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What changed in Pool Corporation's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Pool Corporation's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+349 added−356 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Pool Corporation's 2025 10-K

349 paragraphs added · 356 removed · 279 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

79 edited+17 added−27 removed34 unchanged
Biggest changeWeather Possible Effects Hot and dry • Increased purchases of chemicals and supplies for existing swimming pools • Increased purchases of above-ground pools and irrigation and lawn care products Unseasonably cool weather or extraordinary amounts • Fewer pool and irrigation and landscaping of rain installations • Decreased purchases of chemicals and supplies • Decreased purchases of impulse items such as above-ground pools and accessories Unseasonably early warming trends in spring/late cooling • A longer pool and landscape season, thus positively trends in fall impacting our sales (primarily in the northern half of the U.S. and Canada) Unseasonably late warming trends in spring/early cooling • A shorter pool and landscape season, thus negatively trends in fall impacting our sales (primarily in the northern half of the U.S. and Canada) For discussion regarding the effects seasonality and weather had on our results of operations in 2024 and 2023, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Seasonality and Quarterly Fluctuations,” of this Form 10-K. 10 Government Regulations Our business is subject to a wide variety of regulations, principally under local fire codes and international, federal, state and local environmental and health and safety requirements, including regulation by the Environmental Protection Agency, the Consumer Product Safety Commission, the Department of Transportation, the Occupational Safety and Health Administration, the National Fire Protection Agency and the International Maritime Organization.
Biggest changeWeather Possible Effects Hot and dry • Increased purchases of chemicals and supplies for existing swimming pools • Increased purchases of above-ground pools and irrigation and lawn care products Unseasonably cool weather or extraordinary amounts of rain • Fewer pool and irrigation and landscaping installations • Decreased purchases of chemicals and supplies • Decreased purchases of impulse items such as above-ground pools and accessories Unseasonably early warming trends in spring/late cooling trends in fall (primarily in the northern half of the U.S. and Canada) • A longer pool and landscape season, thus positively impacting our sales Unseasonably late warming trends in spring/early cooling trends in fall (primarily in the northern half of the U.S. and Canada) • A shorter pool and landscape season, thus negatively impacting our sales For discussion regarding the effects seasonality and weather had on our results of operations in 2025 and 2024, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Seasonality and Quarterly Fluctuations,” of this Form 10-K.
Given the seasonal nature of our business, our peak employment period is the summer season and, depending on expected sales levels, we add 100 to 200 employees to our work force to meet seasonal demand. We believe that we have good relations with our employees. None of our employees are currently covered under any collective bargaining agreements.
Given the seasonal nature of our business, our peak employment period is the summer season and, depending on expected sales levels, we add 100 to 200 employees to our work force to meet seasonal demand. We believe that we have good relations with our employees and none of our employees are currently covered under any collective bargaining agreements.
We sell the following types of products: • maintenance products, such as chemicals, supplies and pool accessories; • repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps and lights; • building materials, such as concrete, plumbing and electrical components, both functional and decorative pool surfaces, decking materials, tile, hardscapes and natural stone, used for pool installations and remodeling; • pool equipment and components for new pool construction and the remodeling and replacement of existing pools; • irrigation and related products, including irrigation system components and professional turf care equipment and supplies; • commercial pool products, including American Society of Material Engineers-certified heaters, safety equipment, commercial decking equipment and commercial pumps and filters; • fiberglass pools and hot tubs and packaged pool kits including walls, liners, braces and coping for in-ground and above-ground pools; and • other pool construction and recreational products, which consist of a number of product categories and include discretionary recreational and related outdoor living products, such as grills and components for outdoor kitchens.
We sell the following types of products: • pool maintenance products, such as chemicals, supplies and pool accessories; • repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps and lights; • building materials, such as concrete, plumbing and electrical components, both functional and decorative pool surfaces, decking materials, tile, hardscapes and natural stone, used for pool installations and remodeling; • pool equipment and components for new pool construction and the remodeling, replacement and upgrade of existing pools; • irrigation and related products, including irrigation system components and professional turf care equipment and supplies; • commercial pool products, including American Society of Material Engineers-certified heaters, safety equipment, commercial decking equipment and commercial pumps and filters; • fiberglass pools and hot tubs and packaged pool kits including walls, liners, braces and coping for in-ground and above-ground pools; and • other pool construction and recreational products, which consist of a number of product categories and include discretionary recreational and related outdoor living products, such as grills and components for outdoor kitchens.
Our POOL360 PoolService mobile application allows pool professionals to better manage their service business through providing a complete Customer Relationship Management (CRM) tool, routing, billing and other day-to-day management capabilities, while improving their customers’ experiences. Each of these tools links directly into our POOL360 B2B platform, creating efficiencies for both us and our customers.
Our POOL360 PoolService mobile application allows pool professionals to better manage their service business through providing a complete Customer Relationship Management (CRM) tool, routing, billing and other day-to-day management capabilities, while improving their customers’ experiences. Each of 4 these tools links directly into our POOL360 B2B platform, creating efficiencies for both us and our customers.
These tools offer real-time integration into our enterprise resource planning system, creating efficiencies in our business processes and also provide our customers graphical catalog presentation in the same platform. Our BlueStreak mobile ordering platform enables our sales associates to process orders faster, often eliminating the need for customers to get out of their vehicles.
These tools offer real-time integration into our enterprise resource planning system, creating efficiencies in our business processes and provide our customers graphical catalog presentation in the same platform. Our BlueStreak mobile ordering platform enables our sales associates to process orders faster, often eliminating the need for customers to get out of their vehicles.
They gain valuable experience during their training program through field-based interaction with customers and operating management. Our program includes interaction with subject matter experts, hands-on projects and role play to provide MITs with practical industry knowledge, leadership skills and the tools necessary to succeed within our organization.
Our MITs gain valuable experience during their training program through field-based interaction with customers and operating management. Our program includes interaction with subject matter experts, hands-on projects and role play to provide MITs with practical industry knowledge, leadership skills and the tools necessary to succeed within our organization.
As the installed base of in-ground swimming pools ages, we also believe cosmetic considerations such as a pool’s 1 appearance and the overall look of backyard environments create ongoing demand for our other discretionary and non-discretionary products.
As the installed base of in-ground swimming pools ages, we also believe cosmetic considerations such as a pool’s appearance and the overall look of backyard environments create ongoing demand for our other discretionary and non-discretionary products.
Maintaining a safe and consistent water chemistry as well as necessary upkeep and repair of swimming pool equipment, such as pumps, heaters, filters and safety equipment, creates non-discretionary demand for pool chemicals, equipment and other related parts and supplies.
Maintaining a safe and consistent water chemistry as well as necessary upkeep and repair of swimming pool equipment, such as pumps, heaters, filters, lights and safety equipment, creates non-discretionary demand for pool chemicals, equipment and other related parts and supplies.
Our total compensation package includes cash compensation (base salary and performance-based incentive or bonus payments), company contributions toward additional benefits (such as health and disability plans), retirement plans with a company match and paid time off. We also offer the opportunity to become a shareholder through equity grants for certain roles and our employee stock purchase plan.
Our total compensation package includes cash compensation (base salary and incentive or bonus payments), company contributions toward additional benefits (such as health and disability plans), retirement plans with a company match and paid time off. We also offer the opportunity to become a shareholder through equity grants for certain roles and our employee stock purchase plan.
Based on our peak summer selling season, we generally open new sales centers and close or consolidate sales centers, when warranted, either in the first quarter before the peak selling season begins or in the fourth quarter after the peak selling season ends. Weather is one of the principal external factors affecting our business.
Based on our peak summer selling season, we generally open new sales centers and close or consolidate sales centers, either in the first quarter before the peak selling season begins or in the fourth quarter after the peak selling season ends. Weather is one of the principal external factors affecting our business.
We expect to realize continued sales growth for these types of product offerings by expanding the number of locations that offer these products, increasing the number of products offered at certain locations and continuing a modest broadening of these product offerings on a company-wide basis.
We expect to achieve continued sales growth for these types of product offerings by expanding the number of locations that offer these products, increasing the number of products offered at certain locations and continuing a modest broadening of these product offerings on a company-wide basis.
The recurring nature of the maintenance and repair market has helped maintain a relatively consistent rate of industry contribution to revenue over time. This characteristic has helped buffer our performance when unfavorable economic conditions, such as higher interest rates and softness in the housing market, adversely impact consumer discretionary spending, including pool construction and major replacement and renovation activities.
The recurring nature of the maintenance and repair market has helped maintain a relatively consistent rate of industry contribution to revenue over time. This characteristic helps support our performance when unfavorable economic conditions, such as higher interest rates and softness in the housing market, adversely impact consumer discretionary spending, including pool construction and major replacement, renovation and upgrade activities.
In 2024, we generated approximately 96% of our sales in North America (including Canada and Mexico), 4% in Europe and less than 1% in Australia. While we continue to expand both domestically and internationally, we expect this geographic mix to be similar over the next few years.
In 2025, we generated approximately 95% of our sales in North America (including Canada and Mexico), 4% in Europe and less than 1% in Australia. While we continue to expand both domestically and internationally, we expect this geographic mix to be similar over the next few years.
In particular, our POOL360 and Horizon 24/7 B2B internet and mobile platforms help our customers be more productive by allowing them to digitally review and order our products, while leveraging our customer service staff resources, particularly during peak business periods.
In particular, our POOL360 and Horizon 24/7 B2B internet and mobile platforms help our customers be more productive by allowing them access to our full inventory network to digitally review and order our products, while leveraging our customer service staff resources, particularly during peak business periods.
Similarly, we employ velocity slotting technology and other processes to enhance the operational efficiencies of our sales centers and warehouses. We believe that ongoing investments in digital transformation and technology help us provide best-in-class service to our customers by improving the customer experience, enhancing our existing customer relationships and expanding our customer base.
Similarly, we employ various processes and technologies to enhance the operational efficiencies of our sales centers and warehouses. We believe that ongoing investments in digital transformation and technology help us provide best-in-class service to our customers by improving the customer experience, enhancing our existing customer relationships and expanding our customer base.
Our success depends on our employees understanding how their work contributes to the company’s overall strategy. When our employees succeed, the company succeeds. To help our employees achieve success in their roles, we emphasize continuous training and career development opportunities.
Our success depends on our employees understanding how their work contributes to the company’s overall strategy and how they have the opportunity to grow. When our employees succeed, the company succeeds. To help our employees achieve success in their roles, we emphasize continuous training and career development opportunities.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Allowance for Doubtful Accounts” for additional information.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Allowance for Doubtful Accounts” for additional information.
Our goal is to be an Employer of Choice by focusing on the engagement, development, retention, and health and well‑being of our employees. We believe that our success is a direct result of the contributions and commitment of our employees.
Human Capital Management We strive to be an Employer of Choice by focusing on the engagement, development, retention, and health and well‑being of our employees. We believe that our success is a direct result of the contributions and commitment of our employees.
We believe that our selection of pool equipment, supplies, chemicals, replacement parts, irrigation and related products and other pool construction and recreational products is the most comprehensive in the industry. We currently have over 650 product lines and approximately 45 product categories.
We believe that our selection of pool building materials, equipment, supplies, chemicals, replacement parts, irrigation and related products and other pool construction and recreational products is the most comprehensive in the industry. We currently have over 700 product lines and approximately 40 product categories.
In 2024, we generated approximately 60% of our net sales and 73% of our operating income in the second and third quarters of the year. We typically experience a build-up of product inventories and accounts payable during the winter months in anticipation of the peak selling season.
In 2025, we generated approximately 61% of our net sales and 78% of our operating income in the second and third quarters of the year. We typically experience a build-up of product inventories and accounts payable during the winter months in anticipation of the peak selling season.
Product offerings such as chemicals and fertilizers, power equipment and related repair and maintenance services offer recurring revenue streams in an industry otherwise closely tied to the new housing market. The irrigation and landscape maintenance distribution business serves both residential and commercial markets, with the majority of sales related to the residential market.
Sales of landscape power equipment and related landscape maintenance services offer recurring revenue streams in an industry otherwise closely tied to the new housing market. The irrigation and landscape maintenance distribution business serves both residential and commercial markets, with the majority of sales related to the residential market.
In general, sales and operating income are highest during the second and third quarters, which represent the peak months of swimming pool use, pool and irrigation installation and maintenance activities. Sales are lower during the first and fourth quarters.
In general, sales and operating income are highest during the second and third quarters, which represent the peak months of both swimming pool use and installation, as well as irrigation and landscape installations and maintenance. Sales are lower during the first and fourth quarters.
Geographic Areas See Note 12 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for financial information about geographic areas for the past three years. Website Access and Additional Information Our website is www.poolcorp.com .
We also own rights to numerous internet domain names. 10 Geographic Areas See Note 12 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for financial information about geographic areas for the past three years. Website Access and Additional Information Our website is www.poolcorp.com .
We conduct our operations through 448 sales centers in North America, Europe and Australia. Our primary markets, those with the highest concentration of swimming pools, are Florida, California, Texas and Arizona, collectively representing approximately 54% of our 2024 net sales.
We conduct our operations through 456 sales centers in North America, Europe and Australia. Our primary markets with the highest concentration of swimming pools are California, Florida, Texas and Arizona, collectively representing approximately 53% of our 2025 net sales.
We believe that our industry is fragmented, and as such, we add considerable value to the industry by purchasing products from a large number of manufacturers and then efficiently distributing the products with high levels of service to our customer base on conditions that are more favorable than our customers could obtain on their own.
Operating in a fragmented industry, we add considerable value by purchasing products from a large number of manufacturers and then efficiently distributing the products with high levels of customer service on conditions that are generally more favorable than our customers could obtain on their own.
Many new homeowners with existing pools transform older pools into a modern backyard oasis through upgraded features, finishes and equipment.
Many 2 new homeowners with existing pools transform older pools into a modern backyard oasis through upgraded pool finishes, tile, decking, equipment and enhanced features.
Intellectual Property We maintain both domestic and foreign registered trademarks and patents, primarily for our proprietary and exclusive brand products that are important to our current and future business operations. We also own rights to numerous internet domain names.
Intellectual Property We maintain both domestic and foreign registered trademarks and patents, primarily for our proprietary and exclusive brand products that are important to our current and future business operations.
Among other factors such as the southern population migration and housing shortage trends, the timing of these types of expenditures is more sensitive to economic factors including home values, existing single-family home sales and consumer confidence as compared to the non-discretionary demand of the maintenance and minor repair market.
The timing of these types of expenditures is more sensitive to economic factors including home values, existing single-family home sales and consumer confidence as compared to the non-discretionary demand of the maintenance and minor repair market.
Our NPT network primarily serves the swimming pool market with our market-leading brand of pool tile and composite pool finish products but also provides some overlap with the irrigation and landscape industry as we offer NPT hardscapes and other outdoor living products.
Our NPT network primarily serves the swimming pool market with our market-leading brand of pool tile and composite pool finish products and also serves the irrigation and landscape industry through NPT hardscapes and other outdoor living products.
The activity in this market, which includes major swimming pool remodeling and upgrading, is driven by the aging of the installed base of pools and availability of enhanced feature products such as swimming pool automated controls, variable speed pumps, robotic cleaners and LED pool and hot tub lighting.
The activity in the remodel, renovation and upgrade market is driven by the aging of the installed base of pools and availability of enhanced feature products such as automated controls, variable speed pumps, robotic cleaners and LED pool and hot tub lighting.
This coursework covers topics such as recruitment best practices, effective communications, leading and empowering others and managing employee performance. We provide an entry level training program to prepare Manager Trainees (MITs) for sales and operations management opportunities and build our pipeline for field leadership. Our MITs are hosted at either our EDGEucation Center or in a virtual classroom.
This coursework covers topics such as recruitment best practices, effective communications, leading and empowering others and managing employee performance. We provide an entry level training program to prepare managers in training (MITs) for sales and operations management opportunities and build our pipeline for field leadership.
Swimming pool tile, decking materials and interior pool surfacing products are distributed through our NPT network, as well as through SCP and Superior networks.
We distribute irrigation, landscape maintenance and related products through our Horizon network. Swimming pool tile, decking materials and interior pool surfacing products are distributed through our NPT network, as well as through SCP and Superior networks.
No single customer accounted for 10% or more of our sales in 2024. 4 We provide extended payment terms to qualified customers for sales under pre-season early buy programs, which typically occur during the fourth and first quarters. The extended terms usually require payments in equal installments during the second quarter of each year. See Item 7.
We provide extended payment terms to qualified customers for sales under pre-season early buy programs, which typically occur during the fourth and first quarters. The extended terms usually require payments in equal installments during the second quarter of each year.
These programs include digital and media advertising, industry-oriented website development such as www.swimmingpool.com®, www.hottubs.com® and www.nptpool.com®, social media platforms and other digital marketing initiatives, including our new, all-inclusive Regal and E-Z Clor Pool Care mobile apps that enable at-home water testing, as well as our NPT® Backyard mobile app.
These programs include digital and media advertising, industry-oriented website development such as www.swimmingpool.com®, www.hottubs.com® and www.nptpool.com®, social media platforms and other digital marketing initiatives, including our all-inclusive Regal and E-Z Clor Pool Care mobile apps that enable at-home water testing. We use these programs and tools to educate consumers and lead prospective pool owners to our customers.
We adopted the strategy of operating two distinct distribution networks within the U.S. swimming pool market primarily to offer our customers a choice of distinctive product selections, locations and service personnel. We distribute irrigation, landscape maintenance and related products through our Horizon network.
Operating Strategy We distribute swimming pool supplies, equipment and related leisure products domestically through our SCP and Superior sales center networks and internationally through our SCP network. We adopted the strategy of operating two distinct distribution networks within the U.S. swimming pool market primarily to offer our customers a choice of distinctive product selections, locations and service personnel.
As consumers create and enhance outdoor living areas and invest more in their outdoor environment, we believe we can focus our resources to address such demand by leveraging our existing pool and irrigation and landscape maintenance customer base. We believe the development of our NPT network is a natural extension of our distribution model.
As consumers create and enhance outdoor living areas and invest more in their outdoor environment, we believe we can capture this demand by leveraging our existing pool and irrigation and landscape maintenance customer base. The ongoing 6 development of our NPT network serves as a natural extension of our distribution model, strengthening our market reach.
Going forward, we plan to continue growing our suite of POOL360 technologies with additional resources for our customers. We have grown our distribution networks through new sales center openings, acquisitions and the expansion of existing sales centers depending on our market presence and capacity.
We plan to continue expanding our POOL360 technologies to provide additional resources for our customers. We have grown our distribution networks through new sales center openings, acquisitions and the expansion of existing sales centers based on our market presence, existing market capacity and local population trends.
In 2024, inflationary product cost increases returned to our historical average of approximately 1% to 2%, which we expect to continue into 2025. Business Strategy and Growth Strategy Our mission is to provide exceptional value to our customers and suppliers, creating exceptional return to our shareholders, while providing exceptional opportunities to our employees.
We expect inflationary product cost increases to be approximately 1% to 2% in 2026. 3 Business Strategy and Growth Strategy Our mission is to provide exceptional value to our customers and suppliers, creating exceptional return to our shareholders, while providing exceptional opportunities to our employees.
Employee Growth and Development We strive to be an Employer of Choice by investing in our employees. Our goal is to attract, develop and retain a talented team inspired by our mission to maintain exceptional relationships with our customers and suppliers and create exceptional return to our shareholders, while providing exceptional opportunities for our employees.
Our goal is to attract, develop and retain a talented team inspired by our mission to maintain exceptional relationships with our customers and suppliers and create exceptional return to our shareholders, while providing exceptional opportunities for our employees.
POOL360 WaterTest and POOL360 PoolService are tools designed to unlock capacity for our customers and our sales center network. By integrating e-commerce, software applications and data-driven insights, POOL360 enhances both customer experience and operational efficiency.
Our POOL360 digital ecosystem is a suite of products transforming the way pool professionals do business. POOL360 WaterTest and POOL360 PoolService are tools designed to unlock capacity for our customers and our sales center network. By integrating e-commerce, software applications and data-driven insights, POOL360 enhances both customer experience and operational efficiency.
We then evaluate the performance in these markets and focus on those product categories that we believe exhibit the best long-term growth potential.
We continue to identify new related product categories, and we typically introduce new categories each year in select markets. We then evaluate the performance in these markets and focus on those product categories that we believe exhibit the best long-term growth potential.
We provide in depth product training that allows our customers to expand the scope of their product offerings. We also provide uniquely tailored advertising programs through our EDGE Marketing Portal that include such features as digital marketing, customer lead generation, personalized websites, brochures, direct mail, marketing campaigns and business development training.
We also provide uniquely tailored advertising programs through our EDGE Marketing Portal that include features such as digital marketing, customer lead generation, personalized websites, brochures, direct mailers, marketing campaigns and business development training.
To create connection and community within our workforce, we have established a mentoring program to cultivate the growth and development of our high potential employees. We also support our employees with training and development opportunities, which include content aimed at creating and sustaining an inclusive environment.
We also support our employees with training and development opportunities, which include content aimed at creating and sustaining an inclusive environment and have established a mentoring program to cultivate the growth and development of our high potential employees. Employee Development Investing in our employees helps us grow our business and become an Employer of Choice.
These favorable trends include the following: • long-term growth in housing units in warmer climate markets due to the population migration toward the southern United States, where outdoor home entertainment is more prevalent and extends longer throughout the year; • increased homeowner spending on outdoor living spaces for relaxation and entertainment as lower housing turnover encourages consumers to renovate their existing homes; • consumers bundling the purchase of a swimming pool and other products, with new irrigation systems, landscaping and improvements to outdoor living spaces often being key components to both pool installations and remodels; • consumers using more automation and control products, higher quality materials and other pool features that add to our sales opportunities over time; and • consumers increasing focus on sustainable, energy-efficient products.
Data, Inc. reports): We believe that the following favorable demographic and socioeconomic trends have positively impacted our industry over the past several years and will continue over the long term: • long-term growth in housing in warmer climate markets due to the population migration toward the southern United States, where outdoor home entertainment is more prevalent and extends longer throughout the year; • increased homeowner spending on outdoor living spaces for relaxation and entertainment; • healthy home equity levels providing consumers additional capacity to renovate their existing homes; • increased customer bundling of the purchase of a new or remodeled swimming pool with new irrigation systems, landscaping, outdoor kitchens and overall improvements to outdoor living spaces, viewing these elements as key components to both pool installations and remodels; • increased demand for automation and control products, higher quality materials and other pool features that add to our sales opportunities over time; and • increased customer focus on sustainable, energy-efficient products.
Our employees can take advantage of a range of benefits, including healthcare and wellness programs, tuition reimbursement for eligible employees and multi-year scholarships to their dependents, and financial wellness programs to help provide education and tools to assist in improving, maintaining and capitalizing on our employees’ financial future.
Our employees can take advantage of a range of benefits, including healthcare and wellness programs, tuition reimbursement for eligible employees and multi-year scholarship opportunities for 9 dependents, and financial wellness programs to help provide education and tools to assist our employees in planning their financial future. Seasonality and Weather Our business is seasonal.
We generally pass industry price increases through our supply chain and from time to time may make strategic volume inventory purchases ahead of vendor price increases in order to obtain favorable pricing.
We generally pass industry price increases through our supply chain and from time to time may make strategic volume inventory purchases ahead of vendor price increases in order to obtain favorable pricing. Inflationary product cost increases moderated from heightened pandemic levels in 2023, which saw levels at approximately 3% to 4%.
Our Industry We operate in the outdoor living industry, which services approximately 11.0 million bodies of water in the United States alone, including 5.4 million in-ground swimming pools.
Our Industry We operate in the outdoor living industry, which services more than 14.0 million swimming pools and hot tubs in the United States alone, including approximately 5.5 million in-ground swimming pools.
Our commitment to fostering a welcoming workplace goes beyond hiring; it’s about ensuring every voice is heard and valued. 8 We are committed to supporting our workforce through the hiring, retention and advancement of top-tier talent through the following: • Recruiting, developing and retaining a dynamic workforce and providing developmental opportunities for career advancement for all employees; • Ensuring that our policies, practices and procedures are fair and provide equal employment opportunity for a wide range of prospective candidates and employees; and • Communicating that we, as an Employer of Choice, are committed to a culture with action-oriented programs that produce results and employee engagement.
We demonstrate this by: • recruiting, developing and retaining a dynamic workforce and providing developmental opportunities for career advancement for all employees; • ensuring that our policies, practices and procedures are fair and provide equal employment opportunity for a wide range of prospective candidates and employees; and • communicating that we, as an Employer of Choice, are committed to creating a culture with action-oriented programs that produce results and employee engagement.
Within the United States market, we believe that residential and commercial irrigation systems, landscape maintenance products, power equipment, hardscapes and specialty outdoor products and accessories offer a total addressable market value of approximately $19.0 billion. 2 Economic Environment Certain trends in the housing market, the cost and availability of consumer credit and general economic conditions (as commonly measured by Gross Domestic Product or GDP) affect our industry, particularly the installation of new pools and irrigation systems, as well as the timing and extent of pool remodels, equipment replacements, landscaping projects and outdoor living space renovations.
Economic Environment Certain trends in the housing market, the cost and availability of consumer credit and general economic conditions (as commonly measured by Gross Domestic Product or GDP) affect our industry, particularly the installation of new pools and irrigation systems, as well as the timing and extent of pool remodels, equipment replacements and upgrades, landscaping projects and outdoor living space renovations.
We regularly evaluate supplier relationships and consider alternate sourcing to ensure competitive cost, service and quality standards. Our largest suppliers include Pentair plc, Zodiac Pool Systems, Inc, and Hayward Pool Products, Inc., which accounted for approximately 20%, 12% and 11%, respectively, of the cost of products we sold in 2024.
Our largest suppliers include Pentair plc, Zodiac Pool Systems, Inc. and Hayward Holdings, Inc., which accounted for approximately 20%, 12% and 11%, respectively, of the cost of products we sold in 2025.
We assist certain customers with aspects of their businesses, including site selection, store layout and design, product merchandising, comprehensive product offering selections and efficient ordering and inventory management processes.
We assist certain customers with aspects of their businesses, including site selection, store layout and design, product merchandising, comprehensive product offering selections and efficient ordering and inventory management processes. In addition to these programs, we feature consumer showrooms in many of our sales centers and host our annual Retail Summit.
Irrigation system installations often occur in tandem with new single-family home construction making them more susceptible to economic variables that drive new home sales. However, the landscape industry offers similar maintenance-related growth opportunities as the swimming pool industry.
The irrigation and landscape maintenance industry shares many characteristics with the pool industry, and we believe that it exhibits similar long-term growth potential. Irrigation system installations often occur in tandem with new single-family home construction making demand for them more susceptible to the economic variables that drive new home sales.
Based on our 2024 product classifications, sales for our pool and hot tub chemicals product category represented approximately 15% of total net sales for 2024, 14% of total net sales in 2023 and 13% of total net sales in 2022.
Based on our 2025 product classifications, sales for our pool and hot tub chemicals product category represented approximately 14% of total net sales in 2025, 15% in 2024 and 14% in 2023. No other product categories accounted for 10% or more of total net sales in any of the last three fiscal years.
Going forward, we expect to continue to realize sales growth through market share gains and continued expansion of our product offerings with a focus on our proprietary and exclusive brand products. Customers and Products We serve roughly 125,000 customers, most of which are small, family-owned businesses with relatively limited capital resources.
Going forward, we expect to continue to realize sales growth through market share gains and continued expansion of our product offerings with a focus on our proprietary and exclusive brands, such as our recently expanded Regal, E-Z Clor, SuperPro and PoolStyle lines. Customers and Products We proudly serve approximately 125,000 customers, the majority of whom are small, entrepreneurial, family-owned businesses.
Sun Wholesale Supply also owns and operates a specialty chemical re-packaging plant providing pool chemical products to the Pinch A Penny franchised store network and a portion of the chemical products sold through our SCP and Superior networks. 6 We evaluate our sales centers based on their performance relative to predetermined standards that include both financial and operational measures.
Sun Wholesale Supply also provides chemical products to our SCP and Superior networks. We evaluate our sales centers based on their performance relative to predetermined standards that include both financial and operational measures.
We consider the commercial market to be a key growth opportunity as we focus more attention on providing products to customers who operate and service large commercial installations such as hotels, condominiums, apartment complexes, universities and community recreational facilities. We continue to leverage our existing sales center networks and customer and vendor relationships to grow this market.
Over the last several years, we have increased our product offerings and service abilities related to commercial swimming pools. We consider the commercial market to be a key growth opportunity as we focus more attention on providing products to customers who operate or provide services to large commercial installations such as hotels, condominiums, apartment complexes, universities and community recreational facilities.
As of December 31, 2024, we operated 448 sales centers in North America, Europe and Australia, from which we sell swimming pool supplies, equipment and related leisure products, irrigation and landscape maintenance products and hardscape, tile and stone products to our customer base, including pool builders, retail stores, service companies, landscape contractors and others, through our five distribution networks listed below: • SCP Distributors (SCP); • Superior Pool Products (Superior); • Horizon Distributors (Horizon); • National Pool Tile (NPT); and • Sun Wholesale Supply (Sun Wholesale).
As of December 31, 2025, we operated 456 sales centers strategically located in North America, Europe and Australia, from which we sell swimming pool supplies, equipment and related leisure products, irrigation and landscape maintenance products and hardscapes, tile and stone products. Our customer base generally includes pool builders, pool service companies, retail stores, commercial pool operators and landscape contractors.
In addition to our efforts aimed at promoting industry and customer growth, we strive to operate more effectively by continuously focusing on improvements in our operations, which we define as capacity creation. We create capacity with business-to-business (B2B) development tools and execution aimed at developing best-in-class service and value creation for our customers and suppliers.
We create capacity with business-to-business (B2B) development tools and execution aimed at developing best-in-class service and value creation for our customers and suppliers.
We use these programs as tools to educate consumers and lead prospective pool owners to our customers. We also promote the growth of our industry by offering a growing selection of energy-efficient and environmentally friendly products, which support sustainability and can help pool owners save energy, water, time and money.
We also promote the growth of our industry by offering a growing selection of energy-efficient and environmentally friendly products, which support sustainability and help pool owners save energy, water, time and money. Our environmentally friendly technology products include variable speed pumps, LED pool and hot tub lights and high-efficiency heat pumps.
We face intense competition from many regional and local distributors in our markets and from a limited number of other national wholesale distributors.
We face intense competition from many regional and local distributors in our markets and from a limited number of other national wholesale distributors. We also face competition, both directly and indirectly, from mass market retailers (both store-based and internet) and large pool supply retailers who primarily buy directly from manufacturers.
Nonetheless, new home construction grew versus a decline in new pool construction, creating more available backyards for swimming pools when economic conditions stabilize. We believe that over the long term, higher rates of home appreciation and turnover have a positive impact on new pool installations.
Consumers typically spend more on new pools, new irrigation systems, renovations, replacements and upgrades when general economic conditions are strong. We believe that over the long term, higher rates of home appreciation and turnover have a positive impact on new pool installations.
Sun Wholesale Supply distributes swimming pool supplies, equipment and related leisure products, primarily servicing independently owned and operated Pinch A Penny franchise locations. Since our acquisition in December 2021, we have expanded Pinch A Penny franchise operations through additional locations of Pinch A Penny franchised stores and plan to continue these expansion initiatives.
Since our acquisition of this business in December 2021, we have expanded Pinch A Penny franchise operations through additional locations of Pinch A Penny franchised stores and plan to continue these expansion initiatives. Sun Wholesale Supply also owns and operates a specialty chemical re-packaging plant that sells proprietary pool chemical products principally to the Pinch A Penny franchised store network.
Our Horizon sales centers offer organic fertilizers, organic pesticides, and irrigation and drainage products that reduce water usage and soil erosion, allowing our customers and homeowners to have less of an impact on freshwater reserves. 3 We promote the growth of our customers’ businesses by offering the broadest product assortment through the largest number of conveniently located market-based sales centers and through comprehensive support programs that include promotional tools and marketing support to help our customers generate increased sales.
We promote the growth of our customers’ businesses by offering the broadest product assortment through the largest number of conveniently located market-based sales centers and through comprehensive support programs that include promotional tools and marketing support to help our customers generate increased sales. We provide in-depth training that allows our customers to expand the scope of their product offerings.
Our local employees and partners have also donated their time and energy to make these events a success. Employee Compensation and Benefits We strive to provide market-competitive compensation, benefits and services to our employees, and our performance-based compensation philosophy rewards each employee’s individual contributions.
Employee Compensation and Benefits We strive to provide market-driven compensation, benefits and services to our employees. Our performance-based compensation philosophy rewards our employees’ individual contributions to our success.
We focus on the following factors in implementing and developing our human capital strategy: • employee health, safety and wellness; • talent management; • employee growth and development; and • employee compensation and benefits. Employee Health, Safety and Wellness Our commitment to the health, safety and wellness of our employees ranks at the top of our core operating priorities.
We focus on the following factors in implementing and developing our human capital strategy: • employee health, safety and wellness; • talent empowerment; • employee development; and • employee compensation and benefits. We employed approximately 6,000 people at December 31, 2025 and approximately 90% of our employees were located in the U.S.
In addition to our 18 stand-alone NPT sales centers, we currently have 117 SCP and Superior sales centers that feature consumer showrooms where swimming pool and landscape contractors, as well as homeowners, can view and select pool components including pool tile, decking materials and interior pool finishes in various styles and grades.
In addition to our 19 dedicated NPT sales centers, we operate 124 SCP and Superior sales centers featuring consumer showrooms. These showrooms enable swimming pool and landscape contractors, as well as homeowners, to view and select pool components, including tile, decking and surfacing, in a wide range of styles and grades.
We estimate that new swimming pool construction comprised almost 15% of 2024 sales. The demand for new pools is generally driven by the perceived benefits of pool ownership including increased use of outdoor space, enhanced property value, relaxation, entertainment, family activity, exercise and convenience.
The demand for new pools is generally driven by the perceived benefits of pool ownership including increased use of outdoor space, enhanced property value, relaxation, entertainment, family activity, health and wellness and convenience. The industry competes for new pool sales against other discretionary consumer purchases such as kitchen and bathroom remodeling, boats, motorcycles, recreational vehicles and vacations.
These practices, together with a more comprehensive service offering, have positively impacted our selling margins and our returns on inventory investments. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Vendor Programs,” for additional information.
These practices, together with a more comprehensive service offering, have positively impacted our selling margins and our returns on inventory investments.
New product technology provides opportunities not only for improved energy-efficiency but also expanded control and convenience in enjoying leisure activities. We offer a growing selection of energy-efficient and environmentally friendly products, which support sustainability and can help pool owners save energy, water, time and money over time.
Innovative product technologies unlock new opportunities for enhanced energy efficiency, expanded control and greater convenience in leisure activities. We have broadened our selection of energy-efficient and environmentally friendly products, empowering pool owners to save energy, water, time and money while supporting sustainability initiatives.
Our local sales personnel work from our sales centers as trusted resources for our customers and are charged with understanding and meeting our customers’ specific needs. Our sales center personnel help educate our customers on a variety of topics including the newest, most innovative products and solutions that can elevate their businesses.
Our sales center personnel help educate our customers on a variety of topics including the newest, most innovative products and solutions that can elevate their businesses. 5 We offer our customers more than 200,000 manufacturer, proprietary and exclusive brand products.
We also face competition, both directly and indirectly, from mass market retailers (both store-based and internet) and large pool supply retailers who primarily buy directly from manufacturers. 7 Some geographic markets we serve, particularly the four largest and higher pool density markets of Florida, California, Texas and Arizona have a greater concentration of competition than others.
Some geographic markets we serve, particularly the four largest and higher pool density markets of California, Florida, Texas and Arizona have a greater concentration of competition than others. Barriers to entry in our industry are relatively low.
We use local sales and marketing personnel to promote the growth of our business and develop and strengthen our customers’ businesses. Our sales and marketing personnel focus on developing customer training programs and promotional activities, creating and enhancing sales management tools and providing product and market expertise.
Our sales and marketing personnel focus on developing customer training programs and promotional activities, creating and enhancing sales management tools and providing product and market expertise. Our local sales personnel work from our sales centers as trusted resources for our customers and are charged with understanding and meeting our customers’ specific needs.
In recent years, steady increases in home values, lack of affordable new homes and increased mortgage rates have prompted homeowners to stay in their homes longer. Although homeowners’ investment in their houses has moderated from the pandemic heightened levels of 2020 to 2022, home investment levels generally remain favorable.
Although homeowners’ investment in their houses has moderated from the pandemic heightened levels of 2020 to 2022, homeowners continue to invest in their homes.
We believe that the pool industry will continue to grow with the increased penetration of new pools into households with the discretionary income and physical capacity to install a swimming pool.
We anticipate that the outdoor living industry will continue to grow with the increased penetration of new pools at households with the discretionary income and yard capacity to install a swimming pool. These pools present significant growth opportunities requiring continuous maintenance throughout their lifetime and periodic remodeling, equipment replacement and upgrade activities as the installed base of swimming pools ages.
This effort begins immediately with new employees and is reinforced each day through a focus on training, safety awareness, risk identification and other essential safety protocols. We closely monitor overall workers’ compensation and auto claims, OSHA recordable incidents, Department of Transportation compliance and other internally established safety prevention elements in an effort to make every workday safe.
We also continue to modernize our fleet with advanced safety features and closely monitor overall workers’ compensation and auto claims, Occupational Safety and Health Administration recordable incidents, Department of Transportation compliance and other internally established safety prevention elements in an effort to make every workday safe. 8 Talent Empowerment We value the differences in perspective and lived experience that our thousands of employees bring to work.
We believe our showrooms, local stocking of products, specialized delivery equipment and virtual support provide us with a competitive advantage in these categories. Given the more discretionary nature of these products, this business tends to be more sensitive to external market factors compared to our business overall.
Given the more discretionary nature of these products, this business tends to be more sensitive to external market factors compared to our business overall. Sun Wholesale Supply distributes swimming pool supplies, equipment and related leisure products, primarily servicing independently owned and operated Pinch A Penny franchise locations.
Similar to other discretionary purchases, replacement and renovation activities are more heavily impacted by economic factors such as consumer confidence, GDP and employment levels. During periods of high demand, contractor labor availability can limit our customers’ ability to fully meet consumer construction and renovation demand.
Similar to other discretionary purchases, replacement, upgrade and renovation activities are more heavily impacted by economic factors such as consumer confidence, GDP and employment levels. In recent years, steady increases in home values, lack of affordable new homes and increased mortgage rates have positioned homeowners to stay in their homes longer and upgrade their home environments, including their backyards.
Further, we believe the desire for consumers to enhance their outdoor living spaces with water-sensing and battery-powered alternatives, hardscapes, lighting and other outdoor living-related products provides us with additional future growth opportunities. Over the past several years, favorable demographic and socioeconomic trends have positively impacted our industry, and we believe these trends will continue over the long term.
The desire for consumers to enhance their outdoor living spaces with water-sensing and battery-powered alternatives, hardscapes, lighting and other outdoor living-related products provides us with additional future growth opportunities, and we continually add products to take advantage of technological advancements and the development of sustainable, energy-efficient and more aesthetically attractive products. 1 The following table reflects growth in the domestic installed base of in-ground swimming pools over the past 10 years (based on Company estimates for 2025 and information from 2024 P.K.
In addition to these programs, we feature consumer showrooms in many of our sales centers and host our annual Retail Summit to educate our customers about product offerings and the overall industry. We also function as a day-to-day resource by offering product and market expertise to serve our customers’ unique needs.
We also function as a day-to-day resource by offering product and market expertise to serve our customers’ unique needs. In addition to our efforts aimed at promoting industry and customer growth, we strive to operate more effectively by continuously focusing on improvements in our operations, which we define as capacity creation.
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These pools require routine maintenance throughout their lifetime, and we believe significant growth opportunities reside with pool remodel and pool equipment replacement activities due to the aging of the installed base of swimming pools. We continue to add products to take advantage of technological advancements and the development of sustainable, energy-efficient and more aesthetically attractive products.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeInvestors or other stakeholders could react negatively to our targets or other positions we take on ESG matters, which could negatively impact our relationships with such stakeholders or result in claims that our initiatives harmed them or us. 17 Various governmental bodies in Europe and the United States, particularly in the state of California, have adopted or proposed laws or regulations increasing the obligations of companies to disclose information about their emissions and other similar data.
Biggest changeVarious governmental bodies in Europe and the United States, particularly in the state of California, have adopted or proposed laws or regulations increasing the obligations of companies to disclose information about climate-related and other sustainability matters. We expect that these initiatives will expose us to additional compliance costs and potential risks.
Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of earnings and other financial performance measures, statements of management’s expectations regarding our strategic, operational and capital allocation plans and objectives, management’s views on industry, economic, competitive, technological and regulatory conditions and other forecasts of trends and other matters.
Our forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of earnings and other financial performance measures, statements of management’s expectations regarding our strategic, operational and capital allocation plans and objectives, management’s views on economic, industry, competitive, technological and regulatory conditions and other forecasts of trends and other matters.
Further, our business may also be affected by additional factors that generally apply to all companies operating in the U.S. and globally, which we have not included below. Risks Relating to Macroeconomic Conditions or Events The demand for our products may be adversely affected by unfavorable economic conditions and changes in consumer discretionary spending.
Further, our business may also be affected by additional factors that generally apply to all companies operating in the U.S. and globally, which we have not included below. Risks Relating to Macroeconomic Conditions or Events The demand for our products may be adversely affected by unfavorable economic conditions and changes in discretionary consumer spending.
Consequently, we may not be able to implement security barriers or other preventative measures that repel all future cyber-attacks or detect such attacks in a timely manner, which may result in significant expenses from system downtime, lower sales, increases in insurance costs, fines and fees, lost business relationships, managerial distractions, litigation, increases to regulatory oversight, expenditures for additional threat prevention technologies or reputational harm, any of which could materially impact us.
Consequently, we may not be able to implement security barriers or other preventative measures that repel all 16 future cyber-attacks or detect such attacks in a timely manner, which may result in significant expenses from system downtime, lower sales, increases in insurance costs, fines and fees, lost business relationships, managerial distractions, litigation, increases to regulatory oversight, expenditures for additional threat prevention technologies or reputational harm, any of which could materially impact us.
Certain extreme weather events and natural disasters, such as hurricanes, tornadoes, earthquakes, tropical storms, floods, intense storms, drought and wildfires, may adversely impact us in several ways, including interfering with our ability to deliver our products and services, interfering with our receipt of supplies from our vendors, reducing demand for our products and services, and damaging our facilities.
Certain extreme weather events and natural disasters, such as hurricanes, tornadoes, earthquakes, tropical storms, floods, intense storms, drought, wildfires and extreme heat, may adversely impact us in several ways, including interfering with our ability to deliver our products and services, interfering with our receipt of supplies from our vendors, reducing demand for our products and services, and damaging our facilities.
Additionally, if our suppliers experience difficulties or disruptions in their operations, if there is any material interruption in our supply chain or if we lose any significant supplier due to financial failure or any other reason, we may experience increased supply costs or delays in establishing replacement supply sources that meet our quality and control standards, which may affect our profitability.
Additionally, if our suppliers experience difficulties or disruptions in their operations, if there is any material interruption in our supply 13 chain or if we lose any significant supplier due to financial failure or any other reason, we may experience increased supply costs or delays in establishing replacement supply sources that meet our quality and control standards, which may affect our profitability.
Because we source certain products from outside the United States, major changes in tax policy, import or export regulations, other trade restrictions or trade relations, such as the imposition of additional tariffs or duties on imported products, could adversely affect our business, results of operations, effective income tax rate, liquidity and net income.
Because we source certain products from outside the United States, major changes in tax policy, import or export regulations, other trade restrictions or trade relations, such as the imposition of tariffs or duties on imported products, could adversely affect our business, results of operations, effective income tax rate, liquidity and net income.
Concerns over changing climate patterns have led to, and may in the future lead to, new or increased legal and regulatory requirements designed to reduce or mitigate the effects of changing climate patterns, which could increase our compliance obligations. In particular, advocates of change are continuing to explore ways to reduce greenhouse gas emissions.
Concerns over changing climate patterns have led to, and may in the future continue to lead to, new or increased legal and regulatory requirements designed to reduce or mitigate the effects of changing climate patterns, which could increase our compliance obligations. In particular, advocates of change are continuing to explore ways to reduce greenhouse gas emissions.
However, we cannot guarantee that our insurance coverage will be adequate to cover future claims that may arise or that we will be able to maintain adequate insurance in the future at rates we consider reasonable. Successful claims for which we are not fully insured may adversely affect our working capital and profitability.
However, we cannot guarantee that our insurance coverage will be 18 adequate to cover future claims that may arise or that we will be able to maintain adequate insurance in the future at rates we consider reasonable. Successful claims for which we are not fully insured may adversely affect our working capital and profitability.
We also may experience occasional system interruptions and delays that make our information systems unavailable or slow to respond, including the interaction of our information systems with those of third parties or the failure of software of services provided by third parties that we do not control.
We also may experience occasional system interruptions and delays that make our information systems unavailable or slow to respond, including the interaction of our information systems with those of third parties or the failure of software provided by third parties that we do not control.
The European Union and other international regulators, as well as state governments, have recently enacted or enhanced data privacy regulations, such as the California Consumer Privacy Rights Act, and other governments are considering establishing similar or stronger protections.
The European Union and other international regulators, as well as state governments, have enacted or enhanced data privacy regulations, such as the California Consumer Privacy Rights Act, and other governments are considering establishing similar or stronger protections.
While we contemplate continued growth through internal expansion and acquisitions, no assurance can be made as to our ability to: • penetrate new markets; • generate sufficient cash flows to support expansion plans and general operating activities; • obtain financing; • identify appropriate acquisition candidates and successfully integrate acquired businesses; • identify appropriate locations for new sales centers and successfully integrate them into our network; • maintain favorable supplier arrangements and relationships; and • identify and divest assets which no longer meet our objectives.
While we contemplate continued growth through internal expansion and acquisitions, no assurance can be made as to our ability to: • penetrate new markets; • generate sufficient cash flows to support expansion plans and general operating activities; • obtain financing; • identify appropriate acquisition candidates and successfully integrate acquired businesses; • identify appropriate locations for new sales centers and successfully integrate them into our network; • maintain favorable supplier arrangements and relationships; and • identify and close or consolidate locations or divest assets which no longer meet our objectives.
Despite our best efforts to comply, any noncompliance could result in incurring potential substantial penalties and reputational damage. Risks Relating to Legal, Regulatory and Compliance Matters The nature of our business subjects us to compliance with employment, environmental, health, transportation, safety and other governmental regulations.
Despite our best efforts to comply, any noncompliance could result in incurring potential substantial penalties and reputational damage. 17 Risks Relating to Legal, Regulatory and Compliance Matters The nature of our business subjects us to potential non-compliance with employment, environmental, health, transportation, safety and other governmental regulations.
Our effective tax rate may also be impacted by changes in the geographic mix of our earnings. We cannot assure you we will continue paying dividends at the current rates, or at all. We cannot assure you we will continue periodic dividends on our capital stock at the current rates, or at all.
Our effective tax rate may also be impacted by changes in the geographic mix of our earnings. We cannot assure you we will continue paying dividends or repurchasing shares at the current rates, or at all. We cannot assure you we will continue periodic dividends on our capital stock at the current rates, or at all.
Fluctuations in other factors relating to international trade, such as tariffs, trade restrictions, transportation costs and inflation are additional risks for our international operations. We do not have operations in the Middle East, Russia or Ukraine.
Fluctuations in other factors relating to international trade, such as tariffs, trade restrictions, transportation costs and inflation are additional risks for our international operations. We do not have operations in the Middle East, Russia, Ukraine or South America.
Should store‑ and internet-based mass market retailers increase their focus on the pool or irrigation industries or increase the breadth of their pool and irrigation and related product offerings, they may become a more significant competitor for our direct customers and end-use consumers, which could have an adverse impact on our business.
Should store‑ and internet-based mass market retailers increase their focus on the pool or irrigation industries or increase the breadth of their pool and irrigation and related product offerings, they would likely become a more significant competitor for our direct customers and end-use consumers, which could have an adverse impact on our business.
A lack of sophistication or reliability of our information systems could adversely impact our operations and customer service and could require major repairs or replacements, resulting in significant costs and foregone revenue. Increasing complexity of technology could increase our cost of doing business. We devote significant resources to protect our systems and data from cyber-attacks. Refer to Item 1C.
A lack of sophistication or reliability of our information systems could adversely impact our operations and customer service and could require major repairs or replacements, resulting in significant costs and foregone revenue. Increasing complexity of technology could increase our cost of doing business. We devote significant resources to protect our systems and data from cyber-attacks.
No assurance can be given that the expected results in any forward-looking statement will be achieved, and actual results may differ materially due to one or more factors, including the risks described below in this Item 1A, below in Item 7 of this Form 10-K and elsewhere in this Form 10-K.
No assurance can be given that the expected results in any forward-looking statement will be achieved, and actual results may differ materially from those anticipated due to one or more factors, including the risks described below in this Item 1A, below in Item 7 of this Form 10-K and elsewhere in this Form 10-K.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Taxation and tax policy changes, tax rate changes, new tax laws, changes in tax law interpretations and changes in accounting standards and guidance related to tax matters may cause fluctuations in or adversely affect our effective tax rate.
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Changes in tax laws, tax policy, tax rates, tax law interpretations and accounting standards and guidance related to tax matters may cause fluctuations in or adversely affect our effective tax rate.
Our international operations, including Canada and Mexico, accounted for 7% of our total net sales in 2024 and expose us to certain additional risks, including: • difficulty in staffing international subsidiary operations; • different political, economic and regulatory conditions; • local laws and customs; • currency fluctuations (including the current strength of the U.S. dollar compared to foreign currencies), exchange controls and repatriation restrictions; • adverse tax consequences; and • adverse consequences for violating anti-corruption, anti-competition, economic sanctions, immigration and other laws governing international commerce.
Our international operations, including Canada and Mexico, accounted for 7% of our total net sales in 2025 and expose us to certain additional risks, including: • difficulty in staffing international subsidiary operations; • different political, economic and regulatory conditions; • local laws and customs; • currency fluctuations (including changes in the relative strength of the U.S. dollar compared to foreign currencies), exchange controls and repatriation restrictions; • adverse tax consequences; and • adverse consequences for violating anti-corruption, anti-competition, economic sanctions, immigration and other laws governing international commerce.
We indirectly compete against mass market retailers and large pool or irrigation supply retailers as they purchase the great majority of their supplies directly from manufacturers. We compete to a lesser extent with internet retailers, as they purchase the majority of their supplies from distributors.
We indirectly compete against store-based mass market retailers and large pool or irrigation supply retailers as they purchase the majority of their supplies directly from manufacturers. We compete to a lesser extent with internet retailers, as they purchase the majority of their supplies from distributors.
Given the density and demand for pool products, some geographic markets that we serve also tend to have a higher concentration of competitors than others, particularly Florida, California, Texas and Arizona. These states encompass our four largest markets and represented approximately 54% of our net sales in 2024.
Given the density and demand for pool products, some geographic markets that we serve also tend to have a higher concentration of competitors than others, particularly California, Florida, Texas and Arizona. These states encompass our four largest markets and represented approximately 53% of our net sales in 2025.
Item 1A. Risk Factors Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 This report contains forward-looking information that involves risks and uncertainties.
Item 1A. R isk Factors Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995 This report contains forward-looking information that involves risks and uncertainties.
We maintain disclosure controls and procedures designed to provide reasonable assurances regarding the accuracy and completeness of our SEC reports and internal control over financial reporting designed to provide reasonable assurance regarding the reliability and compliance with U.S. generally accepted accounting principles (GAAP) of our financial statements. We cannot assure you these measures will be effective. 19
We maintain disclosure controls and procedures designed to provide reasonable assurances regarding the accuracy and completeness of our reports filed with the SEC and internal control over financial reporting designed to provide reasonable assurance regarding the reliability and compliance of our financial statements with U.S. generally accepted accounting principles. We cannot assure you these measures will be effective. Item 1B.
Further, we may face additional competitive pressures if large pool or irrigation supply retailers look to expand their customer base to compete more directly within the distribution channel. 14 We depend on our ability to attract, develop and retain highly qualified personnel. We consider our employees to be the foundation for our growth and success.
Further, we may face additional competitive pressures if large pool or irrigation supply retailers look to expand their customer base to compete more directly with us. We depend on our ability to attract, develop and retain highly qualified personnel. We consider our employees to be the foundation for our growth and success.
The risk of breaches is likely to continue to increase due to several factors, including (i) the increasing use of machine learning, artificial intelligence (AI) and other sophisticated techniques to initiate cyber and phishing attacks, (ii) the wider accessibility of cyber-attack tools that can circumvent security controls and evade detection, (iii) the expanded size, use and complexity of our systems, and (iv) our increased reliance on e-commerce, open source software, cloud computer services and work-from-home staffing.
The risk of breaches is likely to continue to increase due to several factors, including (i) the increasing use of machine learning, artificial intelligence (AI) and other sophisticated techniques to initiate cyber attacks and social engineering threats, such as phishing or deepfake schemes, (ii) the wider accessibility of cyber-attack tools that can circumvent security controls and evade detection, (iii) the expanded size, scope, use and complexity of our systems, and (iv) our increased reliance on e-commerce, open source software, cloud computing services and work-from-home staffing.
Given the nature of our business, weather is one of the principal external factors affecting our business and the effect of seasonality has a significant impact on our results. In 2024, we generated 60% of our net sales and 73% of our operating income in the second and third quarters of the year.
Given the nature of our business, weather is one of the principal external factors affecting our business and the effect of seasonality has a significant impact on our results. In 2025, we generated 61% of our net sales and 78% of our operating income in the second and third quarters of the year.
Consumer discretionary spending significantly affects our sales and is impacted by a variety of factors, including changes in general economic conditions, the housing market, unemployment rates, wage levels, interest rate fluctuations, inflation, disposable income levels, consumer confidence and access to credit.
Discretionary consumer spending significantly affects our sales and is impacted by a variety of factors, including changes in general economic conditions, the housing market, unemployment rates, wage levels, interest rate fluctuations, inflation, disposable income levels, consumer confidence and access to credit. Any material decline in discretionary consumer spending could reduce our sales and harm our business.
Currently, we estimate that approximately 64% of our net sales are derived from maintenance and minor repair products, while approximately 22% of our sales are derived from products used in the remodel, renovation, and upgrade of pools.
Currently, we estimate that approximately 64% of our net sales are derived from maintenance and minor repair products, while approximately 22% of our sales are derived from products used to remodel, renovate, and upgrade pools.
Our business could be adversely impacted if (i) consolidation of our customers leads to changes in purchasing habits, (ii) more people choose to live in urban settings or rented space or (iii) more homeowners bypass our customers by directly procuring their own supplies or undertaking their own improvement projects.
Our business could be adversely impacted if (i) consolidation of our customers leads to changes in purchasing habits, (ii) more people choose to live in urban settings, rented space or housing complexes with a single community pool or (iii) more homeowners bypass our customers by directly purchasing their own supplies or undertaking their own improvement projects.
“Cybersecurity” for further information on our cybersecurity risk management and strategy and governance. In recent years we have faced, and expect to continue to face, various attempted cyber-attacks of increasing sophistication.
Refer to Item 1C, “Cybersecurity” of this Form 10-K for further information on our cybersecurity risk management, strategy and governance. In recent years we have faced, and expect to continue to face, various attempted cyber-attacks of increasing sophistication.
Additionally, changes in data privacy laws and our ability to comply with them could have a material adverse effect on us. In the course of doing business, we collect and store data that is sensitive to us and our employees, customers and vendors.
Failure to maintain the security of confidential information could damage our reputation and expose us to litigation. Additionally, changes in data privacy laws and our ability to comply with them could have a material adverse effect on us. In the course of doing business, we collect and store data that is sensitive to us and our employees, customers and vendors.
While the Federal Reserve began cutting interest rates in the latter part of 2024, interest rates remain relatively high. If interest rates remain elevated or increase, the cost of servicing our variable rate debt not covered by our interest rate swaps could materially reduce our profitability and cash flows.
While the Federal Reserve has been cutting interest rates since the latter parts of 2024, interest rates remain relatively high compared to the recent past. If interest rates remain elevated or increase, the cost of servicing our variable rate debt not covered by our interest rate swaps could materially reduce our profitability and cash flows.
Although we maintain insurance coverage that may, subject to policy terms and conditions (including self-insured deductibles, coverage restrictions and monetary coverage caps), cover certain aspects of our cyber risks, such insurance coverage may be unavailable or insufficient to cover our losses. Failure to maintain the security of confidential information could damage our reputation and expose us to litigation.
Although we maintain insurance coverage that may, subject to policy terms and conditions (including self-insured deductibles, coverage restrictions and monetary coverage caps), cover certain aspects of our cyber risks, such insurance coverage may be unavailable or insufficient to cover our losses.
Our initiatives aimed at reducing our impact on the environment and climate change reflect our current plans and aspirations, and it is possible that we may not be able to achieve our desired impact, which may cause us to suffer from legal claims, reputational damage or a loss of demand for our products.
Climate-related and other sustainability disclosures we make reflect our current plans and aspirations, and it is possible that we may not be able to achieve our desired impact, which may cause us to suffer from legal claims, reputational damage or a loss of demand for our products.
While warmer weather conditions generally impact our sales favorably, natural disasters and other significant weather events can create more variability in our reported results in the short term or otherwise adversely impact our sales or operations. Drought conditions or water management initiatives may lead to government-imposed water use restrictions.
Natural disasters and other significant weather events can create more variability in our reported results in the short term or otherwise adversely impact our sales or operations. Drought conditions or water management initiatives may lead to government-imposed water use restrictions or an increase in the number of homeowners unwilling to construct or maintain a pool.
The variability and complexity of tariffs and duties exposes us to the risk of higher costs and inadvertent noncompliance associated with our imported products. Moreover, in recent years the United States has generally increased its tariff rates and indicated that additional increases could be forthcoming.
The variability and complexity of tariffs and duties exposes us to the risk of higher costs and inadvertent noncompliance associated with our imported products. Moreover, in recent years, the United States has increased its tariff rates or imposed new tariffs or trade restrictions.
Additionally, because the internet facilitates competitive entry, price transparency and comparison shopping, increased internet sales by us or our competitors could increase the level of competition we face or reduce our margin.
Additionally, because the internet facilitates competitive entry, online ordering, price transparency and comparison 14 shopping, increased internet transactions by us or our customers or competitors could increase the level of competition we face, reduce our margins or reduce our customers’ reliance on us.
Other catastrophic events or societal unrest could adversely impact our operations. Terrorism and other acts of violence, wars, rioting, labor strife, civil disturbances, societal unrest, geopolitical tensions or political instability could negatively impact us directly by interfering with our ability to operate or indirectly by depressing macroeconomic conditions.
An outbreak of disease or similar public health threat, terrorism and other acts of violence, wars, rioting, labor strife, civil disturbances, societal unrest, geopolitical tensions or political instability could negatively impact us directly by interfering with our ability to operate due to adverse impacts on our workforce, supply chain or operations or indirectly by depressing macroeconomic conditions.
We have entered into interest rate swap contracts and a forward-starting interest rate swap contract to reduce our exposure to fluctuations in variable interest rates on current and future interest payments that we owe on a portion of our variable rate borrowings.
Our unsecured syndicated senior credit facility, term facility and receivables securitization facility bear interest at variable rates. We have entered into interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates on current and future interest payments that we owe on a portion of our variable rate borrowings.
We balance the need to maintain inventory levels that are sufficient to maximize operational efficiencies and minimize potential supply chain constraints against the risk of inventory obsolescence due to changing consumer preferences and fluctuating commodity prices. In order to successfully manage our inventories, we must estimate demand from our customers and purchase products that substantially correspond to consumer demand.
We strive to balance the need to maintain inventory levels that are sufficient to maximize operational efficiencies and minimize potential supply chain constraints against the risk of inventory obsolescence due to changing consumer preferences and fluctuating commodity prices.
Such a breach could result in damage to our reputation and subject us to potential litigation, liability, fines and penalties and require us to incur significant expense to address and remediate or otherwise resolve these issues, resulting in a possible material adverse impact on our financial condition and results of operations. 16 A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal and other data.
Such a breach could result in damage to our reputation and subject us to potential litigation, liability, fines and penalties and require us to incur significant expense to address and remediate or otherwise resolve these issues, resulting in a possible material adverse impact on our financial condition and results of operations.
Our projections of financial statement impacts related to ASU 2016-09 are subject to several assumptions which can vary significantly, including our estimated share price and the period that our employees will exercise vested stock options. 18 Excess tax benefits or deficiencies recognized under ASU 2016-09 vary from quarter to quarter and past results may not be indicative of future results.
Our projections of financial statement impacts related to ASU 2016-09 are subject to several assumptions, including our estimated share price and the period that our employees will exercise vested stock options. Our actual results may vary significantly from our projected results.
We may not be able to compete effectively against our competitors and other leisure product alternatives, which could have an adverse impact on our business. New competitors may emerge as there are low barriers to entry in our industry, which has led to highly competitive markets consisting of various-sized entities, ranging from small or local operators to large regional businesses.
New competitors may emerge as there are low barriers to entry in our industry, which has led to highly competitive markets consisting of various-sized entities, ranging from small or local operators to large regional businesses.
However, the growth in these portions of our business depends on the expansion of the installed pool base, which has been and could in the future be adversely affected by decreases in construction activities, similar to the trends experienced in 2023 and 2024. A weak economy may also cause consumers to defer discretionary replacement and renovation activity.
However, the growth in these portions of our business depends on the expansion of the installed pool base, which has been and could in the future be adversely affected by decreases in construction activities, similar to the trends experienced since the latter half of 2022.
Investors should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K. The risks discussed below are not the only risks we face. Other risks or uncertainties not presently known to us, or that we currently believe are immaterial, may emerge or materially affect our business if they occur.
The risks discussed below are not the only risks we face. Other risks or uncertainties not presently known to us, or that we currently believe are immaterial, may emerge or materially affect our business if they occur.
Even in generally favorable economic conditions, severe or prolonged downturns in the housing market could have a material adverse impact on our financial performance.
Economic weakness or uncertainty may also cause consumers to defer discretionary replacement, renovation and upgrade activity. Even in generally favorable economic conditions, severe or prolonged downturns in the housing market could have a material adverse impact on our financial performance.
We expect that these initiatives will expose us to additional risk. We store chemicals, fertilizers and other combustible materials that involve fire, safety and casualty risks. We store chemicals and fertilizers, including certain combustibles and oxidizing compounds, at our sales centers.
We handle and store chemicals, fertilizers and other combustible materials that involve fire, safety and casualty risks. We handle and store chemicals and fertilizers, including certain combustibles and oxidizing compounds, at our sales centers and at our chemical re-packaging plant.
We believe that we currently enjoy good relationships with our suppliers, who generally offer us competitive pricing, return policies and promotional allowances.
We believe that we currently enjoy good relationships with our suppliers, who generally offer us competitive pricing, return policies and promotional allowances. However, any failure to maintain favorable relationships with our suppliers could have an adverse effect on our business.
To succeed, we must continue to maintain effective business relationships with qualified suppliers who can timely and efficiently supply us with high quality products. As we increase the number of proprietary and exclusive brand products we distribute, our exposure to potential liability claims may increase.
To succeed, we must continue to maintain effective business relationships with qualified suppliers who can timely and efficiently supply us with high quality products. Our proprietary and exclusive brand products we distribute also expose us to potential liability claims. Product and service quality issues could negatively impact customer confidence in our brands and our business.
However, any failure to maintain favorable relationships with our suppliers could have an adverse effect on our business. 13 Our largest suppliers are Pentair plc, Zodiac Pool Systems, Inc., Hayward Pool Products, Inc., which accounted for 20%, 12% and 11%, respectively, of the costs of products we sold in 2024.
Our largest suppliers are Pentair plc, Zodiac Pool Systems, Inc. and Hayward Holdings, Inc., which accounted for 20%, 12% and 11%, respectively, of the costs of products we sold in 2025.
We have experienced short-term impacts on our sales due to closures from weather events such as Hurricane Ian in 2022 and Hurricanes Helene, Francine and Milton in 2024. Although these events have not had any material lasting impacts on our business or resulted in any material permanent operational challenges, similar events could adversely affect our business in the future.
In the past, we have experienced short-term impacts on our sales due to closures from weather events such as Hurricanes Francine, Helene and Milton in 2024. Similar events in the future could result in similar short-term impacts or potentially result in more severe damage to our business.
Outside of our industry, we compete indirectly with alternative suppliers of big-ticket consumer discretionary products, such as boat and motor home distributors, and with other companies who rely on discretionary homeowner expenditures, such as home remodelers.
Outside of our industry, we compete indirectly with alternative suppliers of big-ticket discretionary leisure or homeowner products, such as boat and motor home distributors and with other home and backyard remodelers. We may not be able to compete effectively against our competitors and other leisure and homeowner product alternatives, which could have an adverse impact on our business.
We might not be able to successfully anticipate and remain in compliance with evolving future regulatory requirements. Governmental actions designed to address changing climate patterns or the failure to meet environmental social and governance (ESG) expectations or standards or achieve our ESG commitments could adversely affect our business and increase our costs of doing business.
Governmental actions designed to address changing climate patterns or the failure to comply with climate-related and other sustainability requirements could adversely affect our business and increase our costs of doing business.
Our business, financial condition and results of operations could be negatively impacted if we fail to accurately forecast demand for our products or successfully manage our inventories. 15 Risks Relating to Technology, Cybersecurity and Data Privacy We rely on information technology systems to support our business operations.
Our business, financial condition and 15 results of operations could be negatively impacted if we fail to (i) timely identify or effectively respond to changing consumer tastes, preferences, spending patterns and swimming pool, irrigation, landscape and related outdoor living products needs, (ii) accurately forecast demand for these products or (iii) successfully manage our inventories.
While inflation and interest rates have recently moderated, uncertainty remains, including as to the timing and magnitude of further reductions by the Federal Reserve of its overnight borrowing rate and its corresponding impact on the market. 12 Discretionary spending is often adversely affected during times of economic, social or political uncertainty, whether caused by health threats, man-made or natural disasters, or other similar events discussed below in this item 1A.
Unfavorable economic conditions or a downturn in the housing market could result in a significant tightening of credit markets, which can limit the ability of consumers to access financing for these purchases. 12 Discretionary spending is often adversely affected during times of economic, social or political uncertainty, whether caused by health threats, man-made or natural disasters, technological change or other similar events discussed below in this Item 1A.
The entry of significant new competitors into these markets could negatively impact our sales. More aggressive competition by store- and internet-based mass merchants and large pool or irrigation supply retailers could adversely affect our sales. Mass market retailers today carry a limited range of, and devote a limited amount of shelf space to, merchandise and products targeted to our industry.
We face competition from both store-based and internet-based mass market retailers, which have greater scale and bargaining power than us. Today these retailers carry a limited range of, and devote a limited amount of shelf space to, merchandise and products targeted to our industry.
This surge abated in mid-2022, when spending on these products began to decrease. We do not expect our near-term sales to match the levels experienced at the height of the pandemic. We are subject to inventory management risks. Insufficient inventory may result in lost sales opportunities or delayed revenue, while excess inventory may negatively impact our gross margin.
If we do not successfully manage these potential difficulties or successfully execute our business strategies and initiatives, our operating results could be adversely affected. We are subject to inventory management risks. Insufficient inventory may result in lost sales opportunities or delayed revenue, while excess inventory may negatively impact our gross margin.
Unfavorable economic conditions or a downturn in the housing market could result in a significant tightening of credit markets, which can limit the ability of consumers to access financing for these purchases. Over the past couple years, new pool construction projects have decreased, impacted by higher interest rates and inflation, increased economic uncertainties, and tightened consumer credit.
Likewise, new pool construction and major remodeling projects over the past few years have decreased, impacted by higher interest rates and inflation, increased economic uncertainties, tightened consumer credit and fewer new housing developments. These events could create uncertainties that negatively impact our business in ways that we cannot presently predict. Catastrophic events or societal unrest could adversely impact our operations.
Financial Risks The cost of servicing our debt could reduce our profitability if interest rates remain at elevated levels. Our unsecured syndicated senior credit facility, term facility and receivables facility bear interest at variable rates.
Excess tax benefits or deficiencies recognized under ASU 2016-09 vary from quarter to quarter and past results may not be indicative of future results. 19 Financial Risks The cost of servicing our debt could reduce our profitability if interest rates increase or remain at elevated levels.
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These events could create uncertainties that negatively impact our business in ways that we cannot presently predict. Changes in our customer base could also impact us.
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Investors should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K. If any of the events described below were to occur, our business, prospects, financial condition or results of operations could be materially adversely affected and the price of our common stock could decline.
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An outbreak of disease or similar public health threat could adversely impact our business and results of operations. An outbreak of disease or similar public health threat, such as the COVID-19 pandemic and its negative impact on the worldwide economy, could have an adverse impact on our workforce, supply chain or operations.
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The entry of significant new competitors into these markets could negatively impact our sales. We may also be unable to market and sell products if they are not competitive, including on the basis of price, quality, technical performance, ease of use, availability, delivery timing and reliability.
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Although our revenues increased during the COVID-19 pandemic that began in early 2020, we cannot assure you that our revenues would increase in the event of a future public health emergency. Any future public health crises, and any corresponding governmental response, could adversely impact our business and results of operations in ways that we cannot predict.
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Competitive pressures may limit our ability to maintain or raise prices, and an inability to maintain revenue or raise prices to offset increases in costs could have a significant adverse effect on our gross margin. More aggressive competition by store- and internet-based mass merchants and large pool or irrigation supply retailers could adversely affect our sales.
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Product and service quality issues could negatively impact customer confidence in our brands and our business.
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To successfully manage our inventories, we must estimate demand from our customers and purchase products that substantially correspond to consumer demand, which depends in part on our ability to identify and respond to evolving trends in demographics and consumer preferences.
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If we do not successfully manage these potential difficulties or successfully execute our business strategies and initiatives, our operating results could be adversely affected. The COVID-19 pandemic positively impacted home-centric trends in all of our markets, which led to a non-recurring surge of investment in pools and other backyard products.
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Changes in our customer base or customer preferences could change the mix of products we sell and reduce our profitability. Changes in our customer base could impact our revenues or gross margin, reducing our profitability.
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The clear trend in environmental, health, transportation and safety regulations is to place more restrictions and limitations on activities that impact the environment, such as the use and handling of chemicals and the discharge of greenhouse gas emissions. It is possible that the costs of compliance with increasingly prescriptive laws and regulations will continue to increase.
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Our gross margins vary across our products and can change over time due to a variety of factors, including changes in the mix of products we sell. We derive higher revenues or profits from certain of our products compared to others.
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If customers or end-users opt to use an increased amount of lower-revenue or lower-margin products, our results of operations would be adversely affected. Risks Relating to Technology, Cybersecurity, Artificial Intelligence and Data Privacy We rely on information technology systems to support our business operations.
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We use AI in our business, which could result in reputational harm, competitive harm and legal liability, and adversely affect our business, results of operation and financial condition. As part of our broader digital transformation strategy, we are integrating artificial intelligence to support our internal business functions and exploring additional uses for the future.
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AI presents risks and challenges and may result in unintended consequences, including producing inaccurate data. AI algorithms and training methodologies may be flawed. While we aim to develop and use AI responsibly, we may be unsuccessful in identifying or resolving issues and risks before they arise.
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The AI-related legal and regulatory landscape is evolving and remains uncertain and may be inconsistent from jurisdiction to jurisdiction. Our obligations to comply with the evolving legal and regulatory landscape could entail significant costs or limit our ability to incorporate certain AI capabilities into our operations and products.
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AI-related issues, deficiencies and failures could also give rise to legal or regulatory action (including with respect to proposed legislation regulating AI in jurisdictions such as the European Union and others, and as a result of new and different applications of existing data protection, privacy, intellectual property and other laws), damage our reputation or otherwise materially harm our business.
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A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal and other data.
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It is possible that the costs of compliance with increasingly prescriptive laws and regulations will continue to increase. We might not be able to successfully anticipate and remain in compliance with evolving future regulatory requirements, which could adversely impact our results of operations.
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Investors or other stakeholders could react negatively to disclosures we make on climate-related and other sustainability matters, which could negatively impact our relationships with such stakeholders or result in claims that our disclosures harmed them or us.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CIO oversees our cyber governance programs, evaluates our compliance with applicable standards and remediates known risks. Our CIO also oversees our internal phishing tests, leads our employee cyber training program and seeks to promote company-wide awareness of cybersecurity risk through broad-based communications and educational initiatives.
Biggest changeOur CIO also oversees our internal phishing tests, leads our employee cyber training program and seeks to promote company-wide awareness of cybersecurity risk through broad-based communications and educational initiatives. 21 At the day-to-day operational level, our CIO manages an information security team tasked with executing our cybersecurity program.
Governance Our Board of Directors (Board) is responsible for oversight of our risk management programs and assisting management in addressing specific risks, including cybersecurity risks. The Audit Committee assists our Board in reviewing cybersecurity and other information technology risks, controls and procedures, including our plans to mitigate cybersecurity risks and to respond to data breaches.
Governance Our Board of Directors (Board) is responsible for oversight of our risk management programs and assisting management in addressing specific risks, including cybersecurity risk. The Audit Committee assists our Board in reviewing cybersecurity and other information technology risks, controls and procedures, including our plans to mitigate cybersecurity risks and to respond to data breaches.
We deploy multiple strategies and dedicate significant resources toward systems designed to identify, assess, manage, mitigate and respond to cybersecurity threats. We also consistently strive to improve the detection and response capabilities of our cybersecurity program. To do this, we monitor best practices across the cybersecurity space and endeavor to incorporate those in our own cybersecurity program.
We deploy multiple strategies and dedicate significant resources toward systems designed to identify, assess, manage, mitigate and respond to cybersecurity threats. We also consistently strive to improve the detection and response capabilities of our cybersecurity program. To do this, we monitor best cybersecurity practices and endeavor to incorporate those in our own cybersecurity program.
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our CIO, who has held that role since 2019 and has been employed by the company since 2004. With almost 20 years of experience in cybersecurity, our CIO has extensive cybersecurity expertise and in-depth knowledge and experience instrumental in developing and executing our cybersecurity strategies.
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our CIO , who has held that role since 2019 and has been employed by the company since 2004. With over 20 years of experience in cybersecurity, our CIO has extensive cybersecurity expertise and in-depth knowledge and experience instrumental in developing and executing our cybersecurity strategies.
To date, we are not aware of any cybersecurity incident or threat that materially impacted or could reasonably be anticipated to materially affect our business, results of operations or financial condition. However, we cannot guarantee that we will not experience such an incident in the future.
To date, we are not aware of any cybersecurity incident or threat that materially affected or could reasonably be anticipated to materially affect our business, results of operations or financial condition. However, we cannot guarantee that we will not experience such an incident in the future.
For a further description of these risks, see “Risk Factors – Risks Relating to Technology, Cybersecurity and Data Privacy,” included in Item 1A of this Form 10-K, which should be read in conjunction with this Item 1C.
For a further description of these risks, see “Risk Factors – Risks Relating to Technology, Cybersecurity, Artificial Intelligence and Data Privacy,” included in Item 1A of this Form 10-K, which should be read in conjunction with this Item 1C.
Our CIO, IT management group, architects and network security team members receive briefings and annual training on cybersecurity threats and response methods that provide real world threat scenarios to measure the effectiveness of our programs and technologies in protecting our systems.
Our CIO, IT management group, architects and network security team members receive briefings and annual training on cybersecurity threats and response methods that provide real world threat scenarios to measure the effectiveness of our programs and technologies in protecting our systems. Our team of professionals also monitors our compliance with laws governing privacy rights, data protection and cybersecurity.
Members of our information technology (IT) management group, led by our CIO, have extensive years of combined experience in defending large, complex corporate environments.
This team includes a director of network security, technical director of enterprise architecture, system architects and network security staff. Members of our information technology (IT) management group, led by our CIO, have extensive years of combined experience in defending large, complex corporate environments.
Our team of professionals also monitors our compliance with laws governing privacy rights, data protection and cybersecurity. 21 Our incident response policy outlines our protocols for assessing, managing and responding to cyber incidents.
Our incident response policy outlines our protocols for assessing, managing and responding to cyber incidents.
To combat cybersecurity risk, we focus on proactive procedures such as patch management and emphasize the importance of cybersecurity across our organization through quarterly trainings, which include best practices and participation in simulated phishing exercises to strengthen employee vigilance.
To combat cybersecurity risk, we focus on proactive procedures such as patch management and emphasize the importance of cybersecurity across our organization. We provide our employees quarterly cybersecurity training courses that expose them to cybersecurity risks and threat actor tactics and we conduct simulated phishing exercises to test and educate employees on real-world threats.
Like most large organizations, we face constant and dynamic risks related to cybersecurity. In recent years we have faced, and expect to continue to face, various attempted cyber-attacks of increasing sophistication.
Like most large organizations, we face constant and dynamic risks related to cybersecurity. The emergence of artificial intelligence and its role in accelerating cybersecurity attacks will only make this area of risk more dynamic and difficult to prevent.
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At the day-to-day operational level, our CIO manages an information security team tasked with executing our cybersecurity program. This team includes a director of network security, technical director of enterprise architecture, system architects and network security staff.
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In recent years we have faced, and expect to continue to face, various attempted cyberattacks including those that bear the hallmarks of being produced through the use of AI. We continue to observe attacks that are well planned and sophisticated.
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Our CIO oversees our cyber governance programs, evaluates our compliance with applicable standards and remediates known risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(2) In addition to the stand-alone NPT sales centers, there are 117 SCP and Superior locations that have consumer showrooms and serve as stocking locations that feature NPT brand tile and composite finish products. 23 The tables below identify the number of sales centers in each state, territory or country by distribution network as of December 31, 2024: Location SCP Horizon Superior NPT Total United States California 29 20 25 7 81 Florida 44 17 5 — 66 Texas 31 20 5 3 59 Arizona 8 11 8 3 30 Georgia 8 — 2 1 11 Washington 3 8 — — 11 Tennessee 6 — 4 — 10 Nevada 2 3 3 1 9 New York 9 — — — 9 North Carolina 5 1 2 1 9 Alabama 5 — 2 — 7 New Jersey 5 — 2 — 7 Pennsylvania 6 — 1 — 7 Virginia 3 3 1 — 7 Louisiana 5 — — 1 6 Illinois 4 — 1 — 5 Indiana 2 — 3 — 5 Oregon 1 4 — — 5 South Carolina 4 — 1 — 5 Colorado 1 1 2 — 4 Missouri 3 — 1 — 4 Ohio 2 — 2 — 4 Oklahoma 2 — 1 1 4 Arkansas 3 — — — 3 Idaho 1 2 — — 3 Mississippi 3 — — — 3 Massachusetts 3 — — — 3 Michigan 3 — — — 3 Connecticut 2 — — — 2 Kansas 2 — — — 2 Kentucky 1 — 1 — 2 Minnesota 1 — 1 — 2 Utah 2 — — — 2 Wisconsin 1 — 1 — 2 Hawaii 1 — — — 1 Iowa 1 — — — 1 Maryland 1 — — — 1 Nebraska 1 — — — 1 New Mexico 1 — — — 1 North Dakota 1 — — — 1 Puerto Rico 1 — — — 1 West Virginia 1 — — — 1 Total United States 218 90 74 18 400 24 Location SCP Horizon Superior NPT Total International Canada 17 — — — 17 France 9 — — — 9 Australia 6 — — — 6 Mexico 5 — — — 5 Portugal 3 — — — 3 Italy 2 — — — 2 Spain 2 — — — 2 Belgium 1 — — — 1 Croatia 1 — — — 1 Germany 1 — — — 1 United Kingdom 1 — — — 1 Total International 48 — — — 48 Total 266 90 74 18 448 25
Biggest change(2) We also own and operate a chemical re-packaging plant and one Pinch A Penny retail store. 23 The tables below identify the number of sales centers in each state, territory or country by distribution network as of December 31, 2025: Location SCP Horizon Superior NPT Sun Wholesale Supply Total United States California 29 20 25 7 — 81 Florida 44 16 6 — 1 67 Texas 32 18 5 4 1 60 Arizona 8 12 8 3 — 31 Georgia 8 — 2 1 — 11 Washington 3 8 — — — 11 Nevada 3 3 3 1 — 10 Tennessee 6 0 4 0 — 10 New York 9 — — — — 9 North Carolina 5 1 2 1 — 9 Alabama 5 — 2 — — 7 New Jersey 5 — 2 — — 7 Pennsylvania 6 — 1 — — 7 Virginia 3 3 1 — — 7 Louisiana 5 — — 1 — 6 Illinois 4 — 1 — — 5 Indiana 2 — 3 — — 5 Oregon 1 4 — — — 5 South Carolina 4 — 1 — — 5 Colorado 1 1 2 — — 4 Missouri 3 — 1 — — 4 Ohio 2 — 2 — — 4 Oklahoma 2 — 1 1 — 4 Arkansas 3 — — — — 3 Idaho 1 2 — — — 3 Kansas 3 — — — — 3 Massachusetts 3 — — — — 3 Michigan 3 — — — — 3 Mississippi 3 — — — — 3 Utah 3 — — — — 3 Connecticut 2 — — — — 2 Hawaii 2 — — — — 2 Kentucky 1 — 1 — — 2 Maryland 2 — — — — 2 Minnesota 1 — 1 — — 2 Wisconsin 1 — 1 — — 2 Iowa 1 — — — — 1 Nebraska 1 — — — — 1 New Mexico 1 — — — — 1 North Dakota 1 — — — — 1 Puerto Rico 1 — — — — 1 West Virginia 1 — — — — 1 Total United States 224 88 75 19 2 408 International Canada 17 — — — — 17 France 9 — — — — 9 Australia 6 — — — — 6 Mexico 5 — — — — 5 Portugal 3 — — — — 3 Italy 2 — — — — 2 Spain 2 — — — — 2 Belgium 1 — — — — 1 Croatia 1 — — — — 1 Germany 1 — — — — 1 United Kingdom 1 — — — — 1 Total International 48 — — — — 48 Total 272 88 75 19 2 456 24
As of December 31, 2024, we had sixteen leases with remaining terms longer than seven years that expire between 2032 and 2036. Most of our leases contain renewal options, some of which involve rent increases. In addition to minimum rental payments, which are set at competitive rates, certain leases require reimbursement for taxes, maintenance and insurance.
As of December 31, 2025, we had sixteen leases with remaining terms longer than seven years that expire between 2033 and 2036. Most of our leases contain renewal options, some of which involve rent increases. In addition to minimum rental payments, which are set at competitive rates, certain leases require reimbursement for taxes, maintenance and insurance.
We also own a chemical re-packaging plant in Florida, which is approximately 105,000 square feet, and lease three additional properties for storage space that range in size from 39,000 square feet to 122,000 square feet. We lease all of our other properties, and the majority of our leases have three to seven year terms.
We also own a chemical re-packaging plant in Florida, which is approximately 105,000 square feet, and lease two additional properties for storage space, measuring 39,000 square feet and 122,000 square feet. We lease all of our other properties, and the majority of our leases have three-to-seven year terms.
We own seventeen sales center facilities, which includes seven sales center facilities in Florida, three in Texas, two in Alabama, and one in each of California, Georgia, Mississippi, Tennessee and Virginia.
We own fifteen sales center facilities, which includes seven sales center facilities in Florida, two in Texas, two in Alabama, and one in each of California, Georgia, Mississippi and Tennessee.
The table below summarizes the changes in our sales centers during the year ended December 31, 2024: Network 12/31/23 New Locations Consolidated/Closed Locations Acquired Locations 12/31/24 SCP (1) 209 7 — 2 218 Superior 74 — — — 74 Horizon 92 1 (3) — 90 NPT (2) 17 1 — — 18 Total Domestic 392 9 (3) 2 400 SCP International 47 1 — — 48 Total 439 10 (3) 2 448 (1) At December 31, 2024, this total includes two distribution locations for Sun Wholesale Supply.
The table below summarizes the changes in our sales centers during the year ended December 31, 2025: Network 12/31/24 New Locations Consolidated/ Closed Locations Acquired Locations 12/31/25 SCP 216 6 — 2 224 Horizon 90 1 (3 ) — 88 Superior 74 1 — — 75 NPT (1) 18 — — 1 19 Sun Wholesale Supply (2) 2 — — — 2 Total Domestic 400 8 (3 ) 3 408 SCP International 48 — — — 48 Total 448 8 (3 ) 3 456 (1) In addition to the stand-alone NPT sales centers, there are 124 SCP and Superior locations that have consumer showrooms and serve as stocking locations that feature NPT brand tile and composite finish products.
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We also own and operate a chemical re-packaging plant and one Pinch A Penny retail store. At December 31, 2023, we owned three Pinch A Penny retail stores and sold two of these in 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the outcome of any litigation is inherently unpredictable, based on currently available facts, we do not believe that the ultimate resolution of any of these matters will have a material adverse impact on our financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 26 PART II.
Biggest changeWhile the outcome of any litigation is inherently unpredictable, based on currently available facts, we do not believe that the ultimate resolution of any of these matters will have a material adverse impact on our financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 25 PAR T II.
Item 3. Legal Proceedings From time to time, we are subject to various claims and litigation arising in the ordinary course of business, including product liability, personal injury, commercial, contract and employment matters.
Item 3. Lega l Proceedings From time to time, we are subject to various claims and litigation arising in the ordinary course of business, including product liability, personal injury, commercial, contract and employment matters.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 26 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. [Reserved] 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 47 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 25 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. [Reserved] 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 46 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAdditionally, we chose the S&P 500 Index for comparison, as opposed to an industry index, because we do not believe that we can reasonably identify a peer group or a published industry or line-of-business index that contains a sufficient number of companies in a similar line of business. 27 Base Period Indexed Returns Years Ending Company / Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Pool Corporation $ 100.00 $ 176.95 $ 270.70 $ 146.09 $ 195.04 $ 168.93 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 Nasdaq Index 100.00 144.92 177.06 119.45 172.77 223.87 Issuer Purchases of Equity Securities The table below summarizes the repurchases of our common stock in the fourth quarter of 2024: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (2) Maximum Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan (2) October 1 – October 31, 2024 55,752 $ 363.34 55,692 $ 486,956,114 November 1 – November 30, 2024 170,615 $ 360.71 170,550 $ 425,421,246 December 1 – December 31, 2024 175,915 $ 355.58 175,915 $ 362,869,451 Total 402,282 $ 358.83 402,157 (1) These shares may include shares of our common stock surrendered to us by employees in order to satisfy minimum tax withholding obligations in connection with certain exercises of employee stock options or lapses upon vesting of restrictions on previously restricted share awards, and/or to cover the exercise price of such options granted under our share-based compensation plans.
Biggest changeIssuer Purchases of Equity Securities The table below summarizes the repurchases of our common stock in the fourth quarter of 2025: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (2) Maximum Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan (2) October 1 – October 31, 2025 68,271 $296.07 67,046 $493,151,746 November 1 – November 30, 2025 405,536 $246.44 405,536 $393,213,236 December 1 – December 31, 2025 266,733 $233.39 266,733 $330,961,555 Total 740,540 $246.31 739,315 (1) Includes 1,225 shares of our common stock surrendered to us during fourth quarter of 2025 by employees in order to satisfy minimum tax withholding obligations in connection with certain exercises of employee stock options or lapses upon vesting of restrictions on previously restricted share awards, and/or to cover the exercise price of such options granted under our share-based compensation plans.
The following graph compares the cumulative total shareholder return on our common stock for the last five fiscal years with the total return on the S&P 500 Index (of which we have been a member since 2020) and the Nasdaq Index for the same period, in each case assuming the investment of $100 on December 31, 2019 and the reinvestment of all dividends.
The following graph compares the cumulative total shareholder return on our common stock for the last five fiscal years with the total return on the S&P 500 Index (of which we have been a member since 2020) and the Nasdaq Index for the same period, in each case assuming the investment of $100 on December 31, 2020 and the reinvestment of all dividends.
Common Stock Dividends We initiated quarterly dividend payments to our shareholders in the second quarter of 2004 and we have continued payments in each subsequent quarter. Our Board has increased the dividend amount nineteen times, most recently in the second quarters of 2011 through 2024.
Common Stock Dividends We initiated quarterly dividend payments to our shareholders in the second quarter of 2004 and we have continued payments in each subsequent quarter. Our Board has increased the dividend amount twenty times, most recently in the second quarters of 2011 through 2025.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “POOL.” On February 20, 2025, there were approximately 829 holders of record of our common stock and a significantly larger number of beneficial holders of our common stock.
Marke t for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “POOL.” On February 20, 2026, there were approximately 842 holders of record of our common stock and a significantly larger number of beneficial holders of our common stock.
There were 125 shares surrendered for this purpose in the fourth quarter of 2024. (2) In May 2024, our Board approved an additional $316.2 million under our share repurchase program for the repurchase of shares of our common stock on the open market at prevailing market prices bringing the total authorization available under the program to $600.0 million.
(2) In April 2025, our Board authorized an additional $309.2 million under our share repurchase program for the repurchase of shares of our common stock in the open market at prevailing market prices bringing the total authorization available under the program to $600.0 million.
As of February 20, 2025, $336.8 million remained available for use under our current share repurchase program. Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the three months ended December 31, 2024.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the three months ended December 31, 2025.
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Additionally, we chose the S&P 500 Index for comparison, as opposed to an industry index, because we do not believe that we can reasonably identify a peer group or a published industry or line-of-business index that contains a sufficient number of companies in a similar line of business. 26 Base Period Indexed Returns Years Ending Company / Index 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 Pool Corporation $ 100.00 $ 152.98 $ 82.56 $ 110.22 $ 95.46 $ 65.10 S&P 500 Index 100.00 128.71 105.40 133.10 166.40 196.16 Nasdaq Index 100.00 122.18 82.43 119.22 154.48 187.14 As shown in the graph above, our cumulative total shareholder return for the five-year period ended December 31, 2025 trailed both the S&P 500 Index and the Nasdaq Index in recent periods.
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During the COVID-19 pandemic (generally 2020 through 2022), we experienced unprecedented demand, driving up sales and earnings. Since the latter half of 2022, these trends moderated resulting in significantly reduced discretionary spending on new pool construction and remodeling activities.
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Our full-year 2025 results include a fifth consecutive year of sales exceeding $5.0 billion, diluted earnings per share of $10.85 and double-digit operating margin.
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As of February 20, 2026, $331.0 million of the authorized amount remained available for use under our current share repurchase program. The share repurchase program does not obligate us to acquire any specific amount of shares and does not have an expiration date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

106 edited+32 added−41 removed60 unchanged
Biggest changeThe following summarizes our outlook for 2025: • We expect sales to be flat to a low single digit increase compared to 2024, impacted by the following factors and assumptions: ◦ normal weather patterns for 2025; ◦ sustained demand for pool maintenance products; ◦ similar volumes of discretionary products used for pool construction and remodeling, renovation and upgrading of pools as 2024; ◦ inflationary product cost increases, which generally pass through to customers of approximately 1% to 2%; and ◦ one less selling day in the first quarter and for the full year of 2025 compared to 2024. • We project gross margin for the full year of 2025 to be in the range of our 2024 gross margin at 29.7% and our long-term target of 30.0%, with our highest margin in the second quarter of the year.
Biggest changeThe following summarizes our outlook for 2026: • We expect sales to be a low single digit increase compared to 2025, impacted by the following factors and assumptions: o normal weather patterns for 2026; o slight growth in sales of pool maintenance products; o consistent new construction units to 2025; o flat to slightly up renovation and remodel activity; o inflationary product cost increases, which generally pass through to customers, of approximately 1% to 2%; and o the same number of selling days each quarter compared to 2025. • We project gross margin for the full year of 2026 to be similar to our 2025 gross margin of 29.7%.
We may declare and pay quarterly dividends so long as (i) the amount per share of such dividends is not greater than the most recently publicly announced dividends per share and (ii) our Average Total Leverage Ratio is less than 3.25 to 1.00 both immediately before and after giving pro forma effect to such dividends.
We may declare and pay quarterly dividends so long as (i) the amount per share of such dividends is not greater than the most recently publicly announced amount of dividends per share and (ii) our Average Total Leverage Ratio is less than 3.25 to 1.00 both immediately before and after giving pro forma effect to such dividends.
Our primary capital needs are seasonal working capital obligations, debt repayment obligations and other general corporate initiatives, including acquisitions, opening new sales centers, technology-related investments, dividend payments and share repurchases. Our primary working capital obligations are for the purchase of inventory, payroll, rent, other facility costs and selling and administrative expenses.
Our primary capital needs are seasonal working capital obligations, debt repayment obligations and other general corporate initiatives, including acquisitions, opening new sales centers, technology-related investments, dividend payments and discretionary share repurchases. Our primary working capital obligations are for the purchase of inventory, payroll, rent, other facility costs and selling and administrative expenses.
Based on our most recent hindsight analysis, we concluded that our vendor program estimates were within a range of acceptable estimates and that our estimation methodology is appropriate. If market conditions were to change, vendors may change the terms of some or all of these programs.
Based on our most recent hindsight analysis, we concluded that our vendor program estimates were within a range of acceptable estimates and that our estimation methodology is appropriate. 32 If market conditions were to change, vendors may change the terms of some or all of these programs.
To facilitate a sensitivity analysis, we reduced our consolidated fair value estimate to reflect more conservative discounted cash flow assumptions, the sensitivity of a 150 basis point increase in our estimated weighted average cost of capital or a 50 basis point decrease in the estimated perpetuity growth rate.
To facilitate a sensitivity analysis, we reduced our consolidated fair value estimate to reflect more conservative discounted cash flow assumptions, the sensitivity of a 50 basis point increase in our estimated weighted average cost of capital or a 50 basis point decrease in the estimated perpetuity growth rate.
The Credit Facility also includes an accordion feature permitting us to request one or more incremental term loans or revolving credit family commitment increases up to $250.0 million and sublimits for the issuance of swingline loans and standby letters of credit.
The Credit Facility also includes an accordion feature permitting us to request one or more incremental term loans or revolving credit facility commitment increases up to $250.0 million and sublimits for the issuance of swingline loans and standby letters of credit.
Also see “Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995” prior to the heading “Risk Factors” in Item 1A. 31 CRITICAL ACCOUNTING ESTIMATES Critical accounting estimates are those estimates made in accordance with U.S. generally accepted accounting principles that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations.
Also see “Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995” prior to the heading “Risk Factors” in Item 1A. 30 CRITICAL ACCOUNTING ESTIMATES Critical accounting estimates are those estimates made in accordance with U.S. generally accepted accounting principles that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations.
We calculated estimates of future interest payments based on the December 31, 2024 outstanding debt balances, using the fixed rates under our interest rate swap agreements for the applicable notional amounts and the weighted average effective interest rates as of December 31, 2024 for the remaining outstanding balances not covered by our swap contracts.
We calculated estimates of future interest payments based on the December 31, 2025 outstanding debt balances, using the fixed rates under our interest rate swap agreements for the applicable notional amounts and the weighted average effective interest rates as of December 31, 2025 for the remaining outstanding balances not covered by our swap contracts.
We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that we consolidate with acquired sales centers. We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales.
We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that are consolidated with acquired sales centers. We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales.
Weather Impacts on Fiscal Year 2023 to Fiscal Year 2022 Comparisons For a detailed discussion of Weather Impacts on Fiscal Year 2023 compared to Fiscal Year 2022, see the Seasonality and Quarterly Fluctuations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2023 Annual Report on Form 10-K.
Weather Impacts on Fiscal Year 2024 to Fiscal Year 2023 Comparisons For a detailed discussion of Weather Impacts on Fiscal Year 2024 compared to Fiscal Year 2023, see the Seasonality and Quarterly Fluctuations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2024 Annual Report on Form 10-K.
We have funded our capital expenditures and share repurchases in substantially the same manner. 42 We prioritize our use of cash based on investing in our business, maintaining a prudent capital structure, including a modest amount of debt, and returning cash to our shareholders through dividends and share repurchases.
We have funded our capital expenditures and share repurchases in substantially the same manner. 41 We prioritize our use of cash based on investing in our business, maintaining a prudent capital structure, including a modest amount of debt, and returning cash to our shareholders through dividends and share repurchases.
In 2025, we expect our effective tax rate will be around 25% without the impact of ASU 2016-09. Our effective tax rate is dependent upon our results of operations and may change if actual results are different from our current expectations.
In 2026, we expect our effective tax rate will be around 25% without the impact of ASU 2016-09. Our effective tax rate is dependent upon our results of operations and may change if actual results are different from our current expectations.
As of December 31, 2024, the calculations of these two covenants are detailed below: • Maximum Average Total Leverage Ratio . On the last day of each fiscal quarter, our average total leverage ratio must be less than 3.25 to 1.00.
As of December 31, 2025, the calculations of these two covenants are detailed below: • Maximum Average Total Leverage Ratio . On the last day of each fiscal quarter, our average total leverage ratio must be less than 3.25 to 1.00.
Performance-Based Compensation Accrual The Compensation Committee of our Board (Compensation Committee) and our management have designed compensation programs intended to create a performance culture. The primary objectives of our compensation programs are to attract, motivate, reward and retain our employees without leading to unnecessary risk taking.
Performance-Based Compensation Accrual The Compensation and Human Capital Management Committee of our Board (Compensation Committee) and our management have designed compensation programs intended to create a performance culture. The primary objectives of our compensation programs are to attract, motivate, reward and retain our employees without leading to unnecessary risk taking.
Fiscal Year 2024 compared to Fiscal Year 2023 Base Business When calculating our base business results, we exclude for a period of 15 months sales centers that are acquired, opened in new markets or closed.
Fiscal Year 2025 compared to Fiscal Year 2024 Base Business When calculating our base business results, we exclude for a period of 15 months sales centers that are acquired, opened in new markets or closed.
Changes in our business needs, fluctuating interest rates and other factors may result in actual payments differing from our estimates. We cannot provide certainty regarding the timing and amounts of these payments. The following table summarizes our obligations as of December 31, 2024 that are expected to impact liquidity and cash flow in future periods.
Changes in our business needs, fluctuating interest rates and other factors may result in actual payments differing from our estimates. We cannot provide certainty regarding the timing and amounts of these payments. The following table summarizes our obligations as of December 31, 2025 (in thousands) that are expected to impact liquidity and cash flow in future periods.
Failure to comply with any of our financial covenants or any other terms of the Credit Facility and the Term Facility could result in higher interest rates on our borrowings or the acceleration of the maturities of our outstanding debt.
Failure to comply with any of our financial covenants or any other terms of the Credit Facility and the Term Facility could result in, among other things, higher interest rates on our borrowings or the acceleration of the maturities of our outstanding debt.
In September 2023, we recorded goodwill impairment of $0.6 million, primarily related to one of our Horizon reporting units in Texas that we previously identified as being most at risk of goodwill impairment. We had been monitoring this location’s results, which came in below expectations at the end of the 2023 season.
In September 2023, we recorded an aggregate goodwill impairment charge of $0.6 million, primarily related to one of our Horizon reporting units in Texas that we previously identified as being most at risk of goodwill impairment. We had been monitoring this location’s results, which came in below expectations at the end of the 2023 season.
We expect to continue to use cash for the payment of cash dividends as and when declared by our Board and to fund opportunistic share repurchases over the next year.
We expect to continue to use cash for the payment of dividends as and when declared by our Board and to fund opportunistic share repurchases at our discretion over the next year.
To test the reasonableness of our fair value estimate, we compared our company-wide estimated fair value to our market capitalization as of the date of our annual impairment test. In 2024, our company-wide estimated fair value was in line with our market capitalization.
To test the reasonableness of our fair value estimate, we compared our company-wide estimated fair value to our market capitalization as of the date of our annual impairment test. In 2025, our company-wide estimated fair value was in line with our market capitalization.
Interest Rate Swaps We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our variable rate borrowings. Interest expense related to the notional amounts under all swap contracts is based on applicable fixed rates plus the applicable margin on the respective borrowings.
Interest Rate Swaps We utilize interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our variable rate borrowings. Interest expense related to the notional amounts under all swap contracts is based on applicable fixed rates plus the applicable margin on the respective borrowings.
Our discussion of consolidated operating results includes the operating results from acquisitions in 2024, 2023 and 2022. We have included the results of operations in our consolidated results since the respective acquisition dates.
Our discussion of consolidated operating results includes the operating results from acquisitions in 2025, 2024 and 2023. We have included the results of operations in our consolidated results since the respective acquisition dates.
We account for vendor programs as a reduction of the prices of the vendor’s products and therefore a reduction of inventory until we sell the product, at which time we recognize such consideration as a reduction of cost of sales in our income statement.
We account for consideration under vendor programs as a reduction of the prices of the vendor’s products and therefore a reduction of product inventories until we sell the product, at which time we recognize such consideration as a reduction of cost of sales in our income statement.
Adjusted Diluted EPS We have included adjusted diluted EPS, a non-GAAP financial measure, as a supplemental disclosure, because we believe this measure is useful to management, investors and others in assessing our year-over-year operating performance.
Adjusted Diluted EPS We have included adjusted diluted EPS, a non-GAAP financial measure, as a supplemental disclosure, because we believe this measure is useful to management, investors and others in assessing our period-to-period operating performance.
We believe that we are well positioned to benefit from the inherent long-term growth opportunities in our industry fueled by favorable population migration trends, positive housing demand dynamics, and product developments and technological advancements as consumers focus on more sustainable and energy-efficient products.
We believe that we are well positioned to benefit from the inherent long-term growth opportunities in our industry fueled by favorable population migration trends, and product developments and technological advancements as consumers focus on more sustainable and energy-efficient products.
To the extent our qualitative test indicates it is more likely than not that the fair value of a reporting unit is less than the carrying amount or for any reporting unit where we only perform a quantitative test, we perform a discounted cash flow analysis at the reporting unit level to further evaluate our initial fair value estimate.
To the extent our qualitative test indicates it is more likely than not that the fair value of a reporting unit is less than the carrying amount or for any reporting unit where we only perform a quantitative test, we perform a discounted cash flow analysis at the reporting unit level to estimate its fair value.
Vendor Programs Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve any of a number of measures. These measures generally relate to the volume level of purchases from our vendors, or our net cost of products sold, and may include negotiated pricing arrangements.
Vendor Programs Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve certain measures. These measures generally relate to the volume level of purchases from our vendors, or our net cost of products sold, and may include negotiated pricing arrangements.
The following table presents certain unaudited quarterly included income statement and balance sheet data for the most recent eight quarters to allow for a meaningful comparison of the seasonal fluctuations in these amounts. We believe this information reflects all normal and recurring adjustments considered necessary for a fair presentation of this data.
The following table presents certain unaudited quarterly income statement and balance sheet data for the most recent eight quarters to illustrate seasonal fluctuations in these amounts. We believe this information reflects all normal and recurring adjustments considered necessary for a fair presentation of this data.
Our reserve for inventory obsolescence was $26.7 million at December 31, 2024 compared to $23.5 million at December 31, 2023. Our inventory turns, as calculated on a trailing four quarters basis, were 2.8 times at December 31, 2024 and 2.7 times at December 31, 2023.
Our reserve for inventory obsolescence was $23.9 million at December 31, 2025 compared to $26.7 million at December 31, 2024. Our inventory turns, as calculated on a trailing four quarters basis, were 2.7 times at December 31, 2025 and 2.8 times at December 31, 2024.
We also plan to broaden our geographic presence by opening 8 to 10 new sales centers in 2025 and by making selective acquisitions when appropriate opportunities arise. We base our assumptions on normal weather conditions and do not incorporate alternative weather predictions into our guidance.
We also plan to broaden our geographic presence by opening 5 to 8 new sales centers in 2026 and by making selective acquisitions if and when appropriate opportunities arise. We base our assumptions on normal weather conditions and do not incorporate alternative weather predictions into our guidance.
We estimate future losses based upon historical bad debts, customer receivable balances, age of customer receivable balances, customers’ financial conditions and current and forecasted economic trends, including certain trends in the housing market, the availability of consumer credit and general economic conditions (as commonly measured by Gross Domestic Product or GDP).
We estimate future losses based upon historical bad debts, customer receivable balances, age of customer receivable balances, customers’ financial conditions and current economic trends, including certain trends in the housing market, the availability of consumer credit and general economic conditions (as commonly measured by GDP).
After 15 months, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period. We have not provided separate base business income statements within this Form 10-K as base business results closely approximated consolidated results.
After 15 months, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period. We have not provided separate base business income statements within this Form 10-K as base business results for the quarter and year ended December 31, 2025 closely approximated consolidated results.
(Unaudited) Year Ended December 31, 2024 2023 Diluted EPS $ 11.30 $ 13.35 Less: ASU 2016-09 tax benefit 0.23 0.17 Adjusted diluted EPS $ 11.07 $ 13.18 Fiscal Year 2023 compared to Fiscal Year 2022 For a detailed discussion of the Results of Operations in Fiscal Year 2023 compared to Fiscal Year 2022, see the Results of Operations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2023 Annual Report on Form 10-K. 40 Seasonality and Quarterly Fluctuations For discussion regarding the effects seasonality and weather have on our business, see Item 1, “Business,” of this Form 10-K.
(Unaudited) Year Ended December 31, 2025 2024 Diluted EPS $ 10.85 $ 11.30 Less: ASU 2016-09 tax benefit 0.12 0.23 Adjusted diluted EPS $ 10.73 $ 11.07 Fiscal Year 2024 compared to Fiscal Year 2023 For a detailed discussion of the Results of Operations in Fiscal Year 2024 compared to Fiscal Year 2023, see the Results of Operations section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2024 Annual Report on Form 10-K. 39 Seasonality and Quarterly Fluctuations For discussion regarding the effects seasonality and weather have on our business, see Item 1, “Business,” of this Form 10-K.
At December 31, 2024, there was $174.1 million outstanding under the Receivables Facility at a weighted average effective interest rate of 5.3%, excluding commitment fees. 44 Financial Covenants Financial covenants of the Credit Facility, Term Facility and Receivables Facility include maintenance of a maximum average total leverage ratio and a minimum fixed charge coverage ratio, which are our most restrictive financial covenants.
At December 31, 2025, there was $174.5 million outstanding under the Receivables Facility at a weighted average effective interest rate of 4.6%, excluding commitment fees. 43 Financial Covenants Financial covenants of the Credit Facility, Term Facility and Receivables Facility include maintenance of a maximum average total leverage ratio and a minimum fixed charge coverage ratio, which are our most restrictive financial covenants.
These write-offs are charged against our allowance for doubtful accounts. In the past five years, write-offs have averaged approximately 0.10% of net sales annually. Write-offs as a percentage of net sales approximated 0.16% in 2024, 0.12% in 2023 and 0.08% in 2022. We expect that write-offs will range from 0.05% to 0.10% of net sales in 2025.
These write-offs are charged against our allowance for doubtful accounts. In the past five years, write-offs have averaged approximately 0.10% of net sales annually. Write-offs as a percentage of net sales approximated 0.10% in 2025, 0.16% in 2024 and 0.12% in 2023. We expect that write-offs will approximate 0.10% of net sales in 2026.
Throughout the year, we estimate the amount earned based on our expectation of total purchases for the fiscal year relative to the purchase levels that mark our progress toward the attainment of various levels within certain vendor programs. We accrue vendor program benefits on a monthly basis using these estimates provided that we determine they are probable and reasonably estimable.
Throughout the year, we estimate the amount earned based on our expectation of total purchases for the fiscal year relative to the purchase levels that mark our progress toward earning consideration under each program. We accrue vendor program benefits on a monthly basis using these estimates provided that we determine they are probable and reasonably estimable.
The forward-looking statements in this Current Trends and Outlook section and elsewhere in this document are subject to significant risks and uncertainties, including the sensitivity of our business to weather conditions; changes in the economy, consumer discretionary spending, the housing market, inflation, or interest rates; our ability to maintain favorable relationships with suppliers and manufacturers; the extent to which favorable consumer spending trends over the past several years will continue; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; changes in the regulatory environment; new or additional taxes, duties or tariffs; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in Item 1A of this Form 10-K.
The forward-looking statements in this Current Trends and Outlook section and elsewhere in this report are based on current market conditions and our current business plans, speak only as of the filing date of this report, are based on several assumptions and are subject to significant risks and uncertainties, including the sensitivity of our business to weather conditions; changes in the economy, consumer discretionary spending, the housing market, inflation, or interest rates; our ability to maintain favorable relationships with suppliers and manufacturers; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; changes in the regulatory environment; new or additional taxes, duties or tariffs; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in Item 1A of this Form 10-K.
Due to the seasonal nature of our industry, the results of any one or more quarters are not necessarily a good indication of results for an entire fiscal year or of continuing trends, including the impact of new and acquired sales centers.
The results of any one or more quarters are not necessarily a good indication of results for an entire fiscal year or of continuing future trends for a variety of reasons, including the seasonal nature of our business and the impact of new and acquired sales centers.
We pay interest on revolving and term loan borrowings under the Credit Facility at a variable rate based on the one-month Term secured overnight financing rate (SOFR), plus an applicable margin. The term loan requires quarterly amortization payments with all remaining principal due on the term loan maturity date of September 25, 2026.
We pay interest on revolving and term loan borrowings under the Credit Facility at a variable rate based on the one-month term secured overnight financing rate (SOFR), plus an applicable margin. The term loan requires quarterly amortization payments commencing on September 30, 2027 with all remaining principal due on September 30, 2029.
Other covenants include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate, and sell or transfer assets.
Other covenants in each of our credit facilities include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate, and sell or transfer assets.
As of December 31, 2024, our average total leverage ratio equaled 1.42 (compared to 1.39 as of December 31, 2023) and the TTM average total indebtedness amount used in this calculation was $970.1 million. • Minimum Fixed Charge Coverage Ratio .
As of December 31, 2025, our average total leverage ratio equaled 1.67 (compared to 1.42 as of December 31, 2024) and the TTM average total indebtedness amount used in this calculation was $1.1 billion. • Minimum Fixed Charge Coverage Ratio .
If the balance of our inventory reserve increased or decreased by 20% at December 31, 2024, pretax income would change by approximately $5.3 million and earnings per share would change by approximately $0.10 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2024).
If the reserve for inventory obsolescence increased or decreased by 20% at December 31, 2025, pretax income would change by approximately $4.8 million and earnings per share would change by approximately $0.10 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2025).
In October 2022, we performed our annual goodwill impairment test and recorded goodwill impairment of $0.6 million related to the closure of a Horizon reporting unit in that period. 35 Recent Accounting Pronouncements See Note 1 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for details. 36 RESULTS OF OPERATIONS The table below summarizes information derived from our Consolidated Statements of Income expressed as a percentage of net sales for the past three fiscal years: Year Ended December 31, 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 70.3 70.0 68.7 Gross profit 29.7 30.0 31.3 Operating expenses 18.0 16.5 14.7 Operating income 11.6 13.5 16.6 Interest and other non-operating expenses, net 0.9 1.1 0.7 Income before income taxes and equity in earnings 10.7 % 12.4 % 15.9 % Note: Due to rounding, percentages may not add to operating income or income before income taxes and equity in earnings.
Recent Accounting Pronouncements See Note 1 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K for details. 35 RESULTS OF OPERATIONS The table below summarizes information derived from our Consolidated Statements of Income expressed as a percentage of net sales for the past three fiscal years: Year Ended December 31, 2025 2024 2023 Net sales 100.0% 100.0% 100.0% Cost of sales 70.3 70.3 70.0 Gross profit 29.7 29.7 30.0 Operating expenses 18.8 18.0 16.5 Operating income 11.0 11.6 13.5 Interest and other non-operating expenses, net 0.9 0.9 1.1 Income before income taxes and equity in earnings 10.1% 10.7% 12.4% Note: Due to rounding, percentages may not add to operating income or income before income taxes and equity in earnings.
The weighted average effective interest rate for the Credit Facility as of December 31, 2024 was approximately 4.0%, excluding commitment fees and including the impact of our interest rate swaps. Term Facility Our Term Facility provides for $185.0 million in borrowing capacity and matures on December 30, 2026.
The weighted average effective interest rate for the Credit Facility as of December 31, 2025 was approximately 4.0%, excluding commitment fees and including the impact of our interest rate swaps. Term Facility Our Term Facility provides for $90.0 million in borrowing capacity.
Income Taxes Our effective income tax rate was 23.4% at December 31, 2024 and 24.0% at December 31, 2023. We recorded a $8.8 million, or $0.23 per diluted share, benefit from ASU 2016-09 for the year ended December 31, 2024 compared to a benefit of $6.7 million, or $0.17 per diluted share, realized in 2023.
We recorded a $4.6 million, or $0.12 per diluted share, benefit from ASU 2016-09 for the year ended December 31, 2025 compared to a benefit of $8.8 million, or $0.23 per diluted share, realized in 2024. Without the benefits from ASU 2016-09, our effective tax rate was 24.7% for the year ended 2025 and 25.0% for the year ended 2024.
The table below summarizes the changes in our sales center count during 2024: December 31, 2023 439 Acquired locations 2 New locations 10 Closed/consolidated locations (3) December 31, 2024 448 For information about our recent acquisitions, see Note 2 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K. 37 Net Sales (in millions) Year Ended December 31, 2024 2023 Change Net sales $ 5,311.0 $ 5,541.6 $ (230.6) (4)% Net sales in 2024 declined 4% compared to 2023.
The table below summarizes the changes in our sales center count during 2025: December 31, 2024 448 Acquired locations 3 New locations 8 Consolidated/closed locations (3) December 31, 2025 456 For information about our recent acquisitions, see Note 2 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K. 36 Net Sales (in millions) Year Ended December 31, 2025 2024 Change Net sales $ 5,289.4 $ 5,311.0 $ (21.6 ) –% Net sales in 2025 were consistent with 2024.
We believe we will remain in compliance with all covenants and financial ratio requirements throughout 2025. For additional information regarding our debt arrangements, see Note 5 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K. Future Obligations We have certain fixed contractual obligations and commitments that include future estimated payments for general operating purposes.
For additional information regarding our debt arrangements, see Note 5 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K. 44 Future Obligations We have certain fixed contractual obligations and commitments that include future estimated payments for general operating purposes.
The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities.
The Receivables Facility provides for the sale of certain of our receivables to a wholly owned subsidiary (the Securitization Subsidiary). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights to certain third-party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities.
Due to changing tax laws and state income tax rates, significant judgment is required to estimate the effective tax rate expected to apply to tax differences that are expected to reverse in the future. 33 We record Global Intangible Low Tax Income (GILTI) on foreign earnings as period costs if and when incurred, although we have not realized any impacts since the December 2017 enactment of U.S. tax reform.
Due to changing tax laws and state income tax rates, significant judgment is required to estimate the effective tax rate expected to apply to tax differences that are expected to reverse in the future. We record Global Intangible Low Tax Income (GILTI) on foreign earnings as period costs if and when incurred.
Estimates of interest payable on this debt is separately reflected in the table appearing below. For additional information regarding our debt arrangements, see Note 5 of our “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K. • Operating lease amounts include future rental payments for our operating leases.
For additional information regarding our debt arrangements, see Note 5 of our “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K. • Operating lease amounts include future rental payments under the current terms of our operating leases.
As of December 31, 2024, U.S. income taxes were not provided on the earnings or cash balances of our foreign subsidiaries, outside of the provisions of the transition tax from U.S. tax reform.
We have not realized any impacts since the December 2017 enactment of U.S. tax reform. As of December 31, 2025, U.S. income taxes were not provided on the earnings or cash balances of our foreign subsidiaries, outside of the provisions of the transition tax from U.S. tax reform.
Earnings per share decreased 15% to $11.30 per diluted share compared to $13.35 per diluted share in 2023. 39 Reconciliation of Non-GAAP Financial Measures The non-GAAP measures described below should be considered in the context of all of our other disclosures in this Form 10-K.
Earnings per diluted share declined 4% to $10.85 in 2025 compared to $11.30 in 2024. 38 Reconciliation of Non-GAAP Financial Measures The non-GAAP measures described below should be considered in the context of all of our other disclosures in this Form 10-K.
Operating Expenses (in millions) Year Ended December 31, 2024 2023 Change Selling and administrative expenses $ 958.1 $ 913.5 $ 44.6 5% Operating expenses as a percentage of net sales 18.0 % 16.5 % Operating expenses increased 5%, or $44.6 million, to $958.1 million in 2024, up from $913.5 million in 2023.
Operating Expenses (in millions) Year Ended December 31, 2025 2024 Change Selling and administrative expenses $ 992.3 $ 958.1 $ 34.2 4 % Operating expenses as a percentage of net sales 18.8 % 18.0 % Operating expenses increased 4%, or $34.2 million, to $992.3 million in 2025, up from $958.1 million in 2024.
As of December 31, 2024, our fixed charge ratio equaled 5.07 (compared to 5.94 as of December 31, 2023) and TTM Rental Expense was $104.0 million.
As of December 31, 2025, our fixed charge ratio equaled 4.78 (compared to 5.07 as of December 31, 2024) and TTM Rental Expense was $112.2 million.
If the balance of the accounts receivable reserve increased or decreased by 20% at December 31, 2024, pretax income would change by approximately $1.7 million and earnings per share would change by approximately $0.03 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2024).
If the allowance for doubtful accounts increased or decreased by 20% at December 31, 2025, pretax income would change by approximately $1.6 million and earnings per share would change by approximately $0.03 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2025). 31 Inventory Obsolescence Product inventories represent the largest asset on our balance sheet.
We recorded an $8.8 million, or $0.23 per diluted share, tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, for the year ended December 31, 2024 compared to a tax benefit of $6.7 million, or $0.17 per diluted share, realized in 2023.
We recorded a $4.6 million, or $0.12 per diluted share, tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in 2025 compared to an $8.8 million, or $0.23 per diluted share, tax benefit in 2024.
Market conditions in 2024 were challenged by generally higher than normal interest rates and product cost and labor inflation, which led to consumer hesitancy on discretionary spending and some cyclical suppression of demand. While these market conditions impacted new pool construction and remodeling projects, our non-discretionary maintenance product sales in 2024 were not significantly impacted.
As in 2024, market conditions during the majority of 2025 were challenged by generally higher interest rates than the recent past, and product cost and labor inflation, which led to consumer hesitancy on discretionary spending and some cyclical suppression of demand. These market conditions impacted new pool construction and remodeling projects, particularly in the first half of the year.
Sources and Uses of Cash The following table summarizes our cash flows (in thousands): Year Ended December 31, 2024 2023 Operating activities $ 659,186 $ 888,229 Investing activities (66,169) (71,597) Financing activities (576,550) (798,132) Cash provided by operations of $659.2 million for 2024 decreased $229.0 million compared to 2023.
Sources and Uses of Cash The following table summarizes our cash flows (in thousands): Year Ended December 31, 2025 2024 Operating activities $ 365,850 $ 659,186 Investing activities (67,792 ) (66,169 ) Financing activities (273,379 ) (576,550 ) Cash provided by operations of $365.9 million for 2025 decreased $293.3 million compared to 2024.
During 2024, maintenance activities were stable, reflecting steady demand for non-discretionary products, while sales volumes for discretionary products declined, impacted by unfavorable macroeconomic conditions.
During 2025, maintenance product sales held steady, indicating stable demand for non-discretionary products. Sales volumes for discretionary products declined, impacted by unfavorable macroeconomic conditions.
Due to ASU 2016-09 requirements, we expect our effective tax rate will fluctuate from quarter to quarter, particularly in periods when employees elect to exercise their vested stock options or when restrictions on share-based awards lapse.
Due to ASU 2016-09, we expect our effective tax rate will fluctuate from quarter to quarter, particularly in periods when employees elect to exercise their vested stock options or when restrictions on share-based awards lapse. We recorded a $4.6 million benefit in our provision for income taxes for the year ended December 31, 2025 related to ASU 2016-09.
The second quarter of 2024 was marked by precipitation variability across the U.S. with wetter conditions in the central U.S. and Texas and below average precipitation in the western U.S. Maintenance activities benefited from warmer-than-average temperatures across most regions, particularly in June. Overall, mixed weather conditions led to varied impacts across our markets.
In the second quarter of 2024, weather across the U.S. was mixed, with wetter conditions in the central regions and Texas, drier conditions in the West, and warmer-than-average temperatures, especially in June, supporting maintenance activities and leading to varied impacts across our markets.
Inventory Obsolescence Product inventories represent the largest asset on our balance sheet. Our goal is to manage our inventory such that we minimize stock-outs to provide the highest level of service to our customers. To do this, we maintain at each sales center an adequate inventory of stock keeping units (SKUs) with the highest sales volumes.
Our goal is to minimize stock-outs to provide the highest level of service to our customers. To do this, we maintain an adequate inventory of stock keeping units (SKUs) with the highest sales volumes.
For additional details regarding these facilities, see the summary descriptions below and more complete descriptions in Note 5 of our “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K.
For additional details regarding these facilities, see the summary descriptions below and more complete descriptions in Note 5 of our “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K. Credit Facility Our Credit Facility provides for $1.3 billion in borrowing capacity consisting of an $800.0 million revolving credit facility and a $500.0 million term loan facility.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations For a discussion of our base business calculations, see the RESULTS OF OPERATIONS section below. 2024 FINANCIAL OVERVIEW Financial Results Net sales decreased 4% to $5.3 billion in 2024 compared to $5.5 billion in 2023. Base business results approximated consolidated results for the year.
Item 7. Manage ment’s Discussion and Analysis of Financial Condition and Results of Operations For a discussion of our base business calculations, see the RESULTS OF OPERATIONS section below. 2025 FINANCIAL OVERVIEW Financial Results Net sales were $5.3 billion for 2025, comparable to 2024 net sales. Sales of non‑discretionary products were steady throughout the year.
We project that our operating expenses in 2025 will be impacted by the following factors: ◦ an increase of approximately $15.0 million in performance-based compensation to incentivize and reward our employees; ◦ $10.0 million of spend for new sales centers as we further expand our sales center network; ◦ continued investment in technological solutions to enhance our customer service; and ◦ inflationary increases in areas such as labor and occupancy costs with some offsets from our efficiency initiatives.
We project that our operating expenses in 2026 will be impacted by the following factors: o an increase of approximately $10.0 million to $15.0 million as performance-based compensation normalizes; o $5.0 million of spend to add greenfields to our sales center network; o utilization of technological solutions to enhance capacity creation; o inflationary increases in areas such as labor and occupancy costs with some offsets from our efficiency initiatives; and o leverage from enhanced profitability efforts at our recent greenfield locations.
In 2024, sales of equipment, which is used across maintenance, renovation and new pool construction and includes swimming pool heaters, pumps, lights, filters and automation, were flat compared to 2023 and represented approximately 31% of net sales in 2024. Sales of building materials fell 10% compared to 2023 and represented approximately 12% of net sales in 2024.
In 2025, sales of equipment for maintenance, renovation and new construction activities, including swimming pool heaters, pumps, lights, filters and automation devices, were flat compared to 2024 and represented approximately 31% of net sales in 2025.
We expect to repurchase additional shares in the open market from time to time depending on market conditions. We plan to fund these repurchases with cash provided by operations and borrowings under our credit and receivables facilities described below.
We plan to fund these repurchases with cash provided by operations and borrowings under our credit and receivables facilities described below.
In view of current trends, we established our outlook for 2025 based on reasonable expectations for industry demand, pricing and inflationary conditions, continued capacity creation to have a positive impact on variable expenses, continued investment in our digital transformation initiatives and ongoing leverage of existing investments in our business and continuous process improvements.
In view of current trends, we established our outlook for 2026 based on reasonable expectations for industry demand, pricing and inflationary conditions, variable expense reductions, realization of our digital transformation initiatives and leverage of existing investments in our business.
At the same time, we continuously strive to better manage our slower moving classes of inventory, which are not as critical to our customers and thus, inherently turn at slower rates. 32 We establish our reserve for inventory obsolescence based on inventory with lower sales velocity and inventory with no sales for the past 12 months, which we believe represent some exposure to inventory obsolescence.
At the same time, we continuously strive to better manage our slower moving classes of inventory, which are not as critical to our customers and thus, inherently turn at slower rates.
As lower housing turnover encourages consumers to renovate their existing homes, we expect that consumers will continue to invest in outdoor living spaces as they consider backyards an extension of their home space.
Throughout the year, non-discretionary maintenance product sales were stable. As lower housing turnover and market conditions encourage consumers to stay in their homes longer, we expect that consumers will continue to invest in outdoor living spaces as they consider backyards an extension of their home space.
Interest and Other Non-operating Expenses, net Interest and other non-operating expenses, net decreased $8.2 million compared to 2023, primarily due to a decrease in average debt between periods. Our weighted average effective interest rate was 5.2% in 2024 and 2023 on average outstanding debt of $956.3 million in 2024 versus $1.1 billion in 2023.
Interest and Other Non-operating Expenses, net Interest and other non-operating expenses, net decreased $3.5 million compared to 2024, primarily due to a decrease in the weighted average effective interest rate between periods, which includes benefits from our 2025 refinancings.
Based on management’s current plans, we project capital expenditures for 2025 will average 1% to 1.5% of net sales. We believe we have adequate availability of capital to fund present operations and the current capacity to finance any working capital needs that may arise. We continually evaluate potential acquisitions and hold discussions with acquisition candidates.
We believe we have adequate availability of capital to fund present operations and the current capacity to finance any working capital needs that may arise. We continually evaluate potential acquisitions and hold discussions with acquisition candidates. If suitable acquisition opportunities arise that would require financing, we believe that we have the ability to finance any such transactions.
Acquired and new market sales centers excluded from base business contributed less than 1% to the change in net sales.
Excluded sales centers contributed less than 1% to the change in our reported net sales.
We perform a goodwill impairment test in the fourth quarter of each year or on a more frequent basis if events or changes in circumstances occur that indicate potential impairment.
Goodwill represents the excess of the amount we paid to acquire a company over the estimated fair value of tangible assets and identifiable intangible assets acquired less liabilities assumed. We perform a goodwill impairment test in the fourth quarter of each year or on a more frequent basis if events or changes in circumstances occur that indicate potential impairment.
Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 16% to $11.07 per diluted share compared to $13.18 per diluted share in 2023. See RESULTS OF OPERATIONS below for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures.
Adjusting for the impact from ASU 2016-09 in both years, earnings per diluted share decreased 3% to $10.73 in 2025 compared to $11.07 in 2024. See RESULTS OF OPERATIONS below for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures. Financial Position and Liquidity Net cash provided by operations was $365.9 million in 2025.
The adverse effects of cooler and wetter weather in Florida and the Southeast compared to the first quarter of last year and excessive precipitation in Texas and the Northeast outweighed the positives, resulting in an unfavorable net impact on net sales.
However, the adverse effects of cooler and wetter weather in Florida and the Southeast, and excessive precipitation in Texas and the Northeast, outweighed the positives, resulting in an overall unfavorable impact on net sales. Weather conditions in the second quarter of 2025 were generally marked by above-average temperatures and higher-than-normal precipitation.
As of December 31, 2024, we had two interest rate swap contracts in place and one forward-starting interest rate swap contract, each of which has the effect of converting our exposure to variable interest rates on a portion of our variable rate borrowings to fixed interest rates.
As of December 31, 2025, we had two interest rate swap contracts in place, each of which has the effect of converting our exposure to variable interest rates on a portion of our variable rate borrowings to fixed interest rates. For more information, see Note 5 of “Notes to Consolidated Financial Statements” included in Item 8 of this Form 10-K.
We expect that our long-term gross margin target will be more achievable as construction trends improve. Our actual gross margin will depend on changes in product and customer mix and on amounts and timing of sales and inflationary price increases. 30 • We expect to leverage our existing infrastructure and strategically manage discretionary spending.
We expect our gross margin to benefit from effective supply chain management, advantageous pricing strategies and increased private label sales. Our actual gross margin will depend on changes in product and customer mix and on amounts and timing of sales and inflationary price increases. 29 • We expect to leverage our existing infrastructure and strategically manage discretionary spending.
Cash used in investing activities decreased $5.4 million to $66.2 million in 2024, primarily reflecting a decrease of $6.8 million in payments for acquisitions compared to 2023. Cash used in financing activities decreased to $576.6 million in 2024 compared to $798.1 million in 2023.
Cash used in investing activities increased $1.6 million to $67.8 million in 2025, primarily reflecting an increase of $6.1 million in payments for acquisitions compared to 2024, partially offset by a decrease of $3.1 million in net capital expenditures between years. Cash used in financing activities decreased to $273.4 million in 2025 compared to $576.6 million in 2024.
For a discussion of our sources and uses of cash in 2022, see the Liquidity and Capital Resources – Sources and Uses of Cash section of Management’s Discussion and Analysis included in Part II, Item 7 of our 2023 Annual Report on Form 10-K. 43 Future Sources and Uses of Cash To supplement cash from operations as our primary source of working capital, we will continue to utilize our three major credit facilities, which are the Amended and Restated Revolving Credit Facility (the Credit Facility), the Term Facility (the Term Facility) and the Receivables Securitization Facility (the Receivables Facility).
Future Sources and Uses of Cash To supplement cash from operations as our primary source of working capital, we plan to continue to utilize our three major credit facilities, which are the Fourth Amended and Restated Credit Facility (the Credit Facility), the Term Facility (the Term Facility) and the Receivables Securitization Facility (the Receivables Facility).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe maximum amount available under the Credit Facility is $1.3 billion and the maximum amount available under the Receivables Facility is $375.0 million. Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements.
Biggest changeFailure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. In this case, we would still be obligated to pay the variable interest payments underlying our debt agreements.
Further, in the event of changes of such magnitude, we would likely take actions to mitigate our exposure to such changes. Interest Rate Risk Our earnings are exposed to changes in short-term interest rates because of the variable interest rates on our debt. However, we have entered into interest rate swap contracts to reduce our exposure to market fluctuations.
Further, in the event of changes of such magnitude, we would likely take actions to mitigate our exposure to such changes. Interest Rate Risk Our earnings are exposed to changes in short-term interest rates because of the variable interest rates on our debt. However, we have entered into interest rate swap contracts to reduce our exposure to interest rate fluctuations.
While our international operations, including Canada and Mexico, accounted for only 7% of total net sales in 2024, our exposure to currency rate fluctuations could be material in 2025 and future years to the extent that either currency rate changes are significant or that our international operations comprise a larger percentage of our consolidated results.
While our international operations, including Canada and Mexico, accounted for only 7% of total net sales in 2025, our exposure to currency rate fluctuations could be material in 2026 and future years to the extent that either currency rate changes are significant or that our international operations comprise a larger percentage of our consolidated results.
For information about our debt arrangements and interest rate swaps, see Note 5 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10‑K. In 2024, there was no interest rate risk related to the notional amounts under our interest rate swap contracts.
For information about our debt arrangements and interest rate swaps, see Note 5 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10‑K. In 2025, there was no interest rate risk related to the notional amounts under our interest rate swap contracts.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks, including interest rate risk and foreign currency risk. The adverse effects of potential changes in these market risks are discussed below. The following discussion does not consider the effects of the reduced level of overall economic activity that could exist following such changes.
Item 7A. Quant itative and Qualitative Disclosures about Market Risk We are exposed to market risks, including interest rate risk and foreign currency risk. The adverse effects of potential changes in these market risks are discussed below. The following discussion does not consider the effects of the reduced level of overall economic activity that could exist following such changes.
Functional Currencies Canada Canadian Dollar United Kingdom British Pound Belgium Euro Croatia Euro France Euro Germany Euro Italy Euro Portugal Euro Spain Euro Mexico Mexican Peso Australia Australian Dollar 47
Functional Currencies Canada Canadian Dollar United Kingdom British Pound Belgium Euro Croatia Euro France Euro Germany Euro Italy Euro Portugal Euro Spain Euro Mexico Mexican Peso Australia Australian Dollar 46
In this case, we would still be obligated to pay the variable interest payments underlying our debt agreements. Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we continue to be in a net pay position.
Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we continue to be in a net pay position.
To calculate the potential impact in 2024 related to interest rate risk, we performed a sensitivity analysis assuming that we borrowed the monthly maximum available amount under the Credit Facility, the maximum amount available under the Receivables Facility and the amount outstanding under our Term Facility.
To calculate the potential impact in 2025 related to interest rate risk, we performed a sensitivity analysis assuming that we borrowed the maximum $1.3 billion available under the Credit Facility, the $375 million maximum available under the Receivables Facility and the full $500 million outstanding under our Term Facility.
Based on this calculation, our pretax income would have decreased by approximately $13.5 million and earnings per share would have decreased by approximately $0.26 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2024).
In this analysis, we assumed that the variable interest rates for each facility increased by 1.0%. Based on this calculation, our pretax income would have decreased by approximately $13.7 million and earnings per share would have decreased by approximately $0.27 per diluted share (based on the number of weighted average diluted shares outstanding for the year ended December 31, 2025).
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In this analysis, we assumed that the variable interest rates for the Credit Facility and the Receivables Facility increased by 1.0%.

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