Tickers in this Article: POOL, BC, DW, PII
Pool Corp (NYSE:POOL) outlined its strategy at a recent analyst meeting to cope with the nascent recovery in the economy and the housing market. The company has come through the recession in decent shape and, according to management, is set to resume growth over the next few years as the company reaps the benefits of pent up demand for pool spending. IN PICTURES: Eight Ways To Survive A Market Downturn

Pool Corp constructs, maintains and refurbishes pools, both domestically and internationally. The company's largest business is the domestic pool segment, or what the company calls the Blue business. This represents 82% of the company's current sales.

Within the Blue business, new pool construction is only 10% of sales, with the balance split between replacement and refurbishment (20%), repairs (35%) and retail sales (35%) of pool products.

The large amount of non-discretionary spending (70%) in the Blue business helped protect Pool Corp during the recent recession. (To learn more, see The Impact Of Recession On Businesses.) There is an installed base of approximately 9 million above and in ground pools that required spending despite the economic contraction.

Pool Corp believes that the 30% of its business that is based on consumer discretionary spending is set to come back once the economy gets better. This includes new pool construction, replacement and refurbishment. The driver of this increase in business will be the aging of the installed base of pool, with more than half of the 5.2 million in ground pools more than fifteen years old. Another 17% are more than ten years old.

Another reason why this discretionary business might jump higher is that many consumers have deferred major refurbishments or purchasing new pools due to the economy over the last few years. Once the economy improves and employment increases, a higher than normal historical growth rate may emerge.

Pool Corp also has a small but growing international business, which represented 10% of sales in 2009. This business is set to grow again in 2010 after a down year in 2009. The company is active in Spain, Italy, France, Germany and Canada.

Latest Earnings
The company reported $647.5 million in sales in the quarter ending June 20, 2010 - an 8% increase on a year over year basis. Net income came in at $52.8 million, or $1.05 per diluted share. Pool Corp reported a 5.4% increase in its Blue business in the quarter but warned on the current environment.

"We are not out of the woods yet from an industry standpoint as external market factors like single-family home values, consumer confidence, employment, consumer financing and economic growth remain at depressed levels," said Manny Perez de la Mesa, the CEO of Pool Corp.

Pool Corp doesn't have any comparable competitors that are public, but other companies that might benefit from an increase in consumer discretionary spending include Brunswick Corporation (NYSE:BC), Drew Industries (NYSE:DW) and Polaris Industries (NYSE:PII).

Bottom Line
Pool Corp has moved past the worst recession in 50 years and is set to resume earnings growth as the company's key markets rebound, and consumers start to increase spending on pools.

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