Mega-distributor PoolCorp has made its way into the Australian pool market.
The Covington, La.-based distributor purchased a majority interest in Pool Systems Pty. Ltd., based in Brisbane, Queensland. The PoolCorp funding then allowed Pool Systems to acquire fellow Aussie distributor Niagara Pool Supplies of Sydney, New South Wales. Both have had a presence in their markets for more than 30 years.
With PoolCorp already maintaining strong presences in most of the world’s Top 5 pool markets, as well as a host of other countries, this was a natural move, said Manuel Perez de la Mesa, PoolCorp’s CEO. “We had been looking at Australia since 1999, and the right opportunity didn’t come along, and now it has,” he explained.
This transaction now brings the number of sales centers operated by PoolCorp to 329 across North America, Europe, South America and, now, Australia. Pool Systems has one location serving the Brisbane market, while Niagara has two — its Sydney headquarters and another in the Brisbane area. Together the firms serve a large swath of eastern Australia and, said a PoolCorp official to the press, combine to create the largest distributor in the country.
“We were looking at entering the marketplace and, at the end of the day, it’s more efficient to enter with both Pool Systems and Niagara at the same time than doing one and then another a year or two later,” Perez de la Mesa said.
Still, distribution is not nearly as centralized Down Under as it is in the United States.
“In Australia, the market is very fragmented,” Perez de la Mesa said. “There are maybe half a dozen players. It’s no different than the United States 20 years ago. [Pool Systems and Niagara] are important distributors in the markets that they participate in, but they are by no means the largest distributors in that market. But as we invest and gradually provide more value in the marketplace, they will grow in size.”
While there are no specific goals for the acquired companies, PoolCorp intends to grow their presence eventually throughout the country, whose population mostly resides on the eastern and western areas. As in the United States, said Perez de la Mesa, PoolCorp will likely achieve this through acquisition and organic growth. “Without putting a time on it, ultimately we would like to be the best distributor in Australia, and I distinguish between best and largest.”
But there will be a breaking-in period because business isn’t done there exactly as it is in the States, he added. In Australia, some manufacturers also serve as distributors of their own products, which Perez de la Mesa hopes to change.
“Manufacturers in Australia that may have struggled and been compelled to invest in distribution as a way to access the market efficiently may now look to us as a distribution partner, whereas maybe they did not have that same level of confidence, wherewithal or ability to do that before,” he said. “For example, let’s say Manufacturer A went to that market and in certain parts of the country had good distributor relationships. In other parts they may not have had good distributor relationships and may have chosen to distribute product themselves because of those lack of relationships. Now we potentially become a very viable alternative for them.”
Two of these hybrids are internationally known Astral and Waterco, which also have some degree of retail presence. “So that’s a different animal that we will be competing with,” Perez de la Mesa said.
This is more good news for PoolCorp, which reported an 11 percent increase in earnings for its second quarter. Net income rose to $73.9 million ($1.61 per diluted share) from April to June, compared with $66.5 million ($1.39 per share) during 2013’s second quarter. Stocks were up 3 percent on the morning of the reporting. Sales rose 7 percent, to $848.2 million.
In this year’s first quarter, the distributor acquired four more U.S. locations — two each from Atlantic Chemical & Aquatics Inc. of Bedford, Nova Scotia, Canada; and Dallas-based DFW Stone Supply, LLC.