Good morning, everyone, and welcome to our Third Quarter 26 Earnings Conference Call. During today's call, our discussion, comments and responses to questions may include forward-looking statements. Including management's outlook for 2026 and future periods. Actual results may differ materially from those discussed today. Information regarding the factors and variables that could cause actual results to differ materially from projected results are discussed in our 10-K.

In addition, we have provided a presentation on our Investor Relations website that summarizes key points from our press release and today's call. We may make references to non-GAAP financial measures in our discussions. Todd. A description and reconciliation of non-GAAP financial measures are included in our press release or on our Investor Relations website. I will now turn the call over to John Watwood, our President and CEO.

Thank you, Kristin, and good morning, everyone. I want to start by recognizing the people who support our industry. Earlier this month, I had the chance to spend time with about 1.5 thousand employees, suppliers, and industry partners at our international sales conference. And it was 1 of the most energizing experiences of my first year at POOLCORP. Standing in a room with that many people who care about this industry our customers, and each other reinforce what makes this company different.

Scale built on local relationships, It was a powerful reminder that it truly runs deep here. And I want to thank our employees for everything they do for our customers, and for each other every day. I left our conference more convinced that our direction is the right 1, Our strategy is an evolution, not a reinvention. Of what has made Pool Corp successful for more than 45 years. During my first pool season as CEO, I deeply engaged with our employees, customers, and suppliers to understand where we win, and where we can improve.

Our leadership team also spent time in the field and with customers where we identified specific points of friction we are working to remove. The next step is to translate that feedback into an enhanced customer experience stronger share capture, and even better operational performance next season and for years to come. On that note, after I briefly touch on our third quarter results, I will discuss our key strategic initiatives and the actions underway and Melanie will take you through the financials in more detail during her prepared remarks.

Net sales grew 4% in the third quarter reflecting price realization, volume growth in maintenance and building materials, and share gains. Building materials delivered its 5th consecutive quarter of growth despite a muted discretionary environment and that growth was driven by our differentiated national full trends resources and new product introductions. Chemicals grew 4% primarily on volume. In both areas of the business, our focus on branding, private label, and customer support through education and lead generation, is showing up in our results.

Equipment grew 5% reflecting price and healthy volumes in replacement activity as seen in products including pumps and filters. POOL360 accounted for just over 17% of sales up from the same quarter last year. Usage is seasonal and typically peaks in Q2, so we measure progress against the same quarter in the prior year rather than sequentially. By geography, results improved from last quarter Florida, Arizona, and Texas were each up low to mid single digits.

In those markets, our pool business continued to outperform permit data and irrigation and landscape. Which is more closely tied to the housing market. California performed similarly to last quarter. While Horizon in California also had growth this quarter. Europe continued its positive trends with 8% sales growth in local currency. Sales to retail customers moved from a 1% decline last quarter to growth of 3% in the third quarter.

Pinch A Penny franchise sales to end users went from flat last quarter to up 3%. These results reflect resilient end market demands our expanded retail support team and customer offerings, and provide clear proof points of our investments translating into growth. Although our sales activity is running ahead of permit data, new pool construction across the industry remains below last year's levels. The irrigation and landscape business remains tied to housing, which is a challenging end market at the moment.

We are operating in a market that is not giving us much for free. Housing turnover and discretionary spending remains cautious. And larger projects are still being delayed. However, our plan does not depend on relief from macro pressures. We are focused on controlling what we can control. Gross margin declined year over year, with higher inbound freight and customer mix remaining the primary pressures as they were in the second quarter, along with the third quarter's comparison against last year's mid season price increases.

We have increased prices on freight intensive products, including building materials in August to offset rising costs. Those increases are holding and have begun to recover some of the higher freight costs. We expect to recover more as those increases work their way through the channel and our pricing actions on vendor cost changes take effect at the beginning of next year. On expenses, SG&A grew ahead of sales. We chose to protect those investments because they support next season's performance.

At the same time, we are actively managing the cost base. We are also taking a disciplined approach to our network. During the quarter, we opened 1 location in Florida and consolidated 2 locations into existing sales centers. Using the density of our network to continue serving local demand at a lower cost to serve. Our goal is to invest where additional presence strengthens our position and to use our existing footprint more efficiently where we can.

Based on our steady performance to date, and our visibility for the rest of the year, we are reaffirming our 2026 adjusted diluted EPS guidance. Melanie will cover the fourth quarter outlook, which reflects a smaller pricing benefit and a challenging gross margin comparison. We believe the combination of price discipline, private label expansion, and productivity gains gives us a clear path to restoring operating leverage even in a flat volume environment with additional upside as volumes recover.

As we exit the peak season and look toward 2027, we are focused on executing against our 4 priorities. Sales excellence, pricing and supply chain discipline, operational execution, programmatic M&A. Our maintenance driven recurring revenue base provides resilience, and we see opportunities to grow share with our customers. Build density in our network, and execute more consistently across every market we serve. These are areas where we can take action regardless of the broader market environment.

And they are supporting our performance today while positioning us for what is next. I will provide a brief update on each. Our first priority is sales excellence. We are introducing new processes, training, and tools because in our industry, business is 1 locally. We are implementing centers of excellence to put more POOLCORP scale behind our sales centers. Providing better information, better tools, and more authority for the people closest to the customer.

That is how scale wins in local markets. Over time, we expect these efforts to support top line growth share gains, and gross margin improvement. During the quarter, we also moved ownership of our business development initiatives under field leadership and hired a new leader of national accounts and commercial. We are connecting our sales and marketing programs more closely through better targeting tools and more proactive reporting.

Over time, we expect these actions to support market share growth and improve national accounts profitability. Within sales excellence, we are seeing early signs of progress in looking at our sales trends versus permit data larger customer sales growth, and growth in new customer accounts. Additionally, the 7% growth in sales to commercial customers reflects the customer centered focus of our team. And the resources we have put behind the commercial growth opportunity.

Our second priority is pricing and supply chain discipline. We are continuing to sharpen our pricing approach. With decisions informed based on detailed analysis across our product lines and regions not a 1-size fits all approach. During the quarter, we tied pricing decisions within our organization more directly to cost and vendor inputs, aligning the cost side of the business with the sales side and creating data driven decisions.

We are also concentrating our focus on private label expansion on chemicals and building materials, where differentiated products offer opportunities for greater growth and margin benefit over time. Through the strategic efforts of our supply chain team, coordination with the field, we generated a healthy operating cash flow benefit from disciplined inventory management with inventory down 3% from last year on 4% sales growth. Our third priority is operational execution.

We are driving higher standards of service per employees across all of our sales centers. Our teams are dedicated to increasing revenues in our recently opened greenfield sites to deliver performance in line with our broader network while also increasing productivity as these operations mature. We continue to invest in POOL360 water testing, ecommerce, and integrations with our customers, and we prioritize partnering over building where that is the better path.

Above all, we are managing to the customer experience, not simply a metric. Our goal is to be the easiest distributor in the industry to do business with. That means addressing the identified points of friction, to further improve the service and product reliability our customers count on. Our fourth priority is programmatic M&A. We remain selective We look for operational and financial fits. Strong culture and talent, and opportunities to strengthen our existing markets or add capabilities that extend our value proposition.

M&A is a lever that accelerates our organic growth. It is not a substitute for it. We have the balance sheet and operating experience to be the acquirer of choice in our industry. Our capital allocation priorities remain unchanged. We invest in the business to drive profitable growth, pursue discipline, targeted M&A that aligns with our strategy, support the dividend, and use excess cash for share repurchases. All while maintaining a conservative leverage ratio.

Looking ahead, we are focused on finishing 2026 on course and positioning the business for an even stronger future performance. We believe in our ability to win in our markets and generate above market growth. We will continue refining our network and operations to improve efficiency and strengthen the customer experience. This is how we extend our competitive advantage, and create long term value for our shareholders.

As always, I wanna thank all of our industry partners for your commitment to growing the outdoor living industry as 1. And trusting Pool Corp as your partner. I will now turn the call over to Melanie Housey Hart, our senior vice president and Chief Financial Officer to review our third quarter results in more detail.

Thanks, John, and good morning, everyone. We delivered solid sales growth in the quarter, while focusing on our people and our long term priorities. Sales of $1.5 billion were up 4% compared to prior year, an acceleration from the 2% increase we saw in the second quarter resulting in a 4% year-to-date improvement. Pricing contributed 3% of the 4% growth while volumes adding the additional 1%, Supported by growth in maintenance, stable renovation activity, and new construction outperforming the permit trends.

Gross profit dollars grew $7 million on higher sales. Gross margin of 29% was down 60 basis points from prior year. Reflecting higher inbound freight costs customer mix, and the comparison against last year's mid season price increases. Partially offset by continued supply chain benefit. On mix, our larger customers are growing faster than the rest of the customer base. Which adds gross profit dollars but compresses margin percentage.

Our August price increase on the building materials about 11% of third quarter sales, made headway in recovering some of the higher freight costs. Consistent with our pricing and supply chain discipline, we continue to work toward additional actions both during the fourth quarter and as we plan for next season. Operating expenses grew 5% or $13 million The increase includes higher incentive compensation from higher sales, including special incentives for our sales team.

Increased employee insurance costs, and outside fees related to our focus on programmatic M&A, and other strategic initiatives. Headcount is lower than last year, and so this is not a structural step up in our cost basis. As a result, operating income decreased 3% to $172 million and operating margin was 11.4%. Interest and other expenses decreased $2.5 million from the second quarter as we moved into our seasonally stronger cash flow generation period and reduced debt outstanding.

Interest expense for the third quarter was $11.8 million a year over year decrease of over $200 thousand. Share repurchases, reduced diluted earnings per share by about 3.5% year over year, offset lower operating income and lifted adjusted diluted earnings per share to $3.40 compared to $3.39 in the third quarter of last year. Moving into our discussion of our balance sheet and capital allocation. Inventory of $1.2 billion was down $39 million or 3% from the prior year compared to a 4% year-over-year sales increase.

Inventory decreased $194 million sequentially as we sold through our peak season stocking levels and early buy and opportunistic purchases we discussed last quarter. Net cash from operations was $420 million year to date, up 47% from $286 million last year and equal to 115% of net income. We expect full year cash flow from operations to exceed net income. We have $468 million remaining under our share authorization, and significant capacity available under our current debt agreement.

Total debt of $1.2 billion was down from second quarter and carries an average interest rate of 4.2%. Our interest rate swaps are on track to reduce interest expense by approximately $9 million in 2026. They expire in February 2027. Following their expiration, our debt will still carry favorable market rates, priced at SOFR plus 1.25 or approximately 5.2% based on current rates. We intend to offset a portion of interest rate headwinds with lower inventory carrying costs.

We remain within our target leverage ratio of 1.5 to 2x, finishing the quarter at 1.8. As we wrap up the third quarter, we are confirming our adjusted earnings guidance as we move into our seasonally slowest fourth quarter. We now expect slightly better top line growth for the full year between 3% and 4% with a 3% contribution from pricing. October sales to date were up around 2% in line with our fourth quarter outlook.

That outlook reflects a smaller pricing benefit and is more heavily weighted to discretionary versus maintenance spend. Full year new pool builds are expected to be slightly lower below prior year consistent with current activity and permit trends. Year to date gross margin was 29.3%, reflecting freight pressure, customer mix, and the price increase comparison. Last year's fourth quarter margin benefited from pricing and supply chain improvements so the comparison will remain difficult in the fourth quarter.

Year to date adjusted operating expenses grew 3.7% in line with sales. For the full year, we expect adjusted operating expenses to grow less than sales growth with fourth quarter expense growth below the third as we lap last year's incremental IT cost. We expect full year interest expense of about $50 million and a full-year adjusted tax rate near 25%. With no additional benefit from ASU for the remainder of the year.

Weighted average shares outstanding should be about 36 million for the fourth quarter and 36.2 million for the full year. Our adjusted earnings guidance is unchanged at $10.87 to $11.17, which at the midpoint implies growth of almost 3% over prior year. Including the $0.21 of 1-time CEO transition expenses, reported in the second quarter, our GAAP diluted EPS range remains $10.66 to $10.96. Looking ahead to 2027, we will have 1 less selling day for the full year which will impact the fourth quarter.

In summary, our teams delivered 4% sales growth and added gross profit dollars while we continue to strengthen our processes. The actions we are taking and the target investments we are making are to support the 4 priorities John outlined. We continue to generate strong cash flow, return significant capital to shareholders, and invest in our network for the long term. We are now ready to take your questions.

Yeah. Good morning, Susan. Great question. So, the things that we. We have been working on I would say, in season, I have been pretty, open and honest on the record about you do not disrupt the business. We will continue to double down in the areas that we are starting to see improvements on. So, with the restructure we have, with sales excellence, with our new VP of national accounts and commercial, Those things need to take a little time to work in.

I would say. So, we are excited about what we have built. We will continue on our pricing journey and some of the investments there to set us up for a good 2027 season. I would say, overall, the things that we have put in place in season we can move a little faster on in some areas as we get out of season. You know, the freight piece is still a little bit of a concern right now as far as, you know, what is happening in the macro that is outside of our control.

But there is a lot we can control. I have been on record too saying that go into 2027, we are going to simplify our incentive plans. So that is well underway. And then we brought in some help to look at certain parts of the business to help us benchmark where we can improve. So, continue to work in those areas. You know, as we look in 2027, you know, I do not think 2027 materially from a macro level is gonna be much different than 2026.

So, it is really gonna be about what you can do internally to continue to improve, continue to execute. We have got a lot of energy in the company right now. We have got some wins coming through. We are excited about that. We are not taking a victory lap by any means. But I think the foundation is there. And, as we move into 2027, I am pretty excited about what we can achieve.

Yeah. I have not seen much change in it. I mean, it is always been a competitive industry, and I realized some of the narratives around that have changed over the past couple years. But as I have said, we respect our competitors. We know that we have to take care of our own business. And when we do that, we will we will win more times than we do not. So our focus remains the same you know, about how we view our business.

But no material change in competition. I do not expect to see a material change next year in competition. I think it is always gonna be around, and it makes us better, and we embrace it.

Yeah. I mean, between now and next May, yes. Working through our budgeting and our plans now. We, again, put a lot of work in. We are excited about what we are seeing. But we are we are building our bottoms up approach, as we work through the remainder of the year. So as we come into next year and we announce our fourth quarter, then we will break this down a little more granularly about where we see the as you said, the elements of the entire plan. So short answer is yes.

Yes, sir. Yeah. that is the plan. We have worked hard to have the best season possible, and I think we have achieved that. And, again, as we work through these strategic initiatives and set ourselves up and we get-- I do not think there is gonna be much change in how we view 2027 from a macro right now. that is what we will put in the confidence around each 1 of our actions here and display that in our plan.

Yeah. We still have some investment to make. As we continue our growth path. So, as we talked about in this quarter, we did have some incremental sales incentives that we put forth. So when you think about our traditional plans, they are based on primarily operating income. But we did implement some incremental incentives as part of our sales excellence culture this quarter. Which did add some expense. And, certainly, we saw the positive top line that first that created that expense.

But as we continue to work towards simplifying those plans, they will be aligned with our overall results and shareholder expectations. But as we continue to grow into next year, we will have some more investments that we will need to make that will align with the growth that we see.

Do you think even at moderate top line, you would be able to sort of get back to that 60% to 80% of top line growth or because these investments will be a little above that maybe on the high end? So the initial, we still have some rebuilding to do on that, so we will have to absorb that as we as we kinda grow through some of the capacity in the network as well. So I think what you will see there is you will see higher incentive comp more leverage in the capacity in the network. Yeah.

Yes. So we put a little bit wider range on the full year ex expectations for gross margin coming out of what we saw in the third quarter. So, freight rates did continue to climb. We put some actions in place that accounted for some of those increases overall. But as we look at the fourth quarter, our expectations for freight rates as a percentage of sales would be consistent with what we saw in third quarter. And so we also saw when you think about when you looked at fourth quarter last year, we had a really healthy fourth quarter margin rate, and so the comp gets more difficult.

But that being said, what we are looking at kind of in our forecast would be that you will see over the last couple of years, we saw a step up in our gross margin from third quarter to fourth quarter, and so we would expect a similar higher rate in the fourth quarter than what we finished the third quarter. But it will still be lower than what we reported last year.

Yep. So at this point in time, we are still working with our vendors. To get the full picture on early buy activity and orders and opportunities there. So we did. You know, when we looked at our balances in March of this year, we did have a higher inventory that we brought into the season. And that was either with good reason as we stated at this. That point in time. So it certainly will depend on our discussions with our vendors. And what opportunities lie as part of those early buys.

Yeah. So from a pricing timing so, generally, what happens is that we are setting pricing at the beginning of the season. So that is early in the year. And that is most prevalent when you think about our equipment purchases. We were able to do a mid season price increase for our building materials, and those particular items are generally price by the job. So we were able to pass through some of that to offset those higher inbound freight costs there into--in the third quarter, into the fourth quarter.

As we look ahead for pricing, the majority of the kind of remainder of our pricing actions, we would expect to take place at the beginning of next season. Thank you.

Yeah. So we have actually had 5 quarters of increases in building materials overall. So the trend there has been really very good. When you look at the percentage of fourth quarter sales, so in second and third quarter, we typically will have more sales generated from our maintenance business. And then first and fourth quarter, we will generate more of those discretionary sales. And so anything that is happening in those quarters typically are not a trend overall.

And so when you also look at the permit data, we have been outperforming the permit data. Our sales have come in ahead of that. So we see no change in that. We would continue to expect that for fourth quarter. But based on kind of the preliminary data, we are year to date, the permit data is lower than last year, and so we do not have any reason to expect that would not continue into the fourth quarter. So overall, we would expect permit data down our sales to come in better than the permit data. Got it.

Yeah. So when we--you know, there is a lot of different class classifications for large customers. I will say in the context of what we are discussing here, we are still about mid-single digits overall. I would say, in what we classify as a large customer. And they are growing, and that is a good thing. We focused on that, and we have had the ELT in front of these large customers. We do believe over time, profitability to be had there.

So, that is on us to find ways to be, I would say, more efficient in how we operate with certain customers. And they are looking for that as well. Now I would say as you look to the future, you know, we saw good growth in the medium and small accounts as well. And we have got a couple of things we are working on between now and the end of the year so that we understand segment and service that segment better. So I would not necessarily try to trend this out over the next 12 to 18 months. it is just a construct of what we have right now.

As far as consolidations and things like that, have not seen much noise or news on that. In the past quarter. cannot really predict what is gonna happen there. But I think 1 thing we have done throughout the season is we have really set the foundation understand how we deal with each customer segment. And we definitely do not look at growth at any level as a bad thing. But we have also, you know, got our eyes on kind of that medium and small account and how do we make that a little more sticky.

Okay. Good. that is helpful. And then maybe the follow-up. I am I am curious, I guess, this feels like a difficult operating environment for some of your smaller competitors. And I am curious if you think you are starting to see any type of real stress in that sort of smaller group of, competitors, which might add to some shutdowns or maybe they would even sell the business or just how do you think those guys are faring here?

Yeah. You know, I always try to stay away from speculating on things like that. it is it is it is it is a tough operating environment, but, know, you got smart people running those businesses as well. I get to be the 1 and only, that being pool that gets to display I know that we have done a really good job in some markets where got some good regional competitors. And that is probably as deep as I could go with it. We have not heard any rumors or any chatter in the market nor would we share that if we did about certain shutdowns or like that right now outside of what is been out there in the market about, you know, Leslie. So now short answer is, you know, I do not I do not really have any insight into it.

Yeah. I would like to tell you we have the complete picture on that right now. We do not. We do have some of our suppliers' price increases and their expectations of next year, but we do not have enough to really put a pin on the map quite yet. So again, short answer there is, to be determined probably over the next 30 to 45 days. You know, the freight situation we have found ourselves in, and I think I touched on this maybe in some conferences and things, and we really have not seen freight increases quite like what we have experienced the past year, since COVID.

But the thing about COVID was, obviously, you had a whole lot of top line coming in, so it kind of absorbed it. You know, as we move into the rest of the season and we prepare for next year, obviously, we want to work very hard to mitigate as much of that as we can, you know, what we at least can control. And we are certainly focused on that. The price increases that we put through very targeted and very specific product groups are really just to kind of recoup some of those expenses And we also chose deliberately to absorb some of those expenses.

Which shows up in the margin and a little bit in the SG&A. Look, it is a high cost environment. We want to be the best partner to our customers. And we know a lot of those jobs were already bid and already costed. So, you know, we took some hits on that as well because it is the right thing to do. Now as we move into next year, as we get the clearer picture, then we can talk more about what the, you know, what that inflationary environment will look like.

Oh, yeah. I am I am sorry. I think we both had a glitch because I missed part of your-- so I was starting to answer, but then I think you kept going.

Yeah. Do I need to repeat, or are you good? Well, I will answer the first part, and then you can tell me if I missed anything. So. Yeah. So it is. So from a trend standpoint, the price the increase in the freight expense as a percentage of sales will be. We are con. Projecting that to be consistent with where we are in third quarter. So that will continue to be a drag into the fourth quarter. So, and we also had a good fourth quarter, so we could expect that if you are looking at the year over year the comparison could get worse. But the margin reported for fourth quarter will be slightly better than the third quarter.

Yeah. So we came in at 5% expense growth in 3 q. We would expect to do better than that in 4Q. If we ultimately do, you know, see some incremental incentive compensation, that will be tied directly to sales overall from that standpoint. And then the other thing that we do expect to see in fourth quarter is some continued investment on some of our strategic initiatives that we are working forward. To prepare us ahead of next year.

So, you know, we will still expect to see expense growth in the fourth quarter. But when you look at the overall. The full year, adjusted, you know, backing out the incremental cost of the senior transition cost in the second quarter. We would expect that expense growth for the full year will come in less than sales growth.

No. I say would not say anything's material yet. We kind of dug into that a little bit once we saw the numbers. I think that is more the pitch performance just like we have seen with the independent retailers as well. Is really more of an outcome of just, you know, providing a good customer experience and I think it is not any more complicated than that. Because our service business has remained very strong as well.

So if we would have seen a degradation maybe on the maintenance and service side and then maybe a significant increase on that side, maybe you can correlate the 2. But we are surely not. We are just not seeing that shift right now. Okay. Good to hear. And the second question, just with respect to the high impact actions and investments that you outlined in that Slide 9 was very helpful. So thanks for that. Can you just talk about the progress you may be making or intend to make at least on the leveraging of technology investments for the past few years?

I realize this focus is just getting underway here, so it is still fairly new. But Yeah. How impactful do you think that could be to 27 margins and how do you focus on. Or how do you build that leverage? Yeah. So, the technology path that we are on right now is really kind of evaluating where we are at. We have been doing that for the past couple of months. We have not we have not not just starting that by any means.

And it is really looking at our internal technology and our customer facing technology, where we need to play, where we do not need to play. I have talked about this before in certain conferences. You know, where we brought in some third parties to really help evaluate where we are at and where we need to go. And we are getting the outputs of those now. We are putting the plans together. Look. I will talk more about that as we kind of build the elements As a previous question asked, we build the elements into, you know, what are strategic actions are gonna get us.

But certainly, it is a big piece of what we are focused on right now and how we prioritize, how we invest, how we expect the returns of those. Look. We have got some third party integrations we are working through right now that we have announced We are super excited about those. We think they drive you know, not just efficiencies, but they drive top line. They drive POOL360 adoption in some areas as well. So, it is not something we are just sitting and waiting on, but more to come.

Yes. I would say that the our focus in the quarter has been on really all of the priorities. So we have work streams that are occurring in each of those areas that we are making really strong progress for to set us up for next season.

Yeah. Well, look, as I said earlier and as you have heard from others, not just in this industry, but in consumer discretionary space no matter what it is. I do not think anybody's looking at 2027 right now and saying it is going to be materially different than 2026. So I think we are all internally on what we need to do. We think we have got, you know, a lot of self help initiatives that will put us in a good spot next year.

We think we are seeing some of the green shoots of that right now. Obviously, it is 1 quarter. We are not taking a victory lap, still have a lot of work to do. And things can change between now and the first of the year. So short answer is, we are expecting it to be, you know, kill everything you can and that is all you are gonna get. The market's not gonna give you anything for free next year, and we are positioning the company to go take what we can get.

Yeah. From a pricing standpoint, you know, we would expect the comparison to be more difficult in the fourth quarter because we did have better pricing in the fourth quarter of last year. So no negative trends on the volume side.

Yeah. I mean, we have talked about this, a good bit. About, you know, what the long term algorithm is. And what the market gives us now and what the market should normalize in--we would hope normalize in the future. So short answer there is yes. We will we will have a deeper discussion on that. And I have been very clear and on the record, you know, if we could get back to a normalized environment, you know, 80 thousand roughly 80 thousand you know, new pools and some other things.

I think the long term algorithm as it is been in the past is fine. it is really what we are all challenged with, I would say, is trying to figure out when that is gonna happen.

So for the. Related to the building materials, so a couple of fine points. I did call out that it is about 11% of sales for the quarter, so it is just a portion of the sales. And then that price increase also did start kind of mid quarter. So we did get some incremental benefit. We did report a slightly higher pricing benefit for the quarter than what we had talked about and included in our forecast discussion. Last quarter, so that helps to quantify the kind of the scoping on the building materials overall.

And then as it relates to the pricing on the rest of it, again, we would look toward those pricing actions in early season for 2027. And then, you know, we also, you know, we did talk about earlier in second quarter that we did put a freight surcharge in for the products that we deliver. Which, again, is just relates to a portion of our business overall.

Yeah. Some of it was 1-time specialized for the team. Obviously, we are. As we go into next year, something else we have we have talked about a good bit is making sure the incentive plans are aligned correctly. And really kind of pay for themselves as we grow. So I would not look at it as any sort of structural change or any sort of long term negative impact.

Yeah. I think overall, we were we were pleased with all markets, all things considered. So getting a little bit more detail there, you know, we had some structural changes in the beginning of the year that put us in a position to be a little more customer focused. A little more emphasis on the customer. I mean, obviously, we have been out, you know, talking to our employees, talking to customers, removing friction points. that is really gone a long way.

Also, a little bit of connectivity throughout the organization. Right? We have got a lot of scale that we can utilize as we talk about to win locally. And I think we are seeing some benefits of that. We just had our international sales conference I discussed in my opening remarks. Part of that was we got to celebrate some really nice wins where we talked about you know, how we understood the specific needs of the individual customer and kinda rallied the troops around how we offer differentiated, I would say, program process, you know, to help them grow their business.

And that varies. I mean, it is there is just no 1 answer to all that. The key is being able to operate and execute locally on whatever your market requires. A piece of that is product mix, you know, a piece of that service related. I think we are very good in some of those areas. I think there were some things we just needed to adjust as we go. And we certainly have. But I just cannot just do not underestimate the impact of getting back to basics and it all starts with listening.

Listening to the customers, listening to the employees, And I wanted to call this out too. You know, we work very closely with our strategic suppliers throughout this quarter on programs. And these programs are usually place year over year, but I felt like we did a little bit better job this year of trying to execute on the programs as they came in. In the various parts of the season, particularly in Q3. And I think that really drove a top line benefit for us.

So as we move forward, it needs to be more of the same. Last thing I will touch on is national accounts. Obviously, we brought in a new leader there. We have had some new talent within that organization. We have seen some really good benefit there, some really good growth. Again, it starts with listening, and I think the difference there is you are talking about kind of bigger organizations So we really work to connect our organization with their organization, and all the departments.

And I will tell you, just a few conversations we have had with some of these large customers, many more to come. Have uncovered some pain points and some opportunities, and we are executing on those. So very early innings, Really happy about the quarter. Very positive. We got a long way to go here, but excited to see kind of the foundation get put in place.

Yeah. I mean, for us, it is pretty simple. You go where the market goes. And sometimes the market moves and sometimes we have opportunities to be more efficient in some areas with you know, we have got a big network, and we can do lots of that network in a lot of different ways. So, you know, if a market's moving in a certain area and we understand, you know, the needs of the customer there and you know, proximity is key here.

Proximity, product, you know, amount of drive times you have with service and things like that. Then we will grow accordingly there. And that is that is really where our focus remains. You know, because our network is really big too, especially in these larger markets, you know, we can do some things differently some of our competition. You know, we can we can stage some products in some areas that can be shipped, and then, of course, we can be more service focused in others.

So that is that is really kind of the basis of the way we look at it. You know, as we look to the future, we will also be, open to different ways of serving our customers. Right? And it does not always have to be a 30 thousand- or 40 thousand-square-foot building. So I think again, the key here is that we have the agility and the flexibility to do what we need to do. And in some cases, the market moves away from a particular area, or we see benefit for, consolidation and efficiencies. there is no reason not to take, advantage of that as well.

Yeah. So on the first 1, no, it was not it was not retention based. It was more about those that are in the field executing day in and day out, working 10, 12 hours a day. We wanted to incentivize, you know, their hard work, and definitely came through, and we appreciate that. And we appreciate the efforts of all of our employees. So but it was not it was not retention based at all. Now as we move forward to more about the sales excellence, the medium and small cost customers, what we do in a local market, You know, there is a balance, and I have said this, from my time in my previous role as well.

Distribution works best when it is balanced. When you are utilizing your scale to win low And I know that is not just a tagline, but it is really listening to those individual, service center managers, regional managers, and the GMs about what they need to win locally. And that is a different conversation by the branch. Obviously, it starts with having the right product mix, the right depth, all that. We are we are we are pretty good at that.

The technology even that we utilize branch to branch can change a little bit depending on what the customer segmentation is. Right? Is it more service? Is it more builder? Whatever it is. So, therefore, the service I would say, component of that changes as well. So, it is never just a 1-size-fits-all, and I am not sitting here saying we were using a 1-size-fits-all. fits all. I just when I came in to the organization very early on, I felt like we could be a little more flexible in the field.

To empower our people to go win. We could listen to the customer and figure out what those friction points are and address accordingly. But as I said earlier, you know, there is no 1-size-fits-all fits all approach to this. You listen to your people that are closest to the customer. You certainly listen to the customer. You certainly partner up with your strategic suppliers. And out of that comes some pretty good ideas because we have got some pretty smart people in all those areas and then you execute on it. it is, again, distribution 101 and that is why we really harp on getting back to basics.

Yeah. I would not view national accounts as just expense oriented pressures. It just operates a different way. Now good news is in my previous company, we were very big at this. So but make no doubt about it. It happens at the local level. So what this individual has is 1, a lot of experience working with national accounts. And as I touched on in an earlier question, it is really about connectivity throughout the organization.

You are connecting with their supply chain. You are connecting with their IT. You are connecting with their marketing. You are figuring out how you integrate better. And also, a big piece of this is consistency across the organization. I mean, these are multisite multistate organizations. They want to operate. You know, sometimes they wanna, you know, consolidate around a particular product or product group. Sometimes they wanna get into new product groups.

How can we help them with that? So you need a central point of contact to have that consistency and to help the field execute, not execute on behalf of the field. I think that is the biggest piece here is this is to support the field efforts in a consolidated manner. Many of these customers, like I said, you know, they are they are looking at their spin. Want certain chemical programs. They want certain equipment programs.

They want certain deliveries. They want certain connectivity. You just cannot do that trying to get 7 or 8 or 9, 10, or 15 in a room and figure it out. that is really where this national accounts team does an excellent job.

Yeah. And, you know, we-- I would say we have. I know that is. This is more Melanie's realm, I am gonna ask her to tie in here in a minute. You know, look, there is there is some opportunities out there on M&A. We have got a much more healthy pipeline now than we did just a few months ago. So I am excited about our prospects. Obviously, nothing to announce today. As we talked about in our capital allocation strategy, not much has changed.

But buybacks are a part of that, and there is certainly plenty of authorization left to buy back shares at the lower valuation that we have seen. So Melanie, anything you wanna add?

Yeah. You will see that we did do a nice step up in our buybacks during the quarter. A lot of that has to do with the cycle of the way that our cash flow comes in. So, typically, in the beginning of the year, we are using cash because we are investing in inventory. In first quarter, we are paying our early buys in second quarter. And so third and fourth quarter is when we generate the bulk of the cash flow for the year. And so our share buyback process really just kind of follows that excess cash flow timing.

I would just say overall in the chemical space, this has been a really good bright spot for us. There has been some price deflation year to date. I would say it is moderating a little bit. So our growth there has been has been volume and a lot of volume. So, but we put some investments in that as well going into last year that I think have paid off as we have worked through 2026 and should continue in 2027 and 2028.

So look, overall, we are very bullish. Chemicals is what gets a lot of people in the door. So, I am really excited about where we are at. And what we are seeing in that product group now and in the future. I would not say any sort of bankruptcy has impacted that 1 way or the other. that is a little too early to tell.

Thanks. As I close, I wanna share what drives my confidence about where POOLCORP is headed. We operate an industry with a durable foundation. And customers who rely on us season after season. On top of that foundation, we have something no 1 else in our industry can easily replicate, a network of local sales centers, backed by the scale of the largest distributor in the industry. When we put more of that scale behind our people, closest to the customer, we win in local markets.

This is the heart of our strategy. We are building stronger sales capabilities, sharper pricing, and supply chain discipline and a more connected network. We are investing in the tools to ensure we are the easiest distributor in the industry to do business with, we are doing it from a position of financial strength. With the flexibility to invest in our business, pursue strategic M&A that expands our network, and return capital to shareholders.

We look forward to sharing more about these opportunities at our Investor Day in the first half of next year. And when we report full year and fourth quarter results on February 18, 2027. Thank you for your time today and your interest in Pool Corp.