Pool Corporation

Global market leader in pool supplies

Summer, sun, sunshine! It's July, which means summer vacation is just around the corner. And since summer vacation is largely canceled for many families this year, you'll have to make do with local outdoor pools and spas, like it or not. After all, there's nothing better than cooling off in a refreshing pool in these temperatures. But is that even possible right now?

Swimming pools have reopened by now, albeit with various precautions. You usually have to book your ticket online in advance and can only go to the pool at a specific time. And of course, hygiene rules apply at outdoor pools too. There's no increased risk of infection there, though. Those who can afford it opt for their own pool in the backyard. Much to the delight of Pool Corporation, the world's leading wholesale distributor of pool supplies.

The origins and business model of Pool Corporation

As early as 2600 BC, what was probably the first artificially built pool was constructed in what is now Pakistan. The walls were built with stone and brick, and the inner basin was coated with a tar compound. For the inhabitants of Mohenjo-Daro (today a UNESCO World Heritage Site), it was more of a spiritual place; you couldn't swim laps or do water sports there. In antiquity, too, people appreciated a soothing bath. Both the Greeks and the Roman Empire had the first thermal baths, which were supplied with water from the aqueducts. Gaius Maecenas, a wealthy Roman who became known as an imperial adviser and patron of the arts, had the first heated pool built. So bathing was already very popular back then, which makes it all the more surprising that it then disappeared from our history for a long time. It wasn't until 1837 that several swimming pools were built in London, because more and more people were drowning in rivers and the sea and the authorities wanted to promote swimming lessons. The first sports clubs were founded, and swimming became an Olympic discipline. The USA soon had its first pools and swimming baths too, which were later perfectly showcased in Hollywood movies. Finally, in the 1980s, there was a veritable pool construction boom. Anyone who had the necessary spare change built their own swimming pool in their backyard.

Frank J. St. Romain experienced the revival and rise of swimming pools up close. When he was born in Louisiana in 1936, there were hardly any swimming pools there. Various Hollywood flicks awakened in many people the desire for their own pool. Frank was fascinated and therefore decided at 24 to go in this direction professionally as well. He learned from various pool builders until he finally worked for several years as a warehouse manager at the Seablue Corporation. More and more hotels were treating themselves to their own pools, which of course boosted business. In 1980, Seablue Corp. was bought by a large conglomerate. Frank seized the chance to go into business for himself together with his partner Richard Smith. That same year, the two founded their own company, South Central Pool Supply. However, they didn't open their doors until the start of the pool season in 1981.

Maybe it was luck, maybe it was perfect market timing - but the fact is that South Central Pool Supply was in the right place at exactly the right time to fully profit from the pool hype of the '80s. With excellent service, a perfectly tailored product range and the support of local pool builders, the company quickly made an excellent name for itself. Bit by bit, it was able to build a solid service and distribution network. In 1993, it teamed up with the Chicago venture capital firm Code Hennessy & Simmons to drive future expansion. 2 years later, it dared to go public to secure more capital. The plans worked out, and the company was able to keep growing quickly. Today Pool Corporation is the world's leading supplier of equipment, parts and accessories for swimming pools. With more than 4,500 employees in 375 locations, it is very well represented in North and South America as well as in Europe and Australia. With its product range, it serves around 120,000 customers, most of whom are pool builders, pool maintenance companies and specialty retailers.

What do Pool Corporation's future prospects look like?

I'll be honest: in a way, researching Pool Corp. meant jumping in at the deep end myself. I didn't even know the company before. Of course, I could well imagine what they'd be doing. But just how promising an investment here would be surprised even me.

I'd like to start with the broad product range. The company acts as a wholesaler with products from more than 180,000 producers. These include everything related to pools and so-called "outdoor living products". From water chemicals to pool jets and liners to ready-made hot tubs, inflatable round pools and even landscape irrigation systems. The range is huge - so the company is the perfect point of contact for pool experts, but also for private customers who want to make their own dream come true.

In the long run, we're doing better and better. Both in terms of our health and our prosperity - of course, you have to look at the big picture here. At this point, I'd like to recommend the book Factfullness by Hans Rosling, which sheds light on this topic extremely well. Rising prosperity naturally means more luxury within your own four walls or, rather, in your own backyard. So that boosts Pool Corp.'s revenue too. But it doesn't always have to be luxury; the global market leader for pool supplies also offers cheaper models. There's something for every budget. Especially since pools no longer cost the fortune they used to. Fortunately, today you no longer have to belong to the elite to be able to afford your own pool.

A quick cool-off on hot days feels good - that much is clear to everyone. But right at this point, I'd like to throw out a word that you probably heard constantly before Corona: climate change! You can deny it or not, but there's no disputing that it's been getting warmer and warmer in recent years. Thinking a little outside the box: if it keeps getting warmer, will more or fewer pools be sold?

Especially since another topic is quite relevant to Pool Corp's future. We're staying at home more and more. We go out less and less. Amazon delivers everything we need, Hello Fresh supplies us with delicious food, and Netflix & Co. spare us trips to the movie theater. Many people already work from home, too. The trend here is clearly going in one direction - so it's no surprise that people want to make their home as nice as possible.

Ok, and how is business going in the current crisis?

Corona crisis? You can't see any of that at Pool Corporation. The stock dipped briefly, only to then switch to the fast lane at full throttle. Many families had to cancel their annual vacation, so there's money left over in the family budget. Unfortunately, very few invest it sensibly in stocks. Most are now using the money to improve their standard of living. And of course, your own pool can't be missing from that. And those who already have a pool are using the time for maintenance work. Much to the delight of Pool Corp. and its shareholders.

How has the dividend developed?

Since 2004, shareholders have shared in the company's profits in the form of dividends. Since then, Pool Corporation has also managed to raise its payout every year - and at a solid pace. Looking at the dividend growth rate over the last 10 years, it's 17 percent; over 5 years it's even 20.7 percent. With such impressive growth, the current low dividend yield of 0.8 percent is easy to live with. The payout ratio isn't too high either at 35 percent, so enough money stays in the company to keep growing.

Conclusion:
To put it briefly: I wish I hadn't only just now come across Pool Corporation! Without a doubt, economic downturns can come here too. But I suspect that anyone waiting for the perfect entry point here will be waiting forever.