What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-29 compared with 2024-10-30 · 72 added, 132 removed, 265 unchanged (43% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Net sales $ 1,071,526 $ 1,120,810

19 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Net income $ 53,545 $ 78,885

3 unchanged sentences

( 2,911 ) 2,226

Total other comprehensive (loss) income ( 1,511 ) ( 4,109 ) ( 9,013 ) 849

Total other comprehensive income (loss) 1,016 ( 1,442 )

Comprehensive income $ 54,561 $ 77,443

3 unchanged sentences

(In thousands, except share data)

September 30, September 30, December 31,

March 31, March 31, December 31,

2025 2024 2024

30 unchanged sentences

37,659,549 , 38,462,331 and 37,691,942 shares issued and

outstanding at September 30, 2024, September 30, 2023 and

outstanding at March 31, 2025, March 31, 2024 and

December 31, 2024, respectively

8 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

5 unchanged sentences

Equity in earnings of unconsolidated investments, net ( 54 ) ( 57 )

Goodwill impairment — 550

Other 1,377 ( 853 )

20 unchanged sentences

Payments on short-term borrowings and current portion of long-term debt ( 480 ) ( 1,561 )

Payments of deferred financing costs ( 1,731 ) ( 52 )

Payments of deferred and contingent acquisition consideration — ( 551 )

Proceeds from stock issued under share-based compensation plans 6,383 8,773

13 unchanged sentences

Comprehensive

Shares Amount Capital Earnings Income (Loss) Total

Shares Amount Capital Earnings Loss Total

Balance at December 31, 2024 37,692 $ 38 $ 638,615 $ 648,476 $ ( 13,664 ) $ 1,273,465

2 unchanged sentences

— — — — 3,927 3,927

Interest rate swaps, net of the change in taxes of $( 742 )

Interest rate swaps, net of the change in taxes $ 970

— — — — ( 2,911 ) ( 2,911 )

8 unchanged sentences

Balance at March 31, 2025 37,660 $ 38 $ 651,053 $ 600,248 $ ( 12,648 ) $ 1,238,691

— — — 192,439 — 192,439

Foreign currency translation

— — — — ( 4,684 ) ( 4,684 )

Interest rate swaps, net of the change in taxes of $ 459

— — — — ( 1,376 ) ( 1,376 )

Repurchases of common stock, net of retirements

( 181 ) — — ( 68,519 ) — ( 68,519 )

Share-based compensation

— — 5,016 — — 5,016

Issuance of stock under share-based compensation plans

8 — 1,053 — — 1,053

Declaration of cash dividends

— — — ( 45,944 ) — ( 45,944 )

Balance at June 30, 2024 38,289 $ 38 $ 626,347 $ 798,204 $ ( 920 ) $ 1,423,669

— — — 125,701 — 125,701

Foreign currency translation

— — — — 5,066 5,066

Interest rate swaps, net of the change in taxes of $ 2,192

— — — — ( 6,577 ) ( 6,577 )

Repurchases of common stock, net of retirements

( 219 ) — — ( 75,632 ) — ( 75,632 )

Share-based compensation

— — 4,047 — — 4,047

Issuance of stock under share-based compensation plans

13 — 2,129 — — 2,129

Declaration of cash dividends

— — — ( 45,894 ) — ( 45,894 )

Balance at September 30, 2024 38,083 $ 38 $ 632,523 $ 802,379 $ ( 2,431 ) $ 1,432,509

Common Stock Additional

1 unchanged sentence

Comprehensive

Shares Amount Capital Earnings Income (Loss) Total

Shares Amount Capital Earnings Income Total

Balance at December 31, 2023 38,355 $ 38 $ 606,177 $ 699,990 $ 6,582 $ 1,312,787

13 unchanged sentences

Balance at March 31, 2024 38,462 $ 38 $ 620,278 $ 720,228 $ 5,140 $ 1,345,684

— — — 232,250 — 232,250

Foreign currency translation

— — — — 2,801 2,801

Interest rate swaps, net of the change in taxes of $( 1,166 )

— — — — 3,497 3,497

Repurchases of common stock, net of retirements

Share-based compensation

— — 5,073 — — 5,073

Issuance of stock under share-based compensation plans

16 — 1,413 — — 1,413

Declaration of cash dividends

— — — ( 42,945 ) — ( 42,945 )

Other — — ( 307 ) — ( 307 )

Balance at June 30, 2023 39,049 $ 39 $ 593,081 $ 854,559 $ 10,853 $ 1,458,532

— — — 137,843 — 137,843

Foreign currency translation

— — — — ( 5,025 ) ( 5,025 )

Interest rate swaps, net of the change in taxes of $( 305 )

— — — — 916 916

Repurchases of common stock, net of retirements

( 385 ) — — ( 138,003 ) — ( 138,003 )

Share-based compensation

— — 4,596 — — 4,596

Issuance of stock under share-based compensation plans

13 — 2,332 — — 2,332

Declaration of cash dividends

— — — ( 42,965 ) — ( 42,965 )

Balance at September 30, 2023 38,677 $ 39 $ 600,009 $ 811,434 $ 6,744 $ 1,418,226

The accompanying Notes are an integral part of the Consolidated Financial Statements.

9 unchanged sentences

You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2024 Annual Report on Form 10-K.

The results for our three and nine-month periods ended September 30, 2024, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2024.

The results for our three-month period ended March 31, 2025, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2025.

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards.

1 unchanged sentence

We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on restricted stock awards lapse.

We recorded excess tax benefits of $ 0.5 million in the third quarter of 2024 compared to $ 0.4 million in the third quarter of 2023 and $ 8.3 million in the nine months ended September 30, 2024, compared to $ 5.9 million in the nine months ended September 30, 2023.

We recorded excess tax benefits of $ 3.8 million in the first quarter of 2025 compared to $ 7.4 million in the first quarter of 2024.

Retained Earnings

We account for the retirement of repurchased shares as a reduction of Retained earnings.

As of September 30, 2024, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, share retirements since the inception of our share repurchase programs of $ 2.6 billion and cumulative dividends of $ 1.2 billion .

As of March 31, 2025, the Retained earnings on our Consolidated Balance Sheets reflects (i) cumulative net income, (ii) the cumulative impact of adjustments for changes in accounting pronouncements, (iii) share retirements since the inception of our share repurchase programs of $ 2.8 billion and (iv) cumulative dividends of $ 1.3 billion .

Accumulated Other Comprehensive (Loss) Income

The table below presents the components of our Accumulated other comprehensive (loss) income balance (in thousands):

September 30, December 31,

March 31, December 31,

2025 2024 2024

6 unchanged sentences

Standard Description Effective Date Effect on Financial Statements and Other Significant Matters

Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses and related amendments

In November 2024, the FASB issued ASU 2024-03 and in January 2025, the FASB issued ASU 2025-01 , Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which adds new disclosure requirements, including more detailed information about certain income statement expense line items and a separate disclosure for selling expenses.

For annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.

The ASU may be adopted on a prospective or retrospective basis with early adoption permitted.

We are currently evaluating the effect the adoption of this standard will have on our disclosures.

ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures , which will require enhancements and further transparency to various income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

Annual periods beginning after December 15, 2024 on a prospective basis.

Retrospective application for all periods presented is permitted.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which will require enhancements and further transparency for decision usefulness to various income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

Annual periods beginning after December 15, 2024 on a prospective basis and retrospective application is permitted.

Early adoption is also permitted.

We are currently evaluating the effect this standard will have on our disclosures.

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which intends to improve reportable segment disclosures by requiring enhanced disclosures about significant segment expenses, enhance interim disclosure requirements, refine situations in which an entity can disclose multiple segment measures of profit or loss and provide advanced segment disclosure requirements for entities with a single reportable segment, as well as other disclosure requirements.

Annual periods beginning after December 15, 2023 on a retrospective basis for all periods presented.

Early adoption is permitted.

We are currently evaluating the effect this standard will have on our disclosures.

We expect that the adoption of this standard will expand our disclosures but do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , which will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives and transfers of financial assets.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , which will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives, and transfers of financial assets.

The amendments in ASU 2023-06 will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027.

Early adoption is prohibited.

We are currently evaluating the effect this standard will have on our disclosures.

We do not expect the adoption of this standard to have a material impact on our consolidated financial statements since we are already subject to the requirements under Regulation S-X and Regulation S-K.

Note 2 – Earnings Per Share

2 unchanged sentences

Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders.

Participating securities excluded from weighted average common shares outstanding were 206,000 for the three months ended September 30, 2024 and 205,000 for the three months ended September 30, 2023, and 206,000 for the nine months ended September 30, 2024 and 207,000 for the nine months ended September 30, 2023.

Participating securities excluded from weighted average common shares outstanding were 184,000 for the three months ended March 31, 2025, and 205,000 for the three months ended March 31, 2024.

The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except per share data):

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Net income $ 53,545 $ 78,885

14 unchanged sentences

In January 2024, we acquired the distribution assets of Shoreline Pool Distribution, a wholesale distributor of swimming pool products and supplies, adding one location in Mississippi.

In December 2023, we acquired the distribution assets of A.C.

Solucoes para Piscinas, Lda., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in Braga, Portugal.

In June 2023, we acquired the distribution assets of Pioneer Pool Products, Inc., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in Alabama.

In May 2023, we acquired the distribution assets of Recreation Supply Company, a wholesale distributor of commercial swimming pool products, adding one location in North Dakota.

In March 2023, we acquired the distribution assets of Pro-Water Irrigation & Landscape Supply, Inc., a wholesale distributor of irrigation and landscape supply products, adding two locations in Arizona.

We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material.

11 unchanged sentences

The table below presents our assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):

Fair Value at September 30,

Fair Value at March 31,

Input Level Classification 2025 2024

4 unchanged sentences

Interest Rate Swaps

We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on a portion of our variable rate borrowings.

We use significant other observable market data or assumptions (Level 2 inputs) in determining the fair value of our interest rate swap contracts and forward-starting interest rate swap contract that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk.

We utilize interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on a portion of our variable rate borrowings.

We use significant other observable market data or assumptions (Level 2 inputs) in determining the fair value of our interest rate swap contracts that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk.

Our fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves.

1 unchanged sentence

To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, we record the changes in the estimated fair value of our interest rate swap contracts to Accumulated other comprehensive (loss) income on the Consolidated Balance Sheets.

Our interest rate swaps in effect during the quarter were previously forward-starting and converted the variable interest rate to a fixed interest rate on a portion of our variable rate borrowings.

Interest expense related to the notional amounts under our swap contracts was based on the fixed rates plus the applicable margin on our variable rate borrowings.

Changes in the estimated fair value of these interest rate swap contracts were recorded to Accumulated other comprehensive (loss) income on the Consolidated Balance Sheets.

One of our interest rate swap contracts terminated on February 28, 2025.

The following table provides additional details related to this former swap contract:

Derivative Inception Date Effective Date Termination Date Notional Amount

(in millions) Fixed Interest Rate

Interest rate swap 1 February 5, 2020 February 26, 2021 February 28, 2025 $ 150.0 1.3260 %

We currently have two swap contracts in place.

These swap contracts were previously forward-starting and convert the variable interest rate to a fixed interest rate on a portion of our variable rate borrowings.

Interest expense related to the notional amounts under these swap contracts is based on the fixed rates plus the applicable margin on a portion of our variable rate borrowings.

Changes in the estimated fair value of these interest rate swap contracts are recorded to Accumulated other comprehensive (loss) income on the Consolidated Balance Sheets.

The following table provides additional details related to these swap contracts:

1 unchanged sentence

(in millions) Fixed Interest Rate

Interest rate swap 1 February 5, 2020 February 26, 2021 February 28, 2025 $ 150.0 1.3260 %

Interest rate swap 2 March 9, 2020 September 29, 2022 February 26, 2027 $ 150.0 0.6690 %

For the interest rate swap contracts in effect at September 30, 2024, a portion of the change in the estimated fair value between periods relates to future interest expense.

Interest rate swap 3 March 9, 2020 February 28, 2025 February 26, 2027 $ 150.0 0.7630 %

For the interest rate swap contracts in effect at March 31, 2025, a portion of the change in the estimated fair value between periods relates to future interest expense.

Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive (loss) income on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income.

These amounts were not material in the three and nine-month periods ended September 30, 2024 or September 30, 2023.

We also have in place a forward-starting interest rate swap contract to extend the hedged period for future interest payments on a portion of our variable rate borrowings.

The following table provides details related to our forward-starting interest rate swap contract:

Derivative Inception Date Effective Date Termination Date Notional

(in millions) Fixed

Forward-starting interest rate swap March 9, 2020 February 28, 2025 February 26, 2027 $ 150.0 0.7630 %

These amounts were not material in the three-month periods ended March 31, 2025 or March 31, 2024.

Failure of any of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements.

1 unchanged sentence

Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we were in a net pay position.

Our interest rate swap contracts and forward-starting interest rate swap contract are subject to master netting arrangements.

Our interest rate swap contracts are subject to master netting arrangements.

According to our accounting policy, we do not offset the fair values of assets with the fair values of liabilities related to these contracts.

7 unchanged sentences

The table below presents the components of our debt (in thousands):

September 30,

Variable rate debt

Short-term borrowings $ 1,733 $ —

Current portion of long-term debt:

10 unchanged sentences

Total debt $ 1,025,090 $ 979,177

Credit Facility

On September 30, 2024, we entered into the Third Amended and Restated Credit Agreement (the Amended Agreement) by and among us, as U.S.

Borrower, SCP Distributors Canada Inc., as Canadian Borrower, SCP International, Inc., as Euro Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and certain other lenders party thereto.

The Amended Agreement amended and restated the terms of the Company’s predecessor revolving credit facility principally by increasing its borrowing capacity from $ 750.0 million to $ 800.0 million and extending its maturity date from September 25, 2026 to September 30, 2029.

Otherwise, the Amended Agreement retained the core features of the predecessor credit agreement, including:

• a $ 500.0 million term loan facility;

• an accordion feature permitting us to request one or more incremental term loans or revolving credit facility commitment increases up to $ 250.0 million;

• an option permitting us to extend the maturity date of the revolving credit facility up to two years, subject to various conditions and restrictions;

• sublimits for the issuance of swingline loans and standby letters of credit.

Revolving and term loan borrowings under the Amended Agreement bear interest at a variable rate based on a one-month Term Secured Overnight Financing Rate (Term SOFR), plus an applicable margin.

The term loan under the Amended Agreement continues to require quarterly amortization payments, with all remaining principal due on the term loan maturity date of September 25, 2026.

Substantially all of the other terms of the term loan and revolving credit facility in the Amended Agreement remain similar to the predecessor credit agreement.

The Amended Agreement continues to require us to maintain a maximum average total leverage ratio and a minimum fixed charge coverage ratio consistent with the terms specified in the predecessor credit agreement.

All obligations under the Amended Agreement continue to be guaranteed on an unsecured basis by substantially all of our existing and future domestic subsidiaries.

The Amended Agreement also continues to contain various customary affirmative and negative covenants and events of default.

Failure to comply with any of the financial covenants or the occurrence of any other events of default would permit the lenders to, among other things, require immediate payment of all amounts outstanding under the Amended Agreement.

Receivables Securitization Facility

Our accounts receivable securitization facility (the Receivables Facility) provides for the sale of certain of our receivables to a wholly-owned subsidiary (the Securitization Subsidiary).

4 unchanged sentences

We present the receivables that collateralize the cash proceeds separately as Receivables pledged under receivables facility on our Consolidated Balance Sheets .

Note 6 - Segment Information

Since all of our sales centers have similar operations and share similar economic characteristics, we aggregate our sales centers into a single reportable segment and one reportable revenue stream.

These similarities include (i) the nature of our products and services, (ii) the types of customers served and (iii) the distribution methods we use.

Our chief operating decision maker (CODM) is our president and chief executive officer.

Our CODM evaluates each sales center based on individual performance that includes both financial and operational measures.

These measures include operating income, accounts receivable and inventory management criteria.

The accounting policies for our segment are the same as those described in “Note 1 - Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2024, and in Note 1 above.

T he table below presents segment revenue, operating expenses and operating income and reconciles segment operating income to consolidated income before taxes and equity in earnings (in thousands):

Three Months Ended

Net sales $ 1,071,526 $ 1,120,810

Cost of sales 759,157 782,250

Gross profit 312,369 338,560

Compensation expenses 120,369 119,209

Freight out expenses 17,122 17,896

Other selling and administrative expenses 97,340 92,735

Operating income 77,538 108,720

Reconciliation:

Interest and other non-operating expenses, net 11,164 13,419

Income before income taxes and equity in earnings $ 66,374 $ 95,301

The tables below present supplemental information for our segment (in thousands):

Three Months Ended

Depreciation $ 9,840 $ 8,661

Amortization 2,147 2,088

Receivables, net $ 146,209 $ 150,240

Receivables pledged under receivables facility 350,867 376,935

Product inventories, net 1,460,680 1,496,947

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements