Slumping housing sales fail to deter Covington-based Pool Corp.

New Orleans CityBusiness, Jun 15, 2009 by Stephen Maloney

Still feeling the waves of financial insecurity rippling through the housing market, Covington-based Pool Corp. is looking to further consolidate its hold on the pool supply market by expanding its footprint within the industry.

CEO Manuel Perez de la Mesa said the company began to look at ways to expand its holdings into complementary areas more than a decade ago, a mindset that resulted in the acquisition of National Pool Tile in the first quarter of 2008.

"That acquisition really enabled us to further broaden our product offering to be more of a one-stop-shop to customers," Perez de la Mesa said. "But those product lines are more weighted toward the building of new pools and the remodeling of existing pools, and those are certainly markets that are currently adversely affected."

Being able to offer customers more products associated with pool construction and maintenance will pay off in the long run, Perez de la Mesa said.

"That really positions us for the natural recovery that will take place in the next several years," he said.

Analyst Joan Storms, who tracks Pool Corp. for Los Angeles-based Wedbush Morgan Securities, said the acquisition will allow the company to provide a broader range of products to customers.

"Historically they have already consolidated the business in the U.S.," Storms said. "They are the largest distributor by far, and this is just another piece of the puzzle. Now that they own the company, they can distribute tile within their own company and most likely limit distribution to the competition."

Perez de la Mesa said the acquisition will follow the pattern established by the company's Horizon Network, which distributes irrigation products in markets with more water control concerns.

The Horizon Network, covering areas from Texas to the West Coast, sells everything from sprinkler control systems to power equipment and landscape lighting -- another example of products that easily cross over to the poolside, he said.

The seasonal nature of pool care tends to depress the first and fourth quarters of each fiscal year, further compounded by the current economic crisis. But Perez de la Mesa said Pool Corp. is always positioned for yearly rebounds.

"Our business in the second and third quarters of the year is when we make most of our profit, and that will be no different this year than in any other year," he said. "The fact that that segment of the business has been significantly less affected by external factors means that will mitigate, to a large part, the external economic and real estate conditions."