Revenue is on the rise at PoolCorp. Sales figures for the distribution giant often are seen as an indicator of the industry’s health overall.
According to investor presentations made this spring and summer by company executives, PoolCorp expects to see annual revenue growth of 6- to 12 percent in the next five years, thanks to market share gains, market recovery, inflation, and other factors.
In 2011, the Covington, La.-based company reported revenues of $1.8 billion after hitting its post-boom low of $1.5 billion in 2007.
With its markets now beginning to recover, the company is seeing improvement in its core business of selling products for U.S. pools and spas. In the first quarter of 2012, revenue increased 13.6 percent for this part of PoolCorp’s business, which represents more than 80 percent of the company’s revenues.
But there were some regional differences that emerged early this year, according to PoolCorp President/CEO Manual Perez de la Mesa. While the company notched a 7 percent sales gain in California, Texas and Arizona, PoolCorp saw a sales jump of 18.1 percent in Florida and other East Coast markets in the first quarter.
“I believe that 7 percent is more reflective of our expectations for the balance of 2012, with roughly half of that growth coming from [market] share increases, and the other half from market expansion and inflation,” Perez said.
As the economy improves, PoolCorp told investors that it predicts “significant catchup demand” through 2018 for pool renovation and replacement.
But it’s a different story for new pools. “We’re thinking that new construction activity on the pool side is still extremely depressed,” Perez said during a conference call. “We believe it will be up modestly this year. Modestly, maybe 5,000 to 7,000 more pools being built this year than last year. But it’s still a fraction of what it was at peak, and probably 40 percent of normal.”
Finally, the company wants to increase its international business, which is currently responsible for 10 percent of annual revenue. The areas of concentration? Large markets in Europe and Canada, which offer the potential for market share and sales gains. To grow its presence in those areas, PoolCorp has been turning to acquisitions, which executives say can be a cost-effective way of entering new markets.
So far in 2012, it has bought the distribution assets of two different Canadian firms, adding a net of five sales centers through acquisitions in the first quarter alone.