- Q4 Adjusted EBITDA Growth: 4% increase driven by strong U.S. and Canadian performance, despite higher variable compensation and one-time legal costs.
- 2026 Guidance: 6-12% adjusted diluted EPS growth expected, with normal seasonality returning in Q1 and gross margin expansion in H2 2026.
- Aftermarket Resilience: 6-year CAGRs of 7% for net sales and 10% for adjusted EBITDA, supported by a diversified customer base and stable installed pool demand.
- Pricing and Volume Dynamics: 3% global net price gains assumed for 2026, with modest volume growth and higher U.S. pricing pressure offset by operational leverage.
- Strategic Investments: Increased CapEx for U.S. manufacturing upgrades and R&D, with a focus on the OmniX automation system and expansion into flow control markets (TAM ~$100M/year in U.S.).
Aftermarket Business Resilience
The company's aftermarket business has proven resilient, driven by a diversified customer base and a focus on serving the existing pool installed base with regular equipment replacements and upgrades. As Kevin Holleran noted, "Our business model is focused on serving a large installed base of existing pools with regular equipment replacements and upgrades, which provides a steady stream of revenue." This business model has enabled the company to deliver two consecutive years of top-line growth despite a challenging macro environment.
Growth Initiatives and Investments
The company is investing in growth initiatives, including stepping up its CapEx investment program and upgrading its facilities. It is also investing in R&D, particularly around customer experience, with positive feedback and payback on these investments. As Eifion Jones mentioned, "We're consciously investing in the business, particularly around R&D and customer experience." The company's OmniX system has received positive ratings and customer feedback, offering more affordable opportunities for automation.
Valuation and Outlook
With a P/E Ratio of 21.42 and an EV/EBITDA of 12.58, the market is pricing in a certain level of growth for Pool Corp. Analysts estimate revenue growth at 5.8% for next year. The company's ROE is 10.02%, and ROIC is 6.74%. The company's focus on upgrading facilities, pursuing M&A opportunities, and exploring the flow control space positions it well for long-term growth. With a healthy balance sheet and a Net Debt / EBITDA of -1.36, the company has flexibility to invest in growth initiatives and return capital to shareholders.
Cash Flow Priorities
The company's cash flow priorities are focused on investing in the business, pursuing M&A opportunities, and returning capital to shareholders through share repurchases. As Eifion Jones stated, "The first dollar will go back into the business in terms of CapEx, the second dollar to M&A opportunities, and the remaining cash will be used for share repurchases." This approach is expected to drive long-term growth and create value for shareholders.