A few missing at the International Show
When the biggest players in the pool and spa industry are no-shows at the biggest industry event of the year, something is clearly going on. Fluidra, Hayward, Pentair, and PoolCorp were notably absent from this year’s International Pool Spa Patio Expo, which took place November 13-15, in Las Vegas, Nevada.
The International Expo typically draws 10,000+ attendees and 500+ exhibitors, so the absence of not only the industry’s big three manufacturers, but also its biggest wholesale distributor, seems to indicate rather dramatic cost-cutting measures on the part of the industry’s largest suppliers. What does it mean for the overall state of the pool and spa industry that they simply didn’t show up?
This and other markers seem to indicate that the industry may be in for a downturn.
In the past year, stock prices have gone down for all of the major pool equipment manufacturers: Fluidra is down 61 percent since mid-November and 65 percent since its all-time high in August 2021. Hayward is down nearly 65 percent. Pentair is down 42 percent compared to its mid-November 2021 all-time high.
The situation is similar for
And the winners are! Amy Lemieux of Pelican Pools Service & Repair in Port Charlotte, Florida, won the prestigious Pleatco Perfect Pool Gal title alongside Fred Goss of Heritage Pools in North Charleston who won Pleatco Perfect Pool Guy. See story page 6. PoolCorp. becoming a glamor stock of 2021, starting the year under $400 per share and finishing at $566 per share.
In 2022, like the big three industry manufacturers, despite continuing sales and profit increases, the stock has fallen more than 40 percent.
It closed on Nov 28 at $315 a share.
Meanwhile, compared to the big pool industry players, over one year, the S& P 500 is down 14 percent, indicating that whatever is going on seems more magnified for the pool and spa industry.
Despite this, Stephen Volken, research analyst and managing director of Jefferies, an investment banking and capital markets firm, says that the pool industry could be a good hedge against inflation. He says that while historically — that is, pre-Covid — the pool industry has grown in the mid-single digits, business accelerated by between 20 and 30 percent during the pandemic.
Everyone in the pool and spa industry can attest that business was booming during this time, with new pools being built at a record rate. And the prices for those pools also surged, from about $75,000 in 2019 to about $125,000 in 2022 — a 50 percent growth.
Many installers and renovators are still sold out through the end of 2022.
“Frankly, I think we would have built more pools if there was capacity in the industry and what that does is creates a fairly robust backlog,” Volken said.
During that time, there was also a lot of additional spending on luxury equipment: Fancy lighting, miscellaneous water features, automation to control the pool from a smart phone, and so forth.
Now, things are slowly beginning to return to normal.
“We think growth will slowly return to that mid-single digit from the 20 to 30 percent,” Volken said.
For investors speculating about the future of the industry, the question is whether prices will return to normal or decline to below the current average levels.
“The question is do we have to rebase lower again and pay back the benefits that we got during Covid or do we rebase more from the current period and start regrowing at that long-term Compound Annual Growth Rate (CAGR)? That’s the question you need to answer before you get back into these stocks,” Volken said.
Fortunately for pool and spa service professionals, even as we see a decrease in new pool builds, there are now a lot more pools to service, and it’s likely that repair and maintenance will continue to grow.
For example, during the last recession, pool service companies drove the industry.
Even if they weren’t necessarily thriving, they were certainly getting by during a time when every other sector of the pool and spa industry took record hits.