Industry icon Paddock Pools was acquired in May.
It has been purchased by NexGen Holdings Corp., a firm previously specializing in wind turbines. This is NexGen’s second purchase of a prominent Phoenix pool builder since acquiring Cameo Pools in April 2013.
The builders, both mainstays in the Phoenix market, now form a subsidiary called NexGen Pools and Spas Inc., which company officials expect to make up one of Arizona’s largest pool companies.
The two companies will combine and streamline operations. It hasn’t been decided how the firms will share resources, but NexGen President John Myers said each firm will retain its distinct brand.
The combination of the two companies makes sense, said Paddock President Craig Maggi. Paddock, a high-volume builder in the past, had shifted its focus toward retail in recent years, Maggi said, while Cameo has maintained a grasp on the building market.
At one time, Paddock built thousands of pools per year — a huge accomplishment for a company basically dedicated to a single market. The firm constructed 2,305 pools in 2003, landing at No. 3 on Pool & Spa News’ Top 50 Builders list. But its volume dwindled over time to 65 last year, according to the local Rider Permit Report. In 2012, Paddock pulled 161 permits, which exceeded 2011 by eight.
Officials hope joining with Cameo will be a step toward bringing Paddock back to its past success. “Once we do that, Paddock should regain the position it once had,” said Maggi, who now will serve as president/COO of NexGen’s pools division.
NexGen plans to implement an employee stock option and upgrade Paddock’s software to make its building and service departments more efficient. Beyond that, Myers couldn’t offer further details, saying it’s too early in the merger to discuss specific business strategies.
While NexGen may have purchased Paddock for its historic name, some local industry members believe that maintaining it may be tricky. “I don’t know if it’s going to have any significance to the Phoenix market,” said Paul Porter, CEO of Premier Pools Management Corp. in Sacramento, Calif. “There’s not a whole lot left. They’re going to have to start rebuilding it.”
NexGen was founded in 1986 and is based in Queen Creek, Ariz., about 40 miles southeast of Phoenix. Until its purchase of Cameo, the company was called WindPower Innovations Inc. and primarily invested in wind turbines.
Though it still maintains a subsidiary called WindPower Solutions Inc., NexGen now derives much of its earnings from Cameo Pools. According to a financial statement of NexGen’s first quarter of fiscal 2014, the company generated $1,605,000 in revenue, earning a net income (profit) of $115,000. That’s a combined total between its pool and wind energy divisions. Of that amount, WindPower Solutions contributed a net income of $4,500.
In NexGen’s fiscal 2013 (Oct.-Sept.), the company saw a total revenue of $3,078,000.
Myers said the government’s alternative energy incentives increasingly favor solar over wind, prompting NexGen officials to explore other markets. He said he was “intrigued” by the pool industry.
NexGen is a publicly traded holding company, trading as XGEN through the Pink Sheets trading system. On May 19, it sold at $0.0190 a share.
Such firms do not have to meet the same criteria as those that trade through the NYSE or Nasdaq. Myers said NexGen is working toward getting the audits necessary to become listed on the major exchanges.
Last summer, NexGen secured $1 million in funding from Exelerate Group of New York, a financial firm specializing in small public companies. The funds were meant, at least in part, to help manage the costs of becoming a fully reporting company, NexGen officials said.
As a subsidiary of NexGen Pools and Spas, Cameo has increased profits considerably, according to a press release. Last year, the builder’s profits climbed from $53,000 from the quarter that ended Sept. 30 to $115,000 from the quarter ended Dec. 31. Cameo’s digs came in at 136 last year, ranking it sixth in permits for the area, an increase from 122 in 2012.
Paddock Pools has changed hands several times in recent years. In 2005, brothers David and Lewis “Buzz” Ghiz, sold the company to Lincolnshire Management, a private equity firm. Early last year, Maggi, who had worked for Paddock prior to Lincolnshire’s takeover, bought the company amid rumors that the firm was shuttering its construction division.
The company’s history dates back to the legendary Paddock Pools of California, founded in 1924 by industry pioneer Pascal P. Paddock. In 1958, George Ghiz brought the franchise to Phoenix. He diversified the enterprise, launching distribution and manufacturing divisions, calling the latter Paramount. His sons took over after his death in 1988.
As one of the most successful family-owned pool companies in the nation, Paddock was widely known for its state-of-the-art showroom featuring elaborate pool and spas displays. Called “Garden Town,” it spanned 10 acres and inspired many copycats within the industry.
Though its history doesn’t run as deep as Paddock’s, Cameo also has enjoyed considerable success, landing on the Top 50 Builders list in recent years. Cameo’s former proprietor, Larry Duffy, is NexGen Pool and Spa’s executive vice president, while Steve Vollaro serves as Cameo’s president and NexGen’s director of sales.