Mark Joslin - SVP & CFO Manuel Perez de la Mesa - President & CEO.

David Manthey - Robert W. Baird Kenneth Zener - KeyBanc Matt Duncan - Stephens David Mann - Johnson Rice Anthony Lebiedzinski - Sidoti.

Hello and welcome to the Pool Corporation First Quarter 2016 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr.

Mark Joslin, Senior Vice President and Chief Financial Officer. Please go ahead..

Thank you, Amie. Good morning, everyone, and welcome to our Q1 2016 conference call. I would like to remind our listeners that our discussion, comments, and responses to questions today may include forward-looking statements, including management's outlook for 2016 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 is discussed in our 10-K. With that I will turn the call over to our President and CEO, Manny Perez de la Mesa..

Thank you, Mark, and good morning to all on the call.

Well, favorable markets -- excuse me, favorable weather in many markets including both, the acceleration of Pool opening and seasonal markets, and increased ability for customers to perform, remodel, replacement and new construction activity was the significant contributing factor to our 13.5% base business sales growth in the quarter.

The other significant factor was our increase in early buy shipments to help position our customers for the upcoming season. Altogether, we believe that almost one half of our first quarter sales growth or sales that would naturally have been realized later in the year, primarily in the second quarter.

We are fortunate and that we can operationally support these increased sales efficiently in the first quarter which will help us realize strong operating leverage again in 2016. There will be material sales led -- again led the way with 15.4% growth in the quarter including both, industry growth and market share gains.

The industry growth encompasses the ongoing gradual recovery of remodeled activity, as well as the benefit from the favorable weather. Commercial product sales were up 19.2%, given the favorable weather and market share gains. We are on-track to surpass $100 million in commercial product sales in 2016 and industry first for any distributor.

The best illustration of the impact of weather in the quarter was retail product sales increasing by 18.4%. With a pool installed base up roughly 1%, this kind of sales increase for pool maintenance and repair products is primarily a shift from the second quarter although we did pick up some market share.

These gains though were dwarfed by the favorable market conditions. Gross margins were modestly up with full year gross margins anticipated to be essentially flat with 2015.

On the expense front, the leverage benefits become apparent as increases were primarily volume driven freight costs and variable compensation creating positive momentum for another year of operating margin expansion.

The increase in our annual guidance, our earliest in four years factors in all that we know at this time while considering that we are just now entering the busiest time of the year.

It is also the time of the year when our service level and value proposition are most distinctive enabling our customers to be more efficient and realize greater success. Now I'll turn the call over to Mark for his financial commentary..

Thank you, Manny. I'm going to start my comments today by putting additional emphasis on the weather impact on our business at this time of year.

As noted in our press release and as Manny commented on, the warmer than normal winter and early spring benefited our seasonal markets by allowing the construction and renovation of pools that occurred in the fourth quarter of 2015 to continue in many of these markets into 2016.

And markets that are capacity limited due to a combination of demand and market seasonality, we believe that this activity will be a net benefit for us in 2016. In other markets, this activity could be a pull forward in business for later in the season.

Another impact of the warm weather and the seasonal markets is the earlier than usual opening of pools which was further helped by the Easter holiday song in late March this year compared to early April in 2015. Easter is the time in many seasonal markets when pool owners traditionally open their pools.

As we've mentioned in the past, pool openings drive industry revenue and seasonal markets as higher loans, maintenance supplies, and equipment repairs are often necessary when opening the pool after the winter season.

While there is some benefit to us and the industry from the longer pool season, the primary revenue event by the early pool openings result in the shift of revenue from later in the season to earlier in the season. The third and final point to make on Q1 weather benefit relates to customer early buy activity.

I mentioned on our last call that we expected higher Q1 early buy sales as retailer stock up ahead of expected seasonal demand which turned out to be the case. This increase in customer early buy activity was a pull forward of sales from the second quarter into the first quarter as we've mentioned.

The bottom line in all this discussion is that we do expect to benefit for the year from the early warm weather and seasonal markets with the primary benefit coming from increased Q1 construction and renovation activity with an estimated impact of $15 million in sales and roughly $0.05 in earnings per share which is reflected in our new guidance range.

Our second quarter results will likely be adversely impacted by the acceleration of events mentioned with more modest revenue growth than otherwise expected. Our listeners can estimate for themselves what they believe the revenue and earnings impact from this will be. At this point I'll turn to a discussion of our operating expenses.

In preparation for my remarks this morning, I referred back to my commentary from our year-end call two months ago where I discussed our expense management targets and our success in achieving those targets in 2015. Given our start t0 2016 I think it's appropriate to reiterate a couple of points I made then.

First, this year like every year we want to leverage our infrastructure to grow our operating income at a faster rate than our rate of gross profit growth. And we do that by targeting expense growth at about half the rate of gross profit growth. We've been relatively successful at doing that overtime and we obviously have a jump on that goal in 2016.

Keep in mind, however, that the seasonality of our business plays into this objective as we have more operating capacity in our seasonally slower first and fourth quarters than we do in our second and third quarters. So the timing of our revenue growth helps determine how much operating leverage we will achieve for the year.

The magnitude of operating leverage we reported in the first quarter should not be -- would not be possible for us in season.

In other words, if I were modeling out my expectations for the rest of the year I went down back some of the enthusiasm I might have taken from our first quarter results in projecting operating expense leverage for the balance of the year.

Moving over the balance sheet and cash flow, our total net receivable growth of 19% year-over-year is reflective of the mid-teens rate of sales growth in the quarter plus the additional billing day in the month of March. The quality of our receivables remains high as they have historically.

Likewise, our other significant asset inventory grew at a rate that is aligned with our anticipated seasonal demand, so nothing particularly notable here.

Despite these year-over-year working capital increases, our cash use from operations was lower than last year as we're able to differ payment for inventory purchases who are participation early -- vendor early buy programs in addition to benefiting from the increase in net income.

As is the case every year, our goal on cash flow from operations is to exceed net income which in turn supports our objective of growing our return on invested capital.

My last point is to make -- well, my last point to make is on our share repurchase activity in the quarter which consisted of buying 822,000 shares at an average price of $76.85 per share for total use of cash, $63.2 million during the quarter.

I should also point out that the forecast and share count for the year that I provided on our last call remains largely unchanged as a reduction in shares from our share repurchases, is offset by the share delusion we now expect from the increase in our share price so far this year.

At this point, I'll turn the call back over to our operator to begin our question-and-answer session..

Thank you. [Operator Instructions] The first question is from Ryan Marco [ph] at William Blair..

Hey guys, good morning, nice quarter..

Thank you, sir..

So, I just want to be clear you beat by $0.13, you raised the guide by $0.05, so most of the beep is just a shift from the second quarter to the first quarter.

But the raise of $0.05, what was that for? Is that just a better market, better margin performance, what was that for?.

Well, as Mark just mentioned Ryan, there was some benefit that we had because there was some business that took place, that was not a pull forward.

So for example, there were some remodeling activity that took place that just enables our customers to have a longer work here by virtue of the fact that they were able to get some of them worked done in the February/March timeframe..

Got it, makes sense.

And then I know Mark said, we should try to forecast what we think Q2 will but what -- can you give us a little help Manny in terms of roughly where you think that sales might shakeout year-over-year in the second quarter? And maybe comment on April if you're sort of already seeing this sort of step down the growth rate due to the pull forward..

Sure. I would think that the second quarter which is, as you know by far the biggest quarter of the year; a 5% to 7% type growth number is a reasonable expectation. And there are some pluses and minuses there, the minus being obviously some of the volumes that were happening in March that would otherwise happened in April or May.

And the other part of the benefit, the other side is that we had extensive rains in Texas an adjacent states through the better part of six weeks last year that hurt our business. So I think a 5% to 7% is a reasonable expectation for the second quarter and we are pretty much tracking at that rate to-date in April.

With respect to the rest of the year, it's tough to gauge, there is -- as you know, September to December was very positive, so the back half of the year I think 5% to 7% is reasonable and therefore realistically we should finish the year at 6% to 8% when you factor in the first quarter results.

Of course in all of this and what we stocking based business given that new locations and acquisitions don't generally provide a lot to the bottom line and end up being roughly 1% of sales..

Right. Okay, very helpful.

And then I don't recall that you -- did you mentioned the green business and the growth rate and sort of what you're seeing in California if that situation is getting any better?.

I did not mention the green business and the situation in California is, they've gotten a little better in the sense that particularly northern California have a lot more rain but this year's first quarter was milder than last year's first quarter in California.

So that's one area where the weather did not help us but again, net-net to the overall country and including Canada and other countries, our weather was definitely a big positive. Though the green business did not do as well, grow as strongly as the blue business.

And part of that is the fact that their west coasts waited, and the other part is that there are still some headwinds there from the draught repercussions affecting them in terms of timing on some of their business..

Okay, very good. I'll get back in line, thanks..

Thank you..

Our next question comes from David Manthey at Robert W. Baird..

Hi, good morning guys..

Good morning..

Hi, Dave..

You continue to do really well in some of the relatively newer offering like building materials and commercial products as you outlined but could you tell us what percentage of your sales are from new products that used just started distributing within the past year or maybe the past three years, just to give us an idea of the rolling impact of new products to your growth..

That's a very good question, David. The actual number is negligible in the last year. And the reason for that is, typically what we do is -- the process is a gradual process. We don't necessarily bring forth new products and blanket the country or for that matter all of North America and Europe.

What we typically do, test them in a few markets, gauge -- learn to gauge what success we had and why we had the success. Learn from that experience and gradually roll out those product categories, products acumens [ph] and targeted customers.

In some cases gradually overtime, so it may take us four or five years to get in essence, national distribution of a particular new product category. That's factor number one. Factor number two is, we're very cognizant of the capacity for both ourselves and our customers to address opportunities.

And in order for us to execute effectively, we typically limit how many opportunities we target in each individual market. And the focus there is effect of execution, not how many times you went back, it's how many hits you got and therefore because of that, that also results in us layering in those opportunities overtime.

So there are markets today in 2016 that are introducing to their customers products or going after certain categories that other markets may have done five/six years ago. And therefore on an incremental basis, year-on-year the impact is relatively speaking negligible now.

That perspective though is if you step back and say well, what's happened was for example, building materials as an overall broad array of products and the answer there is reflective of the fact that we've grown that product category by almost 20% per year for the past eight years.

And I think that's really where it kicks in, it's not a matter of the impact in year one necessarily but the impact four, five, six, seven, eight years out..

Okay, that's very helpful. And as a brief follow-on hear, as you look at the blue branches, I know in the past we've seen fire pits and pudding greens and some pretty non-traditional things that are going through there.

As you look out then over the next five or ten years and the prospects were continuing to add additional content into those blue branches over the next several years, it would seem that if you're still making headway in things like building materials that you introduced years ago there is still plenty of opportunity to add additional product as look forward.

Is that correct?.

That is correct. The – really, if you look at the outdoor living space certainly pools are important part of it, irrigation, in terms of providing the right landscaping, everything else is there.

But it is really wide open and it just boggles the mind, what we can do, and I'd like to emphasize the fact it is important that we have kind of -- when you look out into the future; we have opportunities for years to come. And it's just boggles the imagination of all that's out there that can be hacked.

And it's just a matter of making sure we execute our existing priorities so we'll be able to tackle new opportunities. And as we do those on our logical goal systematic way. To further capture all that's available.

When you look at -- and I know you're based in the Midwest or says it's perhaps tough to fully imagine but when you look at what's available in the Sunbelt and the fact that the growth of homes in the Sunbelt and the ability to enjoy the outdoors, it's healthy, the quality of family like is great.

And therefore all the products that help enhance that experience in my mind is just -- we are very early in that process..

Very good, thanks Manny..

The next question is from Ken Zener at KeyBanc..

Good morning..

Good morning..

So you guys outlined about half the growth or about $30 million which is about 4% growth year-over-year, it seems on the higher 2Q sales from last year. But when you think about Texas, which had so much rain last year and I believe you guys had flag comps.

And in California, in the second quarter I believe you guys said you had flag comps in the second quarter which led to your -- where earnings revision last year.

Briefly, how do you think in those two markets, in particular, red states, which are obviously very large, how do you think this pre-buy plays-in in those markets where your quote comps are easier considering you had flat sales?.

Great question, Ken. Two things, first is, we should have stronger comps in those markets and those markets are not as affected in the first quarter or net-net while there was some benefit, there was enough significant benefit net-net in those markets.

The markets that were more effective were the seasonal markets were pools are closed for the winter and then reopened, and the fact that when they are reopened a month or two earlier that stands a spike in activity. So that doesn't -- didn't play for Texas and California as much in the first quarter.

So the bottom line is, in those individual markets we should realize strong high single-digit sales which is in fact a recapture of some of the lost opportunity last year. But on the other hand, in the seasonal markets, that's the ones that were most affected and those sales should be more modest in the second quarter..

Okay. And then we have seen trends slowing on the existing home sales side in terms of turnover which is a slightly different driver for you all than many other building products companies but as this cycle ensures we continue to have very strong price gains.

Could you talk about -- I don't know if it's more on the hardscape side, just what insights you have into how your customers' customers are borrowing money to finance what could be a $15,000, $30,000, $50,000 discretionary project?.

Sure. What we began to see and really begin to see it in earnest in '15 is the banks beginning to loosen up and lends for home improvement and in that there are several aspects. One is just them being open to lend. Second, having realistic appraisals of values of the homes.

And third, going down below the foreseen credit scores to very good credit scores. And what that does, it basically brings in the target new in ground pool owner as the same target, by the way that applies to remodeling of kitchens, remodeling of bathrooms. And that targeted homeowner -- the top logic is, they are now beginning to invest.

It's early in the year so while we have permanent information for the major states, the four largest states that we look at every month.

Those permits are in essence overall flattish versus last year's first quarter but the indications are that as the year progresses we anticipate the gain, a little bit of momentum on the new pool construction side and expect to see some growth there in terms of 2016.

And really creating a stronger foundation for growth in '17, '18, '19 and '20 as the improved construction recovers as financing comes back to more normalized levels like it was back in the 80's and 90's..

Right. I guess you talked about credit scores held in implied LTVs, are there numbers that you have in your head that you might want to share with us? In terms of what your impression of the market is, I realize you're not -- you don't have a lending unit..

Right. While we play well for our sector is when they are lending, the loan-to-value is 80%, the values are current transaction values and the credit scores would be in the high 600s..

And then LTV, you're saying after the project or that's being triggered to let them do the….

Typically the LTVs are before the project which is apparently conservative because the projects add value whether it's remodeling a kitchen or adding a bill..

Thank you..

Thank you, sir..

The next question is from Gareth Smith [ph] at Longbow Research..

Thank you and congratulations. First question is just on product mix. You talked a bit about some of the pull forward effects from the favorable weather and the early start to the season.

I was just curious if there was any changes that you observed in the first quarter and perhaps your expectations for the full year with the mix of businesses as it pertains to discretionary versus non-discretionary spend?.

Sure. The non-discretionary spend or items in our case like chemicals, parts and accessories. And in year round markets that's fairly steady, in the seasonal markets there is a spike when the pools are opened and therefore, what we did see was a spike in some of those non-discretionary items; west pools were opened earlier than they were last year.

And in fact for that matter earlier they were in the last three years. So I think that's a factor here in terms of the discretionary spend items.

Discretionary spend items are two tiers; one is what we refer to as somewhat discretionary and that is for example; heating and lighting for existing pool, and maybe a deck around the existing pool, remodeling of a deck on an existing pool.

Those are kinds of -- that kind of behavior or process while certainly in seasonal markets the pools being opened earlier, warmer weather, some of that activity moves in by about a month, that's a positive.

But I think overall while we're seeing a trend since 2011 where there has been a gradual recovery of remodelling and replacement activity given the change in behavior, radical change in behavior that took place in 2008 and 2009.

It's still not quite a normalized behavior but it's getting closer and closer, we expect the industry to be at normalized behavior in terms of those kind of somewhat discretionary items for the next two or three years.

The last and most especially discretionary item is new pool construction and in the case of new pool construction, as we just talked earlier, the major factor is there that's really holding that back has been financing.

Historically about half of new pool construction, just like half of major home improvements were financed in some form or fashion by home equity whether there was a new first or second or home equity loans.

And therefore, that is -- has come back a little bit from the trough of 2009 but not very much and again financing is the key to help swing and open those gates and get back to normalized levels in the future..

Okay, thanks. I just wanted to shift to SG&A. Despite a very strong sales growth in the first quarter SG&A was very well controlled and you saw a 230 basis point decline in SG&A to sales.

I was just wondering if you can provide a little bit of hand holding on your expectations for SG&A through the balance of the year and particularly, if you could on the second quarter just given the pull forward of sales into 1Q, how should we expect the leverage to SG&A to progress here over the next several quarters?.

Sure. Just from a fundamental standpoint if you look at our SG&A, about 60% of the expense they fair is payroll related and then the other two significant factors there are facility costs and freight. So just to understand there is a fundamental baseline.

When we look at our peak times of the pool season which basically is April through August, and those five months we are -- I would say virtually at capacity which means that to the extent that blips in sales above expectations we'll drive more overtime, more contract labor and more third-party freight carriers.

So therefore, the leverage opportunity that exists beyond a pre-set expectation is not as strong as in the first and fourth quarters where we are in essence of -- volume of business is below our capacity.

So we can handle a lot of increase of activity like we realized this first quarter with virtually no increase in overtime or contract employees or third-party freight. So that's the consideration.

The leverage goes back to the premise that Mark outlined in the outset in the preferred marks and that is that, we target based on process improvements, technology, the greater use of technology, and the deployment of best practices throughout the organization.

We factor in a rate of sales growth that is greater than the rate of operating expense growth. And that's built inherently into our plans as part of our DNA and while at the end of day with that results in is that our operating expenses grow out at approximately half the rate of our sales and gross profit dollar growth..

One more thing I might add there, relatively significant part of our labor cost at least is incentive-based pay. And incentive-based pay, we record that throughout the year based on our expectations for the full year as well as how we're progressing throughout the year on those expectations.

And so if you go back to last year 2015, you recall that the second quarter was not particularly strong quarter for us, and so the incentive pay in that quarter was relatively low but as we progress throughout the year and finish off the year strong, we were able to increase that.

So when you look at the year-over-year change, this year versus last year, incentive pay will stick out in the second quarter, likely based on expectations as a fairly significant increase..

The next question comes from Matt Duncan at Stephens..

Good morning guys, congrats on a great quarter..

Thank you, sir..

So a lot of the bigger picture, so long-term questions have been answered so I want to focus on a couple of shorter term things. Just don't -- mainly on the weather in the second quarter, my recollection is last year it was kind of April and May when it was extremely wet in Texas.

We just had a major flood in Houston earlier this week but I'm assuming that the weather overall has not been nearly as bad, so is that what you're referring to as kind of the easier weather comp in Texas this year?.

Yes and obviously -- not obviously, the heavy rains in Texas and adjacent states really started it mid-April and ran through mid-June. So yes, we did have flooding earlier this week in Houston, certainly affected us adversely in the first two days of the week.

But having said that we're -- our expectations build in, built -- yes, basically build in normal weather. And in that particular case we are not expecting for example; 70 inches of rain in Dallas, Metroplex, compared to their normal 35.

So if we're building in, there are going to be loss days that happens every year and we're just building in normalized weather..

So were you seeing so far in Texas than the growth rate kind of more in that high single-digit range so far this quarter or is that sort of where you're tracking there?.

Well we were until Monday and obviously, Monday/Tuesday was a little bit of an aberration..

But we'll make that back up presumably if we don't have a repeat of that major flood as last year..

Exactly, throughout May and June, yes..

Okay, got it. And then Mark, just on the breakdown of sales growth and the various pieces of the business, could you maybe run through what growth was in the U.S.

blue, international blue and green business?.

Sure, I had in front of me. Our international, which is all blue business, was 10.5% in dollars. The overall blue business was a little bit over 14%, the green business was low single-digits.

Did that cover your questions?.

Yes, it does, it does.

And so on the international piece was currency I guess not much of an impact?.

Exactly currency was relatively speaking the non-issue in the quarter..

And then Manny, just on SG&A leverage. Obviously this was a good example of what can happen when you're in the slower parts of the year and you get a big revenue number but I'm also curious about how much capacity that business has from a fixed cost perspective to continue to grow.

And the reason I ask is because if we were to see even in the seasonal high points in your business, 2Q and 3Q, if you've got sort of high single low double digit growth, do you have the capacity to put up better leverage than -- sort of that target of operating profit growth, outstripping gross profit growth pretty significantly?.

Let me give you an example, oaky. So we have 13% -- 13.5% base business growth in the first quarter and we had base business expense growth of 3%. In the second and third quarters, if we were to have -- I'll just use a number 10% base business sales growth, our expense growth would be more like 5% to 6%..

Okay, that's very helpful.

And is that just a headcount or sort of seasonal headcount additions that you would plan to help handle those high points in the business?.

It would be contract employees overtime and then third-party freight carriers..

Got it, perfect. Okay, that's all I have. Thank you, Manny..

Thank you, sir..

The next question is from David Mann at Johnson Rice..

Good morning, let me add my congratulations.

Question about your market share gains, Manny, how much faster do you think you grew relative to the industry or in the other way, how much -- what do you think the growth was in the industry relative to your base business?.

What I'll call legacy products and legacy product categories, we probably grew at about twice the industry growth rate. And that would be right around double digits. And that's pretty much par for the course for the past 20 years we grow at about twice the industry growth rate..

And as the industry is coming into Q2, and you're sort of benefit a little more from that it seems like from the weather, already you see the industry or your competitors positioned, coming into the key part of the season or is this here an opportunity for you to continue to grab share at this pace or potentially even faster if they haven't replenished as fast as you?.

Well, we all replenish in a regular basis so I don't know that, that will be an adverse impact. I think see that T-factor there is, if we have 5% to 7% sales growth what that implies inherently is that the industry will grow at the balance of the year at about a 3% rate and that I think is a reasonable expectation..

Okay. And then housekeeping item, maybe for Mark, about the calendar and the selling days. I just thought that the 10-K said that you're going to have one less day in this past first quarter and you reported one extra day.

So can you just clarify what we should expect the rest of the year?.

David, I am going on memory here, I think we give back the day that we picked up in the first quarter -- third quarter. So second quarter should be the same, third quarter get back and fourth quarter same..

Okay. Great, thank you..

[Operator Instructions] Next question is from Anthony Lebiedzinski at Sidoti..

Good morning. So just a follow-up on the demand side, also it looks like 10-K is one less. Actually one more in the selling day..

I would believe Mark here over my memory..

I would 100% confirm that..

We did have -- this was a leap year, right. Coming back to February, so we did pick up the day, perhaps there was an extra day in the year. I'd have to go back and confirm, to be honest..

Okay, not a problem. I just wanted to follow-up on couple of other questions.

As far as building materials, so what percentage of your sales is that the currently and how do you expect that to be in the next two or three years?.

Well, that is a little bit over 10% of our total sales presently, and we believe that it will cross over to be 11% of our sales, if not in '17, certainly by '18..

Okay, thank you for that. And also, Manny, you talked about the fact that you want to carry more new products, there is still lot of opportunities for additional products.

So can you give us some examples of some product categories perhaps that you would like to carry in your sales centers? And also do you have the physical space to carry these extra products?.

I'll answer the second part first. We on a regular basis review our capacity and also work in ways to enhance our existing capacity based on how we layout and structure and design our facilities. So as a matter of course, every year we move about 50 of our facilities into larger facilities typically and/or expand into adjacent space if we don't move.

So between internal design efficiencies, as well as just simply getting more work rate, it's a part of a rolling process of expanding capacity. And for example; we have our four central distribution locations that complements our individual local locations and we've just moved two of those this past winter into larger facilities.

So it's part of a rolling process, so I would not be concerned about that capacity because again we layer and add to it every year. Even though the number of locations may not change as much, we certainly add to our footage, that's part one.

Part two, in terms of product categories, I mean I can tell you about what I refer to as fun stuff, like for example; our speakers as you can put around the pool that can be a Wi-Fi, pick up the reception and you can play Pandora around the pool and these are water resistant. And we sell that through our retail customers.

We have for example; surfing -- what do you call when you stand up and surf….

Stand up paddle boards?.

Stand up paddle boards. We sell to retail locations. So we have a number of product categories that are fun and exciting. We have a number of cool toys available in our arsenal to solve through our retail store customers. So that's one channel and one flavor of stuff.

On the other side, when you look at the perimeter of the pool and outside space whether it be decking products, natural stone, man-made stone, and variations thereof. We have -- for example; outdoor kitchens, we have even products that complement the outdoor kitchens like coolers and other stuff.

So there is a lot there, it's basically having a vacation or the ability to vacation in your own backyard is part of our theme and it's enhancing that entire experience in every form adding fun, adding function, and just enhancing the experience altogether..

Anthony?.

Yes..

Believe it or not, Manny talked long enough for me to run and get my billing day numbers. Let me just run through that for you for the rest of the year here.

Just so we're clear, so we're minus one in April, plus one in May, no change in June, no change for the second quarter; minus two in July, plus two in August, no change in September, so no change for the third quarter; minus one in October, plus one in November, minus one in December, so we lose one in the fourth quarter..

Okay, got it. So basically your 10-K had the -- it should have been one more day in the first quarter one less in the fourth quarter, so numbers reflect..

I believe so..

No problem.

And lastly, what's your longer term outlook for acquisitions Manny?.

Well we're always looking at opportunities, primarily the driver there as you know is markets that we are not in or markets where we have a low share. So if you look at our blue business and you look specifically at North America, there are a few pockets but not many.

So most of our acquisitions will be on the green side, as well as on the international front but when it's all said and done, acquisitions are an alternative way again to enter a market or enhance our presence in a market we have a low share in.

We do -- we'll do overtime as much in terms of opening our own locations, and we have done that effectively for over 20 years and opportunity to do that. So from a capital standpoint whether it be opening up new locations or acquisitions, we're talking about on average, doing that would be about 1% of our sales per year.

Some years it could be 2%, some years it come closer to zero.

So the big picture, it's not significant in the near-term but it does provide to our base that we can grow from just like the installed base of pools and the growth of the installed base provide for future opportunities for growth as we build on that installed base or number of locations and penetration into markets..

Okay, thanks very much..

This concludes our question-and-answer session. I would like to turn the conference back over to Manny Perez de la Mesa for closing remarks..

Thank you, Amy, and thank you all for joining us today. Our next call is scheduled for July 21 where we will discuss our second quarter results. Have a great day..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..