements under our Credit Facility, our Term Facility and our Receivables Facility.  We believe we will remain in compliance with all material covenants and financial ratio requirements throughout the next twelve months.  For additional information regarding our debt arrangements, see Note 5 of “Notes to Consolidated Financial Statements,” included in Part II, Item 8 of our 2022 Annual Report on Form 10-K, as updated by Note 5 of “Notes to Consolidated Financial Statements,” included in Part I, Item 1 of this Form 10-Q.

23

We believe we have adequate availability of capital to fund present operations and the current capacity to finance any working capital needs that may arise.  We continually evaluate potential acquisitions and hold discussions with acquisition candidates.  If suitable acquisition opportunities arise that would require financing, we believe that we would have the ability to finance any such transactions.

As of April 24, 2023, $186.4 million of the current Board-authorized amount under our share repurchase program remained available.  We expect to repurchase shares on the open market from time to time depending on market conditions.  We plan to fund these repurchases with cash provided by operations and borrowings under the above-described credit facilities.

24

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

There have been no material changes during the three months ended March 31, 2023 from what we reported in our 2022 Annual Report on Form 10-K. For additional information on our interest rate risk, refer to “Quantitative and Qualitative Disclosures about Market Risk” included in Part II, Item 7A in our 2022 Annual Report on Form 10-K.

Currency Risk

There have been no material changes during the three months ended March 31, 2023 from what we reported in our 2022 Annual Report on Form 10-K. For additional information on our currency risk, refer to “Quantitative and Qualitative Disclosures about Market Risk” included in Part II, Item 7A in our 2022 Annual Report on Form 10-K.

Item 4.  Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Act).  The rules refer to the controls and other procedures designed to ensure that information required to be disclosed in reports that we file or submit under the Act is (1) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.  As of March 31, 2023, management, including our CEO and CFO, performed an evaluation of the effectiveness of our disclosure controls and procedures.  Based on that evaluation, management, including our CEO and CFO, concluded that as of March 31, 2023, our disclosure controls and procedures were effective.

We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.  Based on the most recent evaluation, we have concluded that no change in our internal control over financial reporting occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The effectiveness of our system of disclosure controls and procedures or internal control over financial reporting is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating such systems, the assumptions used in identifying the likelihood of future events and the inability to eliminate misconduct completely. As a result, there can be no assurance that our control systems will detect all errors or fraud. By their nature, our system can provide only reasonable assurance regarding management's control objectives.

25

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time, we are subject to various claims and litigation arising in the ordinary course of business, including product liability, personal injury, commercial, contract and employment matters. While the outcome of any litigation is inherently unpredictable, based on currently available facts and our current insurance coverages, we do not believe that the ultimate resolution of any of these matters will have a material adverse impact on our financial condition, results of operations or cash flows.

Item 1A.  Risk Factors

Our operations and financial results are subject to various risks and uncertainties, which could adversely affect our business, financial condition or future results. We urge you to carefully consider (i) the other information set forth in this report and (ii) the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The table below summarizes the repurchases of our common stock in the first quarter of 2023:

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Maximum Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan (2)
January 1-31, 2023	—	$	—	—	$	230,242,715
February 1-28, 2023	34,851	$	356.99	16,792	$	224,242,921
March 1-31, 2023	109,154	$	350.18	108,134	$	186,382,518
Total	144,005	$	351.83	124,926

(1)These shares may include shares of our common stock surrendered to us by employees in order to satisfy minimum tax withholding obligations in connection with certain exercises of employee stock options or lapses upon vesting of restrictions on previously restricted share awards, and/or to cover the exercise price of such options granted under our share-based compensation plans. There were 19,079 shares surrendered for this purpose in the first quarter of 2023.

(2)In May 2022, our Board authorized an additional $196.2 million under our share repurchase program for the repurchase of shares of our common stock in the open market at prevailing market prices bringing the total authorization available under the program to $600.0 million. As of April 24, 2023, $186.4 million of the authorized amount remained available under our current share repurchase program.

Our Board may declare future dividends at their discretion, after considering various factors, including our earnings, capital requirements, financial position, contractual restrictions and other relevant business considerations. For a description of restrictions on dividends in our Credit Facility, Term Facility and Receivables Facility, see the “Liquidity and Capital Resources” section of Management’s Discussion and Analysis in Part I, Item 2 of this Form 10-Q. We cannot assure shareholders or potential investors that dividends will be declared or paid any time in the future if our Board determines that there is a better use of our funds.

26

Item 6.  Exhibits

Exhibits filed as part of this report are listed below.

				Incorporated by Reference
No.		Description	Filed/ Furnished with this Form 10-Q	Form	File No.	Date Filed
3.1		Restated Certificate of Incorporation of the Company.		10-Q	000-26640	8/9/2006
3.2		Amended and Restated Bylaws of the Company.		8-K	000-26640	2/8/2019
4.1		Form of certificate representing shares of common stock of the Company.		8-K	000-26640	5/19/2006
31.1		Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2		Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1		Certification by Chief Executive Officer and Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101.INS	+	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	X
101.SCH	+	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	+	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	+	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	+	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	+	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	+	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)	X

+ Attached as Exhibit 101 to this report are the following items formatted in iXBRL (Inline Extensible Business Reporting Language):

1.Consolidated Statements of Income for the three months ended March 31, 2023 and March 31, 2022;

2.Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and March 31, 2022;

3.Consolidated Balance Sheets at March 31, 2023, December 31, 2022 and March 31, 2022;

4.Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and March 31, 2022;

5.Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2023 and March 31, 2022; and

6.Notes to Consolidated Financial Statements.

27

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 27, 2023.

	POOL CORPORATION
By:	/s/ Melanie Housey Hart
	Melanie Housey Hart
	Vice President and Chief Financial Officer, and duly authorized signatory on behalf of the registrant

28

EX-31.1

EXHIBIT 31.1

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Melanie Housey Hart, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Pool Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2023	/s/ Melanie Housey Hart
		Melanie Housey Hart
		Vice President and Chief Financial Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Peter D. Arvan, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Pool Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	April 27, 2023	/s/ Peter D. Arvan
		Peter D. Arvan
		President and Chief Executive Officer

EX-32.1

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350

(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

        In connection with the Quarterly Report on Form 10-Q of Pool Corporation (the “Company”) for the period ending March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Peter D. Arvan, as Chief Executive Officer of the Company, and Melanie Housey Hart, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 27, 2023

/s/ Peter D. Arvan

     Peter D. Arvan

     President and Chief Executive Officer

/s/ Melanie Housey Hart

     Melanie Housey Hart

     Vice President and Chief Financial Officer

        A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

        This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2023	Apr. 24, 2023
Cover [Abstract]
Document Type	10-Q
Document Period End Date	Mar. 31, 2023
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	0-26640
Entity Registrant Name	POOL CORPORATION
Entity Central Index Key	0000945841
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-3943363
Entity Address, Address Line One	109 Northpark Boulevard,
Entity Address, City or Town	Covington,
Entity Address, State or Province	LA
Entity Address, Postal Zip Code	70433-5001
City Area Code	(985)
Local Phone Number	892-5521
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	POOL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		39,038,250

XML

Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Net sales	$ 1,206,774	$ 1,412,650
Cost of sales	837,019	965,461
Gross profit	369,755	447,189
Selling and administrative expenses	223,984	211,466
Operating income	145,771	235,723
Interest and other non-operating expenses, net	15,835	5,198
Income before income taxes and equity earnings	129,936	230,525
Provision for income taxes	28,273	51,322
Equity earnings in unconsolidated investments, net	36	58
Net income	$ 101,699	$ 179,261
Earnings per share:
Basic (in dollars per share)	$ 2.60	$ 4.46
Diluted (in dollars per share)	$ 2.58	$ 4.41
Weighted average shares outstanding: [Abstract]
Basic (in shares)	38,877	39,932
Diluted (in shares)	39,189	40,392
Cash dividends declared per common share	$ 1.00	$ 0.80

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net Income	$ 101,699	$ 179,261
Other comprehensive (loss) income:
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax	2,469	(214)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax	(3,809)	11,598
Total other comprehensive (loss) income	(1,340)	11,384
Comprehensive income	$ 100,359	$ 190,645

XML

Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, Tax	$ 1,269	$ (3,866)

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Current assets:
Cash and cash equivalents	$ 26,470	$ 45,591	$ 35,365
Receivables, net	163,048	128,247	195,951
Receivables pledged under receivables facility	401,123	223,201	483,976
Product inventories, net	1,686,683	1,591,060	1,641,155
Prepaid expenses and other current assets	27,875	30,892	42,310
Total current assets	2,305,199	2,018,991	2,398,757
Property and equipment, net	200,997	193,709	180,504
Goodwill Balances	693,242	691,993	688,350
Other intangible assets, net	303,753	305,450	310,848
Equity interest investments	1,206	1,248	1,184
Operating lease assets	274,428	269,608	260,285
Other assets	84,004	84,438	42,213
Total assets	3,862,829	3,565,437	3,882,141
Current liabilities:
Accounts payable	739,749	406,667	685,946
Accrued expenses and other current liabilities	126,093	168,521	179,552
Short-term borrowings and current portion of long-term debt	33,080	25,042	21,265
Current operating lease liabilities	78,498	75,484	71,685
Total current liabilities	977,420	675,714	958,448
Deferred income taxes	57,868	58,759	40,944
Long-term debt, net	1,332,670	1,361,761	1,483,808
Other long-term liabilities	37,623	35,471	32,940
Non-current operating lease liabilities	200,498	198,538	191,723
Total liabilities	2,606,079	2,330,243	2,707,863
Stockholders' equity:
Common stock	39	39	40
Additional paid-in capital	586,595	575,776	558,755
Retained earnings	665,561	653,484	611,583
Accumulated other comprehensive income	4,555	5,895	3,900
Total stockholders’ equity	1,256,750	1,235,194	1,174,278
Total liabilities and stockholders' equity	$ 3,862,829	$ 3,565,437	$ 3,882,141

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001	$ 0.001
Common stock, authorized (in shares)	100,000,000	100,000,000	100,000,000
Common Stock, Shares, Outstanding	39,032,631	39,069,419	40,110,126

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating activities
Net Income	$ 101,699	$ 179,261
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
Depreciation	7,632	7,663
Amortization	2,135	2,192
Share-based compensation	4,923	3,657
Equity in earnings of unconsolidated investments, net	(36)	(58)
Other	2,732	5,777
Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables	(211,015)	(303,400)
Product inventories	(96,011)	(306,582)
Prepaid expenses and other assets	(5,786)	(23,330)
Accounts payable	332,800	287,449
Accrued expenses and other liabilities	(35,870)	(60,738)
Net Cash Provided by operating activities	103,203	(208,109)
Investing activities
Acquisition of businesses, net of cash acquired	(1,760)	0
Purchases of property and equipment, net of sale proceeds	(15,570)	(9,159)
Other Investments	(230)	0
Net cash used in investing activities	(17,560)	(9,159)
Financing activities
Proceeds from revolving line of credit	256,079	564,288
Payments on revolving line of credit	(376,895)	(604,960)
Proceeds from Long-term Lines of Credit	0	250,000
Proceeds from asset-backed financing	151,200	155,000
Payments on asset-backed financing	(51,100)	(50,000)
Payments on term facility	(2,313)	(2,313)
Proceeds from short-term borrowings and current portion of long-term debt	3,011	10,277
Payments on short-term borrowings and current portion of long-term debt	(1,223)	(784)
Payments of deferred and contingent acquisition consideration	(551)	(1,374)
Proceeds from stock issued under share-based compensation plans	5,896	3,135
Payments of cash dividends	(39,073)	(32,132)
Purchases of treasury stock	(50,549)	(62,420)
Net cash used in financing activities	(105,518)	228,717
Effect of exchange rate changes on cash and cash equivalents	754	(405)
Change in cash and cash equivalents	(19,121)	11,044
Cash and cash equivalents at beginning of period	45,591	24,321
Cash and cash equivalents at end of period	$ 26,470	$ 35,365

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Income (Loss)
Balance (in shares) at Dec. 31, 2021		40,193,000
Balance at Dec. 31, 2021	$ 1,071,393	$ 40	$ 551,963	$ 526,874	$ (7,484)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	179,261	0	0	179,261	0
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax	(214)	0	0	0	(214)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, Tax	(3,866)
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax	11,598	$ 0	0	0	11,598
Repurchases of common stock, net of retirements (shares)		(138,000)
Stock Repurchased and Retired During Period, Value	(62,420)	$ 0	0	(62,420)	0
APIC, Share-Based Payment Arrangement, Increase for Cost Recognition	3,657	$ 0	3,657	0	0
Issuance of shares under share-based compensation plans (shares)		55,000
Issuance of stock under share-based compensation plans	3,135	$ 0	3,135	0	0
Dividends, Common Stock, Cash	$ (32,132)	$ 0	0	(32,132)	0
Balance (in shares) at Mar. 31, 2022	40,110,126	40,110,000
Balance at Mar. 31, 2022	$ 1,174,278	$ 40	558,755	611,583	3,900
Balance (in shares) at Dec. 31, 2022	39,069,419	39,069,000
Balance at Dec. 31, 2022	$ 1,235,194	$ 39	575,776	653,484	5,895
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	101,699	0	0	101,699	0
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax	2,469	0	0	0	2,469
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, Tax	1,269
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax	(3,809)	$ 0	0	0	(3,809)
Repurchases of common stock, net of retirements (shares)		(144,000)
Stock Repurchased and Retired During Period, Value	(50,549)	$ 0	0	(50,549)	0
APIC, Share-Based Payment Arrangement, Increase for Cost Recognition	4,923	$ 0	4,923	0	0
Issuance of shares under share-based compensation plans (shares)		108,000
Issuance of stock under share-based compensation plans	5,896	$ 0	5,896	0	0
Dividends, Common Stock, Cash	$ (39,073)	$ 0	0	(39,073)	0
Balance (in shares) at Mar. 31, 2023	39,032,631	39,033,000
Balance at Mar. 31, 2023	$ 1,256,750	$ 39	$ 586,595	$ 665,561	$ 4,555

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, Tax	$ 1,269	$ (3,866)

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Description of New Accounting Pronouncements Not yet Adopted

Summary of Significant Accounting Policies

Pool Corporation (the Company, which may be referred to as we, us or our) prepared the unaudited interim Consolidated Financial Statements following U.S. generally accepted accounting principles (GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim financial information. As permitted under those rules, we have condensed or omitted certain footnotes and other financial information required for complete financial statements. 

The interim Consolidated Financial Statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. All significant intercompany accounts and intercompany transactions have been eliminated.

A description of our significant accounting policies is included in our 2022 Annual Report on Form 10-K. You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2022 Annual Report on Form 10-K.  The results for our three-month period ended March 31, 2023, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2023.

Income Taxes

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards. To the extent realized tax deductions exceed the amount of previously recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit. We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on restricted stock awards lapse. We recorded excess tax benefits of $4.8 million in the first quarter of 2023 compared to $7.3 million in the first quarter of 2022.

Retained Earnings

We account for the retirement of treasury shares as a reduction of Retained earnings. As of March 31, 2023, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $2.2 billion and cumulative dividends of $980.1 million.

Accumulated Other Comprehensive Income

The table below presents the components of our Accumulated other comprehensive income balance (in thousands):

	March 31,				December 31,
	2023		2022		2022
Foreign currency translation adjustments	$	(17,139)	$	(9,794)	$	(19,608)
Unrealized gains on interest rate swaps, net of tax	21,694		13,694		25,503
Accumulated other comprehensive income	$	4,555	$	3,900	$	5,895

Recent Accounting Pronouncements Pending Adoption

The following table summarizes recent accounting pronouncements that we plan to adopt in future periods:

Standard	Description	Effective Date	Effect on Financial Statements and Other Significant Matters
ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ASU 2021-01, Reference Rate Reform (Topic 848): Scope ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848	ASU 2020-04, Reference Rate Reform (Topic 848), provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships and sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which refined the scope of ASC 848 and clarified some of its guidance as it relates to recent rate reform activities. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extended the date for using optional expedients and exceptions to December 31, 2024.	The provisions of these updates are available until December 31, 2024.	In 2022, we adopted the hedge accounting expedient related to the probability of forecasted transactions to assert probability of the hedged interest regardless of any expected modification related to reference rate reform. We may apply other elections as applicable. We do not expect that there will be a material impact to the financial statements as a result of adopting any of the optional expedient or exceptions from these ASUs.

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Earnings Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

We calculate basic and diluted earnings per share using the two-class method. Earnings per share under the two-class method is calculated using net income attributable to common stockholders, which is net income reduced by the earnings allocated to participating securities. Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders. Participating securities excluded from weighted average common shares outstanding were 213,000 for the three months ended March 31, 2023 and 239,000 for the three months ended March 31, 2022.

The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except per share data):

	Three Months Ended
	March 31,
	2023		2022
Net income	$	101,699	$	179,261
Amounts allocated to participating securities	(548)		(1,051)
Net income attributable to common stockholders	$	101,151	$	178,210
Weighted average common shares outstanding:
Basic	38,877		39,932
Effect of dilutive securities:
Stock options and employee stock purchase plan	312		460
Diluted	39,189		40,392
Earnings per share attributable to common stockholders:
Basic	$	2.60	$	4.46
Diluted	$	2.58	$	4.41
Anti-dilutive stock options excluded from diluted earnings per share computations (1)	64		1

(1)Since these options have exercise prices that are higher than the average market prices of our common stock, including them in the calculation would have an anti-dilutive effect on earnings per share.

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Acquisitions

3 Months Ended

Mar. 31, 2023

Business Combinations [Abstract]

Acquisitions

Acquisitions

In March 2023, we acquired the distribution assets of Pro-Water Irrigation & Landscape Supply, Inc., a wholesale distributor of irrigation and landscape supply products, adding two locations in Arizona.

In April 2022, we acquired the distribution assets of Tri-State Pool Distributors, a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in West Virginia.

We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material.

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Fair Value Measurements and Interest Rate Swaps

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements and Interest Rate Swaps

Fair Value Measurements and Interest Rate Swaps

Recurring Fair Value Measurements

Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts, our deferred compensation plan asset and liability and contingent consideration related to recent acquisitions. The three levels of the fair value hierarchy under the accounting guidance are described below:

Level 1    Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2     Inputs to the valuation methodology include:

•quoted prices for similar assets or liabilities in active markets;

•quoted prices for identical or similar assets or liabilities in inactive markets;

•inputs other than quoted prices that are observable for the asset or liability; or

•inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3    Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The table below presents our assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):

			Fair Value at March 31,
	Input Level	Classification	2023		2022
Assets
Unrealized gains on interest rate swaps	Level 2	Other assets	$	28,970	$	18,817
Deferred compensation plan asset	Level 1	Other assets	14,014		18,338
Liabilities
Contingent consideration liabilities	Level 3	Accrued expenses and other current liabilities	$	—	$	600
Unrealized losses on interest rate swaps	Level 2	Accrued expenses and other current liabilities	—		514
Deferred compensation plan liability	Level 1	Other long-term liabilities	14,014		18,338

Interest Rate Swaps

We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our variable rate borrowings. 

We use significant other observable market data or assumptions (Level 2 inputs) in determining the fair value of our interest rate swap contracts and forward-starting interest rate swap contract that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk.  Our fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves.

We recognize any differences between the variable interest rate in effect and the fixed interest rates per our swap contracts as an adjustment to interest expense over the life of the swaps. To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, we record the changes in the estimated fair value of our interest rate swap contracts to Accumulated other comprehensive income on the Consolidated Balance Sheets.

We currently have two swap contracts in place. These swap contracts were previously forward-starting and convert the variable interest rate to a fixed interest rate on a portion of our variable rate borrowings. Interest expense related to the notional amounts under these swap contracts is based on the fixed rates plus the applicable margin on a portion of our variable rate borrowings. Changes in the estimated fair value of these interest rate swap contracts are recorded to Accumulated other comprehensive income on the Consolidated Balance Sheets.

The following table provides additional details related to these swap contracts:

Derivative	Inception Date	Effective Date	Termination Date	Notional Amount (in millions)	Fixed Interest Rate
Interest rate swap 1	February 5, 2020	February 26, 2021	February 28, 2025	$150.0	1.3800%
Interest rate swap 2	March 9, 2020	September 29, 2022	February 26, 2027	$150.0	0.7400%

For the interest rate swap contracts in effect at March 31, 2023, a portion of the change in the estimated fair value between periods relates to future interest expense. Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive income on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income. These amounts were not material in the three-month periods ended March 31, 2023 or March 31, 2022.

We have entered into a forward-starting interest rate swap contract to extend the hedged period for future interest payments on a portion of our variable rate borrowings. The following table provides details related to our forward-starting interest rate swap contract:

Derivative	Inception Date	Effective Date	Termination Date	Notional Amount (in millions)	Fixed Interest Rate
Forward-starting interest rate swap	March 9, 2020	February 28, 2025	February 26, 2027	$150.0	0.8130%

Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. In this case, we would still be obligated to pay the variable interest payments underlying our debt agreements.  Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we were in a net pay position.

Our interest rate swap contracts and forward-starting interest rate swap contract are subject to master netting arrangements. According to our accounting policy, we do not offset the fair values of assets with the fair values of liabilities related to these contracts.

Other

Our deferred compensation plan asset represents investments in securities (primarily mutual funds) traded in an active market (Level 1 inputs) held for the benefit of certain employees as part our deferred compensation plan. We record an equal and offsetting deferred compensation plan liability, which represents our obligation to participating employees. Changes in the fair value of the plan asset and liability are reflected in Selling and administrative expenses in the Consolidated Statements of Income.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments. The carrying value of our long-term debt approximates its fair value.  Our determination of the estimated fair value reflects a discounted cash flow model using our estimates, including assumptions related to borrowing rates (Level 3 inputs).

Nonrecurring Fair Value Measurements

In addition to our assets and liabilities that we measure at fair value on a recurring basis, our assets and liabilities are also subject to nonrecurring fair value measurements. Generally, our assets are recorded at fair value on a nonrecurring basis as a result of impairment charges or business combinations. In the three months ended March 31, 2023 and March 31, 2022, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

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Debt

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Debt

Debt

The table below presents the components of our debt (in thousands):

	March 31,
	2023		2022
Variable rate debt
Short-term borrowings	$	3,011	$	10,854
Current portion of long-term debt:
Australian credit facility	11,319		10,411
Current portion of term loans under credit facility	18,750		—
Short-term borrowings and current portion of long-term debt	$	33,080	$	21,265
Long-term portion:
Revolving credit facility	398,895		532,253
Term loan under credit facility	481,250		500,000
Term facility	154,938		164,188
Receivables securitization facility	299,600		290,000
Less: financing costs, net	2,013		2,633
Long-term debt, net	1,332,670		1,483,808
Total debt	$	1,365,750	$	1,505,073

Our accounts receivable securitization facility (the “Receivables Facility”) provides for the sale of certain of our receivables to a wholly-owned subsidiary (the “Securitization Subsidiary”). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities.

We account for the sale of the receivable interests as a secured borrowing on our Consolidated Balance Sheets. The receivables subject to the agreement collateralize the cash proceeds received from the third-party financial institutions. We classify the entire outstanding balance as Long-term debt, net on our Consolidated Balance Sheets as we intend and have the ability to refinance the obligations on a long-term basis. We present the receivables that collateralize the cash proceeds separately as Receivables pledged under receivables facility on our Consolidated Balance Sheets.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Pool Corporation (the Company, which may be referred to as we, us or our) prepared the unaudited interim Consolidated Financial Statements following U.S. generally accepted accounting principles (GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim financial information. As permitted under those rules, we have condensed or omitted certain footnotes and other financial information required for complete financial statements. 

The interim Consolidated Financial Statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. All significant intercompany accounts and intercompany transactions have been eliminated.

Newly Adopted Accounting Pronouncements

Income Taxes

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards. To the extent realized tax deductions exceed the amount of previously recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit. We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on restricted stock awards lapse.

Retained Earnings

We account for the retirement of treasury shares as a reduction of Retained earnings.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Schedule of Accumulated Other Comprehensive Income

The table below presents the components of our Accumulated other comprehensive income balance (in thousands):

	March 31,				December 31,
	2023		2022		2022
Foreign currency translation adjustments	$	(17,139)	$	(9,794)	$	(19,608)
Unrealized gains on interest rate swaps, net of tax	21,694		13,694		25,503
Accumulated other comprehensive income	$	4,555	$	3,900	$	5,895

Schedule of Recent Accounting Pronouncements

The following table summarizes recent accounting pronouncements that we plan to adopt in future periods:

Standard	Description	Effective Date	Effect on Financial Statements and Other Significant Matters
ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting ASU 2021-01, Reference Rate Reform (Topic 848): Scope ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848	ASU 2020-04, Reference Rate Reform (Topic 848), provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships and sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which refined the scope of ASC 848 and clarified some of its guidance as it relates to recent rate reform activities. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extended the date for using optional expedients and exceptions to December 31, 2024.	The provisions of these updates are available until December 31, 2024.	In 2022, we adopted the hedge accounting expedient related to the probability of forecasted transactions to assert probability of the hedged interest regardless of any expected modification related to reference rate reform. We may apply other elections as applicable. We do not expect that there will be a material impact to the financial statements as a result of adopting any of the optional expedient or exceptions from these ASUs.

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Computation of earnings per share and reconciliation of basic and diluted weighted average common shares outstanding

	Three Months Ended
	March 31,
	2023		2022
Net income	$	101,699	$	179,261
Amounts allocated to participating securities	(548)		(1,051)
Net income attributable to common stockholders	$	101,151	$	178,210
Weighted average common shares outstanding:
Basic	38,877		39,932
Effect of dilutive securities:
Stock options and employee stock purchase plan	312		460
Diluted	39,189		40,392
Earnings per share attributable to common stockholders:
Basic	$	2.60	$	4.46
Diluted	$	2.58	$	4.41
Anti-dilutive stock options excluded from diluted earnings per share computations (1)	64		1

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Fair Value Measurements and Interest Rate Swaps (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Estimated fair value of contracts

The table below presents our assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):

			Fair Value at March 31,
	Input Level	Classification	2023		2022
Assets
Unrealized gains on interest rate swaps	Level 2	Other assets	$	28,970	$	18,817
Deferred compensation plan asset	Level 1	Other assets	14,014		18,338
Liabilities
Contingent consideration liabilities	Level 3	Accrued expenses and other current liabilities	$	—	$	600
Unrealized losses on interest rate swaps	Level 2	Accrued expenses and other current liabilities	—		514
Deferred compensation plan liability	Level 1	Other long-term liabilities	14,014		18,338

Schedule of Interest Rate Derivatives

The following table provides additional details related to these swap contracts:

Derivative	Inception Date	Effective Date	Termination Date	Notional Amount (in millions)	Fixed Interest Rate
Interest rate swap 1	February 5, 2020	February 26, 2021	February 28, 2025	$150.0	1.3800%
Interest rate swap 2	March 9, 2020	September 29, 2022	February 26, 2027	$150.0	0.7400%

The following table provides details related to our forward-starting interest rate swap contract:

Derivative	Inception Date	Effective Date	Termination Date	Notional Amount (in millions)	Fixed Interest Rate
Forward-starting interest rate swap	March 9, 2020	February 28, 2025	February 26, 2027	$150.0	0.8130%

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Debt (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of Debt

The table below presents the components of our debt (in thousands):

	March 31,
	2023		2022
Variable rate debt
Short-term borrowings	$	3,011	$	10,854
Current portion of long-term debt:
Australian credit facility	11,319		10,411
Current portion of term loans under credit facility	18,750		—
Short-term borrowings and current portion of long-term debt	$	33,080	$	21,265
Long-term portion:
Revolving credit facility	398,895		532,253
Term loan under credit facility	481,250		500,000
Term facility	154,938		164,188
Receivables securitization facility	299,600		290,000
Less: financing costs, net	2,013		2,633
Long-term debt, net	1,332,670		1,483,808
Total debt	$	1,365,750	$	1,505,073

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Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Accounting Policies [Abstract]
Excess tax benefit	$ 4.8	$ 7.3

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Summary of Significant Accounting Policies - Retained Earnings (Details) $ in Millions	Mar. 31, 2023 USD ($)
Retained Earnings (Accumulated Deficit) [Abstract]
Cumulative share repurchases	$ 2,200.0
Cumulative dividends	$ 980.1

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Summary of Significant Accounting Policies - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income	$ 4,555	$ 5,895	$ 3,900
AOCI Attributable to Parent
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income	4,555	5,895	3,900
Foreign currency translation adjustments
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income	(17,139)	(19,608)	(9,794)
Unrealized (losses) gains on interest rate swaps, net of tax
Accumulated Other Comprehensive Income [Line Items]
Accumulated other comprehensive income	$ 21,694	$ 25,503	$ 13,694

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Net Income	$ 101,699	$ 179,261
Participating Securities, Distributed and Undistributed Earnings (Loss), Basic	(548)	(1,051)
Net Income (Loss) Available to Common Stockholders, Basic	$ 101,151	$ 178,210
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Anti-dilutive stock options excluded from diluted earnings per share computations (in shares)	64	1
Incremental Common Shares Attributable to Participating Nonvested Shares with Non-forfeitable Dividend Rights	213,000	239,000
Weighted average shares outstanding: [Abstract]
Basic (in shares)	38,877	39,932
Effect of dilutive securities: [Abstract]
Stock options and employee stock purchase plan (in shares)	312	460
Diluted (in shares)	39,189	40,392
Earnings Per Share, Basic [Abstract]
Basic (in dollars per share)	$ 2.60	$ 4.46
Earnings Per Share, Basic and Diluted [Abstract]
Diluted (in dollars per share)	$ 2.58	$ 4.41

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Acquisitions (Details) - numberOfReportingUnits	Mar. 31, 2023	Apr. 30, 2022
WEST VIRGINIA | Tri-State Pool Distributors
Business Acquisition [Line Items]
Business Combination, Number of Locations		1
ARIZONA | Pro-Water Irrigation & Landscape Supply, Inc.
Business Acquisition [Line Items]
Business Combination, Number of Locations	2

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Fair Value Measurements and Interest Rate Swaps - Recurring Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred Compensation Plan Assets	$ 14,014	$ 18,338
Deferred Compensation Liability, Classified, Noncurrent	14,014	18,338
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unrealized gains on interest rate swaps	28,970	18,817
Unrealized losses on interest rate swaps	0	514
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration liabilities	$ 0	$ 600

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Fair Value Measurements and Interest Rate Swaps - Interest Rate Swaps (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 09, 2020	Feb. 05, 2020
Interest rate swap 1
Derivative [Line Items]
Effective Date	Feb. 26, 2021
Termination Date	Feb. 28, 2025
Notional Amount (in millions)			$ 150,000
Fixed Interest Rate			1.38%
Interest rate swap 2
Derivative [Line Items]
Effective Date	Sep. 29, 2022
Termination Date	Feb. 26, 2027
Notional Amount (in millions)		$ 150,000
Fixed Interest Rate		0.74%

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Fair Value Measurements and Interest Rate Swaps - Forward-Starting Interest Rate Swaps (Details) - Forward-starting interest rate swap - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 09, 2020
Derivative [Line Items]
Effective Date	Feb. 28, 2025
Termination Date	Feb. 26, 2027
Derivative, Notional Amount		$ 150.0
Fixed Interest Rate		0.813%

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Debt - Schedule of Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Debt Instrument [Line Items]
Short-term borrowings	$ 3,011	$ 10,854
Australian credit facility	11,319	10,411
Current portion of term loans under credit facility	18,750	0
Short-term borrowings and current portion of long-term debt	33,080	21,265
Long-term portion:
Less: financing costs, net	2,013	2,633
Long-term debt, net	1,332,670	1,483,808
Total debt	1,365,750	1,505,073
Revolving Credit Facility
Long-term portion:
Long-term debt, gross	398,895	532,253
Term loan under credit facility
Long-term portion:
Term facility	481,250	500,000
Term Facility [Member]
Long-term portion:
Term facility	154,938	164,188
Receivables Securitization Facility
Long-term portion:
Long-term debt, gross	$ 299,600	$ 290,000