Pool Corporation (POOL): Cash-Flow Resilience Meets Margin Pressure

Berkshire’s move and a Q2 beat set the stage#

Berkshire Hathaway’s roughly +137% increase in its Pool Corporation ([POOL]) position to about 3.46 million shares (~$1.01B) in Q2 2025 is the defining near-term catalyst for the stock, and it arrives alongside a quarter that showed earnings resilience. Pool reported Q2 2025 diluted EPS of $5.17 vs. a consensus near $5.12, and net sales of ~$1.8 billion, with management reiterating the company’s emphasis on aftermarket and maintenance revenues as the stabilizing core of its business. Those concrete developments — the Berkshire stake and a narrowly positive earnings surprise — explain the renewed market focus on Pool and create the opening for a deeper financial and strategic read-through. According to Berkshire’s public filings and Pool’s Q2 release, the moves reflect portfolio-level capital allocation decisions and operational outcomes that matter for investors monitoring quality cyclical names SEC Filings Pool Corporation Investor Relations - News Releases.

Investors should not treat Berkshire’s purchase as a short-term technical trade signal; it is better read as validation from a long-term capital allocator prioritizing durable cash flow and distribution advantages. Pool’s Q2 beat was modest but meaningful because it came while management tightened full-year cadence to reflect softer discretionary spending. The quarter therefore reinforced the narrative that Pool’s maintenance- and aftermarket-heavy mix provides downside protection even as new-pool activity remains rate-sensitive. Those earnings figures and Berkshire’s position together create a clear question for stakeholders: can Pool sustain cash generation and margin recovery while revenue growth stalls?

The rest of this report connects Pool’s recent results to multi-year financial trends, the company’s competitive positioning, and the capital-allocation choices that determine shareholder returns. We reconcile apparent data discrepancies in published TTM metrics with year-end balance-sheet snapshots, quantify leverage and cash-generation patterns independently from the raw filings, and translate those calculations into practical implications for investors assessing the company’s risk/reward profile.

Financial performance: revenue, margins and cash-flow dynamics#

Pool’s most recent full-year revenue (FY2024) was $5.31 billion, down from $5.54 billion in FY2023, a decline of -4.16% YoY using the company’s reported totals. That same period saw net income fall from $523.23MM in 2023 to $434.32MM in 2024, a decline of -16.99%, reflecting margin pressure and lower operating income. Those changes are arithmetic consequences of a revenue mix shift away from higher-margin new-construction sales toward maintenance and aftermarket product sales, combined with expense dynamics that compressed operating leverage in 2024 Pool Corporation Investor Relations - News Releases.

Profitability ratios tell the same story at the margin level. Using Pool’s reported FY numbers, gross profit declined to $1.58B in 2024 for a gross-profit ratio of 29.66%, down from 31.29% in 2022. Operating income in 2024 was $617.2MM, yielding an operating margin of 11.62%, down from 16.60% in 2022. Those year-on-year compressions quantify how much mix and cost pressure have cut into operating leverage over the last two years. The operating-margin decline from 2023 to 2024 alone is roughly -1.86 percentage points, and the multi-year trend is clearly downward compared with the 2021–2022 highs.

At the same time, Pool’s cash generation remains a relative strength. Fiscal 2024 produced net cash provided by operating activities of $659.19MM and free cash flow of $599.71MM, which implies a free-cash-flow margin of ~11.30% (FCF / revenue) for FY2024 when calculated from the reported numbers. Free cash flow conversion versus the GAAP net-income cash-flow line is strong: using the 2024 cash-flow statement, FCF of $599.71MM divided by net cash-income of $432.07MM (cash-flow table net income) gives a conversion ratio of ~138.8%, illustrating that reported net income understates the company’s capacity to produce distributable cash in the year. That conversion explains why Pool has continued to fund dividends and significant buybacks despite the EPS pullback Pool Corporation Investor Relations - News Releases.

Table 1 below summarizes key income-statement trends for FY2021–FY2024 and shows the YoY changes we calculate from the company filings.

All figures above are calculated from Pool’s year-end financial statements; percentages are derived by dividing the line item by revenue and rounding to two decimal places Pool Corporation Investor Relations - News Releases.

Balance-sheet profile and leverage recalculated#

Pool finished FY2024 with total assets of $3.37B, total liabilities of $2.09B, and total stockholders’ equity of $1.27B. The company carried total debt of $1.27B and net debt of $1.19B at year-end 2024. Using those year-end snapshots, a simple balance-sheet leverage calculation (total debt / total equity) yields ~1.00x (1.27 / 1.27). This is different from several published TTM ratio lines that report debt-to-equity ~1.20x or other figures; the discrepancy arises because some TTM metrics use trailing adjustments or different aggregates (for example, market-value denominators, average-equity bases, or EBITDA measured on a TTM basis). We prioritize the year-end balance-sheet snapshot for static leverage statements and highlight the TTM differences when they matter for covenant or market-comparison work Pool Corporation Investor Relations - News Releases.

Net-debt-to-EBITDA is a common covenant and risk metric. Using FY2024 net debt ($1.19B) and FY2024 reported EBITDA ($662.68MM), we calculate net-debt/EBITDA ≈ 1.80x (1.19 / 0.66268). That is materially lower than some published TTM values (≈2.32x) and signals a more moderate leverage position on a year-end basis. The divergence again reflects periodization differences: if EBITDA is measured over trailing 12-months that include stronger earlier quarters, or if net debt includes post-year-end draws, that ratio will change. On the evidence in Pool’s FY2024 filings, however, leverage appears manageable and well within typical rating-agency tolerance for an investment-grade-ish distribution business with stable cash flows Pool Corporation Investor Relations - News Releases.

Table 2 below synthesizes the balance-sheet and cash-flow metrics we calculate from the company statements to aid direct comparisons.

All balance-sheet and cash-flow items are taken from Pool’s FY2024 annual financials; ratios are calculated from those raw line items Pool Corporation Investor Relations - News Releases.

Capital allocation: dividends, buybacks and the cash conversion story#

Pool’s capital-allocation pattern in the last several years has been heavy on returning cash to shareholders via a combination of quarterly dividends and material buybacks. In FY2024 the company repurchased $306.3MM of stock and paid $179.63MM in dividends, while generating $599.71MM of free cash flow. Using the FY2024 figures, the cash returned to shareholders (buybacks + dividends ≈ $485.93MM) represented ~81.0% of free cash flow for the year, calculated as 485.93 / 599.71. That degree of deployment shows management’s preference for shareholder returns even as revenue growth stalls.

The company’s reported dividend per share on a TTM basis was $4.90, which corresponds to an indicated yield near ~1.54% given the current price in our dataset ($317.85). Pool’s reported payout ratio lines vary slightly depending on EPS basis (GAAP EPS vs. adjusted EPS), but using dividends paid vs. cash-flow-net-income gives a cash-based payout near ~41.6% (179.63 / 432.07) for FY2024. The difference versus some published payout figures reflects whether analysts use GAAP EPS, adjusted EPS, or cash-flow metrics to compute payout ratios, and it reinforces the point that Pool’s cash returns are funded largely from free cash flow rather than financial engineering.

Share repurchases have been an important lever. Purchase activity is large relative to market cap (market cap reported in the data is $11.86B), and the company used roughly $306MM in 2024 after heavier repurchases in 2022. Continued repurchases reduce share count and can support EPS in a slow-revenue environment, but they also consume balance-sheet flexibility and are sensitive to market-price and liquidity considerations. On Pool’s 2024 numbers, buybacks look sustainable if free cash flow remains in the high hundreds of millions, but any durable slide in cash flow would force rebalancing between buybacks and dividend maintenance.

Competitive position and strategic levers: moat, mix and modernization#

Pool’s structural advantage is distribution scale. Public and industry commentary point to an estimated U.S. distribution market share in excess of ~65% for Pool, a share supported by an expansive sales-center footprint and long-standing supplier relationships. That scale produces purchasing leverage, faster inventory turns, and better fill rates for commercial and retail customers — factors that protect margin under pressure and sustain aftermarket share gains. Pool’s network effects are not easily replicated and underpin the argument that the company operates a durable distribution moat Pool Corporation Investor Relations - News Releases.

A second strategic lever is revenue mix: aftermarket and maintenance products (chemicals, replacement parts, routine services) are less cyclical than new-pool construction and generate recurring demand from existing pool owners. When new-pool activity decelerates because of higher rates or softer housing markets, maintenance revenue tends to hold up. Pool’s FY2024 results show this dynamic: total revenue declined while maintenance-oriented sales provided the cushion that preserved cash flow and allowed continued shareholder returns. Management’s ongoing investment in omnichannel tools (notably the POOL360 platform) is aimed at capturing more of that aftermarket wallet share by improving order fulfillment, commercial-account management and recurring-order convenience.

Operational modernization is an important but incremental advantage. Digital tools and logistics improvements can raise customer retention and lower order costs, but they also require continuous investment and execution discipline. Pool’s capital expenditures were modest (investments in PP&E of $59.48MM in 2024), and the company has shown moderate operating leverage when topline pressures ease. The central question is whether digital and distribution investments can offset secular pressures to new construction margins and create sustainable margin expansion. Historically, Pool has delivered high ROE numbers during favorable cycles, but recent margin compression suggests the payoff from investments is not yet large enough to offset mix headwinds fully.

Historical execution and management track record#

Management’s track record shows steady cash generation and willingness to return capital. Pool grew free cash flow from $275.8MM in 2021 to $599.7MM in 2024, a multi-year increase driven by operating improvements and cyclical peaks. However, earnings volatility around revenue mix is real: net income peaked in 2022 at $748.5MM before normalizing. Management has shown discipline in maintaining dividends and opportunistic buybacks, but the balance between returning capital and preserving optionality for acquisitions or larger strategic investments is a recurring board-level decision.

Historically, Pool has used M&A selectively (smaller strategic tuck-ins) to expand distribution reach and product breadth. Acquisitions in the multi-year dataset are small (acquisitionsNet in FY2024 was -$4.69MM), and the company has avoided large transformational deals that would materially change leverage or execution risk. That conservatism aligns with a capital-allocation posture focused on compounding through distribution dominance and steady free-cash-flow reinvestment.

Berkshire’s purchase in Q2 2025 can be read as confirmation of that execution record — an endorsement of durable cash-flow generation and a distribution moat that fits certain long-term portfolios. Yet Berkshire’s allocation also underlines that Pool is being valued as a high-quality, defensive cyclical rather than a fast-growth story.

Risks, headwinds and data caveats#

Pool remains exposed to cyclical demand in new-pool construction and large renovation segments, which are sensitive to mortgage and consumer-credit costs. If rates remain elevated or housing investment slows materially, revenue could compress further and pressure operating leverage. The company’s margins are also vulnerable to commodity and chemical-cost swings and to supplier or freight disruptions that could erode gross margins if not passed through to customers.

From a data and metric perspective, several commonly quoted ratios in third-party feeds differ from the year-end numbers we calculate from Pool’s filings. Examples include reported TTM current-ratio and net-debt/EBITDA lines that do not match our year-end snapshots. These differences frequently result from (a) using trailing-12-month aggregates for EBITDA or cash flow, (b) averaging equity balances, or (c) employing market-cap-based denominators for leverage metrics. We explicitly highlight these gaps so readers understand why a TTM ratio in an analyst’s dashboard may diverge from a direct year-end balance-sheet calculation and why reconciliation is necessary for covenant or relative-value work Pool Corporation Investor Relations - News Releases.

Competitive threats remain meaningful. Leslie’s Inc., Fluidra, and regional distributors can pressure localized margins, and e-commerce entrants create pricing transparency that can compress aftermarket margins over time. Pool’s defense is scale and supplier terms, but scale does not immunize the company from aggressive price competition in specific SKUs or from broader secular changes in consumer behavior in outdoor living.

What this means for investors#

Pool is a classic “quality cyclical” in which business durability and cash-flow conversion matter more than headline revenue growth in the near term. On Pool’s FY2024 numbers the company generated $599.7MM of free cash flow, returned ~$486MM to shareholders through dividends and buybacks, and finished the year with net debt of ~$1.19B and a year-end net-debt/EBITDA of ~1.80x (our calculation). Those facts together create a practical framework for investors: the company has the cash-flow capacity to maintain dividends and meaningful repurchases, but margin recovery or revenue stabilization will be required to materially improve earnings-per-share growth without leaning further on buybacks.

Berkshire’s increased stake functions as a high-profile signal that a value-oriented, long-term allocator sees Pool’s distribution moat and cash-flow profile as durable. That endorsement matters for investor psychology but does not change the underlying financial mechanics: Pool still needs to navigate a cyclical consumer-environment and translate modernization investments into margin expansion to restore multi-year EPS growth. For investors focused on cash income and distribution moats, Pool’s high cash conversion and steady dividend are attractive characteristics. For investors looking for rapid revenue expansion or double-digit EPS growth, Pool’s current profile is less compelling.

Key takeaways#

Pool is delivering durable cash flow and returning a large share of that cash to shareholders while facing revenue and margin pressure from mix shifts and a softer new-construction environment. Our independent calculations from FY2024 filings show revenue down -4.16% YoY, net income down -16.99%, free cash flow of $599.71MM, and net-debt/EBITDA ≈ 1.80x on a year-end basis. Management’s capital allocation (dividends + buybacks ≈ 81% of FY2024 FCF) signals confidence in cash generation but also leaves less flexibility for larger strategic moves without improved operating performance.

Berkshire’s stake increase amplifies the company’s narrative as a defensive, cash-generative distributor with a defensible moat. That institutional validation is meaningful but should be viewed alongside the multi-year margin trend and the company’s exposure to cyclical new-construction demand. Pool’s key strategic levers — distribution scale, aftermarket mix, and digital tools — are real and relevant, but their payoff will be measured in margin stabilization and steady top-line improvement, not in quick re-acceleration.

Appendix: Sources and methodology
All primary financial figures and line items are taken from Pool Corporation’s FY2021–FY2024 financial statements and Q2 2025 disclosures as published on the company’s investor-relations site and public SEC filings. Berkshire’s position changes are recorded in SEC filings. Where third-party TTM aggregates differ from direct year-end calculations, we note the divergence and explain likely drivers (TTM aggregation, averaging, or market-value denominators). Key sources: Pool Corporation Investor Relations - News Releases and SEC Filings - Berkshire Hathaway (13F and quarterly disclosures).