Peter Arvan: Yes. I’m not sure this late in the season, right? So for instance, I don’t have a – nobody’s going to winterize their pool in July or August, right, because it’s still hot. And if you – even if you say, hey, look, the pump broke, I’m not going to fix it. I’m going to just winterize the pool, the pool’s still going to turn green because the water temperature is high. Then that’s going to do damage to the pool finish. So homeowners are not likely to do that. So we don’t really see a change in consumer behavior on essentials, right? The break fix, the things that – you have to move the water filter to water and treat the water. If you have any part of that equation that is bad, you really have no choice but to fix it.
And winterizing a pool, pools are not drained. They essentially they put a cover over them, they put a lot of chemicals in there, but if the water temperature is still warm you can’t put enough chemicals in that pool one time dose and cover it in order to keep it from turning green. And green pools, obviously, a lot of bad things come from that. They’re unsightly, frankly, they’re dangerous and they’re going to do damage to the pool. So I don’t really think that’s a big concern.
Andrew Carter: Thanks. I’ll pass it on.
Peter Arvan: Thanks.
Operator: The next question comes from David MacGregor with Longbow Research. Go ahead.
David MacGregor: Yes. Good morning. I just had the one question here. I wondered if you just sort of focus in on maintenance and repair business, maintenance and repair spending and talk about the extent to which you’re seeing price elasticity? Where within the various product categories you might be seeing that? And in the aggregate, what percentage of maintenance and repair is really showing kind of elevated levels of price elasticity versus more non-discretionary inelastic pattern?
Peter Arvan: I guess, the way I would approach that is, when it comes to maintenance and repair, it really depends on the item. So for instance, when we talk about maintenance, big portion of the maintenance business is chemicals. And there we’ve seen a decline in trichlor pricing in some areas, frankly, because of inventory that was purchased in anticipation, frankly, of higher usage that people are trying to get rid of before the end of the year. Because you don’t want to end – you don’t want to winter over a bunch of chemicals because every month they sit on a shelf and in a bucket they become less potent. So we’ve seen certainly some heightened activity to get rid of some chemicals. But frankly, right now the demand for chemicals is very strong.
And we’re seeing an offset in that in terms of the other chemicals, which would be balancers, shock and specialty. And then again, when it comes to an equipment, my pump quit or the motor fails, I have a choice. I can fix it or I can replace it. We haven’t seen a big shift in the customers’ behavior as it relates to, well, I’m not going to fix – I’m not going to replace it anymore, I’m going to fix it. Because we look at our median order value, we look at our median line value and then we look at our parts sales, whole bid sales, and we haven’t really seen anything materially change there. So when it comes to a break fix item the only thing in terms of price elasticity, if one of those components fails, it has to be replaced.
And chances are that when that happens, that’s not something that is negotiated at the distributor that says, hey, I can buy this cheaper here or there. They’re in, they pick up what we have because they’re there for many other reasons other than we may be a nickel cheaper or more expensive. So I don’t really see a lot of price elasticity on non-discretionary items. Discretionary items a little bit different story. So, as I mentioned, robots for instance, which are a great product for pools, have gone up in value. And that’s where some people are looking at it saying, maybe I’ll wait till next year on that.
Melanie Hart: I think we’re at the top of the hour. We’ll take one more question.
Operator: Our last question comes from Garik Shmois of Loop Capital. Go ahead.
Garik Shmois: Hi. Thanks for squeezing me in. I know it’s a little early, but I was just wondering how you’re thinking about product inflation into next year. If you’re seeing any indications from your suppliers on how they’re thinking about pricing if we’re returning more to kind of a normal 1% to 2% inflation environment? Any color you might have a bit early into next year, it would be great.
Peter Arvan: Yes, very early to give you an accurate answer to that question. I can tell you that where my head is at right now is I believe that it’s going to be above normal once again. And the reason is, is because everybody’s SG&A costs and operating costs, whether it is rent, whether it is trucks, people, labor being obviously the biggest component, none of those – there’s been no retreat in anybody’s operating expenses. So I can’t see manufacturers only passing on the historic 1% to 2%. I would expect it to be higher, I could be wrong, but I would expect it to be higher.
Garik Shmois: Okay. Thanks. And my follow-up question is just on Pinch A Penny, just because we had a retail competitor speak of the need to draw down inventories and accelerated pricing pressure. As a result, it looks like your results in Pinch A Penny held in quite well in the quarter. Are you seeing any of those similar dynamics with respect to incremental pricing and inventory de-stocking that has to occur?
Peter Arvan: Yes. The Pinch A Penny franchisees is – they operate a great business and our model is different than most of our competitors as it relates to the publicly traded entities. So, we’re happy with the performance. But as I mentioned, they’re seeing a similar pattern in that the non-discretionary business is holding up quite well. But some of the equipment has – specifically like cleaners and such that are more discretionary. I should have one. I don’t have to have one. If I have an older one, I might be able to get by another year with it. Though they’re seeing some hesitation for the consumer at that point, but that frankly is baked into their performance, which is why that they’re flattish and given the underlying conditions, we’re actually pretty happy with that.
Garik Shmois: Yep. Make sense. Thanks again.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Peter Arvan for any closing remarks.
Peter Arvan: Yes. I just want to thank everybody for your continuing interest and support in Pool Corp. And thank you for joining us today. We look forward to continuing to lead the industry for the remainder of the year and beyond and providing the highest level of value for – service for our customers and our suppliers. We’ll be discussing our third quarter 2023 results on October 19th of this year. And look forward to talking to you all then. Thank you very much.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
