[Management View]
Pool Corp reported Q2 2025 net sales of $1.8 billion, a 1% YoY increase, driven by strong maintenance product performance and improved construction-related trends. Gross margin remained stable at 30%, supported by supply chain initiatives and pricing discipline. Diluted EPS rose 4% YoY to $5.17. Management emphasized the resilience of the maintenance and repair business, investments in private label chemical brands, and digital adoption through the Pool 360 platform.

[Outlook]
The company updated its full-year EPS guidance to $10.80-$11.30, reflecting stable pricing and cost controls. Full-year sales and gross margin are expected to remain flat YoY. SG&A expenses are projected to grow 2%-3% for the year, driven by new sales centers. Management remains cautious about new pool construction recovery, citing interest rate uncertainties, but is optimistic about long-term fundamentals supported by demographic trends and at-home leisure demand.

[Financial Performance]
- Net Sales: $1.8 billion (+1% YoY)
- Gross Margin: 30% (flat YoY)
- Diluted EPS: $5.17 (+4% YoY)
- Operating Income: $273 million (+$2 million YoY)
- Equipment Sales: +1% YoY
- Maintenance Product Sales: +1% YoY
- Building Material Sales: -1% YoY

[Q&A Highlights]

**Question 1:** How should we think about the full-year outlook given the momentum in company-specific initiatives and incremental headwinds like tariffs?
**Answer:** Management highlighted the resilience of the maintenance and repair business, noting that larger renovation projects are being phased out due to interest rate pressures. Investments in private label chemical brands, digital tools, and regional expansions are driving growth. However, new pool construction remains pressured, particularly in overbuilt markets like Texas. Long-term investments in customer experience and supply chain improvements are expected to sustain growth.

**Question 2:** How are you thinking about pricing elasticity and its impact on demand?
**Answer:** Pricing impacts vary by product type. For nondiscretionary items like pump replacements, price increases have minimal impact. However, some consumers are opting to repair rather than replace equipment. Discretionary items like heaters may see deferred purchases. New pool construction costs, even with price increases, are unlikely to deter consumers significantly due to the overall project cost.

**Question 3:** Why was EPS guidance lowered for the year?
**Answer:** The adjustment reflects the absence of anticipated interest rate cuts, which are critical for new pool construction recovery. Maintenance business remains strong, but new construction and large renovation projects are unlikely to rebound in the second half without macroeconomic improvements.

**Question 4:** Has price competition abated in Q2 compared to Q1?
**Answer:** Price competition was more pronounced in Q1 due to early buy payments and smaller volumes. In Q2, competitive activity normalized, with some deflation in chemicals but no significant new pricing pressures.

**Question 5:** Can you elaborate on the improvement in Europe?
**Answer:** Net sales in Europe grew 2% in local currency and 7% in USD, driven by southern markets and late-quarter improvements in France. Management noted increased stability and optimism in the region.

**Question 6:** Are there any supply chain or labor constraints?
**Answer:** Supply chains are stable, and there are no significant labor shortages. Inventory increases are attributed to new product introductions and seasonal stocking, not excess goods.

**Question 7:** What is driving private label chemical growth?
**Answer:** Investments in brand refreshes, expanded product lines, and the Pool 360 water test platform have strengthened the value proposition. Private label chemical sales continue to grow despite a challenging pricing environment.

[Sentiment Analysis]
Management maintained a cautiously optimistic tone, emphasizing resilience in maintenance demand and strategic investments. Analysts expressed concerns about discretionary spending and new construction but acknowledged the company's strong execution in a challenging environment.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|-------------------------|-----------------|-----------------|------------|
| Net Sales | $1.8 billion | $1.78 billion | +1% |
| Gross Margin | 30% | 30% | Flat |
| Diluted EPS | $5.17 | $4.99 | +4% |
| Operating Income | $273 million | $271 million | +$2 million|
| Equipment Sales | +1% | - | - |
| Maintenance Product Sales | +1% | - | - |
| Building Material Sales | -1% | - | - |

[Risks and Concerns]
1. Continued pressure on new pool construction due to high interest rates and macroeconomic uncertainties.
2. Deflation in chemical pricing and discretionary spending constraints.
3. Regional disparities, with Texas and California facing significant construction headwinds.

[Final Takeaway]
Pool Corp delivered stable Q2 results, underpinned by strong maintenance product demand and strategic investments in private label brands and digital tools. While new pool construction remains a headwind, the company’s focus on long-term growth drivers positions it well for future recovery. Updated guidance reflects cautious optimism, with resilience in core maintenance demand offsetting macroeconomic challenges. Investors should monitor interest rate trends and discretionary spending recovery as key factors influencing future performance.