Pool Corp Sales Rise 4% in Third Quarter as Profit Falls
Key Facts
Pool Corp's sales rose 4% year on year to $1.5 billion in the third quarter of 2026, according to the company's earnings statement, while operating and net income declined. The company attributed sales growth to pricing, maintenance and building materials, with pricing contributing 3% growth during the period. It said in its statement that sales benefited from "3% growth from pricing," putting pricing at the forefront of the factors supporting quarterly revenue. Operating income fell to $172.2 million as the company faced pressure on gross margin and higher expenses. Net income also declined to $123.0 million during the quarter, leaving revenue growth accompanied by lower profit. Diluted earnings per share were unchanged at $3.40 from the same period a year earlier, despite the decline in net income.
Gross margin fell to 29.0% in the third quarter of 2026 from 29.6% in the corresponding quarter of 2025, according to the company's statement. Pool Corp attributed the decline to higher inbound freight costs, one of the factors weighing on sales profitability during the period. The company also cited customer mix among the reasons for the margin decline, alongside the comparison with the impact of previous price increases. Selling and administrative expenses rose to $264.1 million from $251.2 million a year earlier. These expenses increased 5% year on year, compared with sales growth of 4% during the same quarter. The company attributed the higher spending to increased performance-based compensation and employee insurance costs. Higher external fees for strategic initiatives also contributed to the increase, with these costs coinciding with pressure on gross margin.
Annual sales growth accelerated in the latest quarter compared with the second quarter of 2026, for which the company reported results in July. In that period, sales rose 2% to $1.8 billion, according to the earlier earnings statement. Growth was slower then than the pace recorded in the third quarter, although quarterly sales were higher in value. When announcing second-quarter results, management described demand conditions as showing "continued momentum in building materials within a weak discretionary spending market." Pool Corp describes itself as the world's largest wholesale distributor of swimming pool and related backyard products, a business that includes maintenance and building materials. The company's network comprised 454 sales centers at the end of September 2026, according to its third-quarter earnings statement.
On liquidity, cash generated from operating activities rose to $419.8 million during the first nine months of 2026, according to the company. During the same period, share repurchases totaled $198.0 million, among the financial actions it had undertaken since the start of the year. At the end of September, inventory was down 3% from a year earlier, according to the earnings statement. Total outstanding debt, meanwhile, rose to $1.2 billion at the end of the same month. Debt increased by $104.9 million year on year, leaving the rise in operating cash flow accompanied by higher indebtedness than a year earlier. The nine-month results thus combine growth in cash generated from operations, continued share repurchases and lower inventory with an increase in outstanding debt.
Margins were a focus of caution at Stifel ahead of the results, according to a report published by Investing in October 2026. The firm lowered its price target for Pool Corp shares to $175 from $189 while maintaining a Hold rating. The report linked that stance to caution over gross margins in the second half of the year, ahead of the release of third-quarter results. In its latest earnings statement, Pool Corp maintained its 2026 adjusted diluted earnings per share guidance despite pressure on quarterly profitability. The annual range reaffirmed by the company is $10.87 to $11.17 per share, remaining its guidance for the rest of the year.