Good morning. My name is Kim and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Pool Corporation’s second quarter 2009 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. Mr. Joslin, you may begin your conference.

Thank you Kim, good morning everyone and welcome to our second quarter 2009 call. As usual, I’d like to remind our listeners that our discussion, comments, and responses to questions today may include forward-looking statements, including management’s outlook for 2009 and future periods. Actual results may differ materially from those discussed today. Information regarding the factors and variables that could cause the actual results to differ materially from projected results is discussed in our most recent Form 10-Q as filed with the SEC. Now I’ll turn the call over to our President and CEO, Manny Perez de la Mesa. Manny?

Thank you, Mark. Thank you all for joining us today. I will first review our progress today on our priorities in 2009 given the challenging market environment that we are facing. Our first priority is cash flow generation. Year-to-date we are attracting $71 million ahead of 2008, given our focus on working capital management especially the internal rebalancing of inventories. This progress has enabled us to reduce our debt by $108 million in the past 12 months. In a market environment where cash is king, I believe we have done well and anticipate that we’ll surpass 2008’s record cash flow generation in 2009. Number two, the sales and market share. While sales are not where we’d like for them to be, we believe that we are continuing to capture profitable market share. Here it’s important to clarify that low margin and high credit sales are not profitable and which specifically work to avoid those kinds of transactions. This consideration has a greater importance over the past several years given the market conditions in our industry. Number three, margin management. We continue to make progress, but today’s market dynamics make that difficult. The reality is that in 2009 virtually all irrigation and landscape distributors and a good many swimming pool product distributors are realizing operating losses. In these cases, rationale pricing behavior is sometimes non-existent. We address these situations on a case-by-case basis to protect profitable market share understanding that our service levels and value added programs enable us to generally price at a premium as well as our operating efficiency and purchasing power enable us to sell at a profit when others cannot. Just like it would be silly for an independent retailer to try to gain sales by under pricing Wal-Mart, the same silliness sometimes applies in our industry.…

Thank you, Manny. My comment this morning will address our operating expenses, our equity investment in Latham, working capital, cash flow and debt. Starting with operating expenses. As has been the case throughout the last two years, managing our operating expenses in line with the external environment has been a major focus for us, one that has gain momentum as time has progressed. With expenses down in the quarter 15% year-over-year on essentially the same sales center base, we continue to make excellent progress on this objective. Now for some of the highlights. Excluding the impact of employee incentive costs which can vary quarter-to-quarter depending upon our actual and expected profitability and other factors, our operating expenses were down over 11% year-over-year for the quarter with labor and related costs being the largest contributor to this reduction also following 11%. Going into the pool season, we have largely made all the necessary headcount adjustments to manage our anticipated reduced volume and along with close management of the discretionary aspects of labor, including overtime and seasonal help, this was the major factor in lowering our cost base this quarter. In what I would call our miscellaneous cost category which combined makes up the next largest group of costs, our expenses were down 12% year-over-year. This includes things like travel costs, phones and computer equipments, supplies, administrative vehicle costs, advertising, insurance and non-income based taxes. Employees throughout the company have undertaken initiatives to drive these costs down 12% this year on top of the reduced spending levels achieved in 2008. Our next largest cost category, facility costs, were actually up 6% for the quarter compared to last year as required GAAP adjustments for future rent increases drove the accounting costs higher. This is an area of ongoing focus and opportunity for us…

Your first question comes from the line of Michael Cox - Piper Jaffray.

My first question is what you are seeing thus far in the month of July. I know you commented the 3Q sales decline will be similar to that of 2Q but with weather transferring a little bit more favorable I just was curious what you are seeing now.

In the first month of the quarter, it’s really trending very similar to the 13% that we saw for the second quarter overall so.

Okay. On the gross margin side I know you commented that the gains are going to be slowing here. I was just wondering if you could just talk a little bit about some of the dynamics there.

Well two elements. First as you can well imagine a number of competitors are having higher levels of stress and as they do that some have a greater urgency to convert some of that inventory to cash. We surely want to protect the profitable market share but we are not going to chase every deal that’s out there. So there is going to be situations where there’s going to be some level of guess that we have to make but on the other hand we will very judicious on how we do that.

Okay that’s helpful and my last question is just prioritizing cash flow. You have done a great job of bringing the debt balances down. As you look forward and obviously still an uncertain market but seems to be showing some signs of improvement here. How do you prioritize the use of cash on a go forward basis here?

Well Michael it’s a good question and really fundamentally the first priorities are intact and that those being certainly investing in our business internally for organic opportunities whether it be product line expansion which is more of an opportunity currently I’ll say than necessarily facility expansion but internal opportunities is always number one. Acquisitions to further expand our reach in network has been and continues to be number two, then we have a dividend commitments to shareholders and that is point number three and then the last two which should be either debt repayment or share buyback, we’ve kind of sliced back and forth. Given our current debt levels and everything else we probably would still keep debt repayment ahead of share buyback but certainly when we deliver a bit more, that quarter may shift and share repurchase may come back. But we are not talking in the near term; we are talking out sometime in the future.

Your next question comes from the line of Kyle O’Meara - Robert W. Baird. Kyle O’Meara - Robert W. Baird: Could you talk about the overall impact of pricing in the quarter?

In terms of price inflation on our sales? Kyle O’Meara - Robert W. Baird: Correct.

At beginning of the year, we were looking at mid single digits and that obviously is occurring gradually during the course of the year. I think when its all said and done for the whole year we’ll be close to that level. It was more modest than that in the first quarter and probably not fully there in the second quarter but certainly gaining, getting closer as price increases there were announced by manufacturers last year work and sell through the system. So I would say, we’re probably in the second quarter close to mid single digits, we’re probably on the low end of that. Maybe instead of being four to six, it would be probably closer to four in the second quarter and then probably migrating more to like the four to six range in the second half of the year. Kyle O’Meara - Robert W. Baird: Great, that’s helpful. You said improved gross margins on private label, your POOLCORP private label, what percentage of your overall sales is that today and where do you ultimately think that could go?

We are running 20 - 21% of our sales currently in private label and that is growing at a rate of 1 to 2% a year. That’s been the case now for the better part of the last 10 years and we’ll continue to do that on a calculated basis, ensuring first and foremost that in no way, former fashion we adversely impact our ability to serve our customers. So we have to make sure that we have the right product quality and have the right sources in place to make sure that we have the right service levels to our customers and then gradually implement that to make sure again that its seamless throughout the whole supply chain. Kyle O’Meara - Robert W. Baird: Then, thanks great. Finally, I guess knowing gross margins are higher on the private label, is there any difference in the EBIT margin between branded and private label?

Difference in gross margin would come down all the way.

Your next question comes from the line of Jeff Germanotta - William Blair.

It sounds like you’re feeling a little more optimistic that we’ve hit the low watermark here. Are you seeing anything in the early part of July that helps reaffirm that thought?

Nothing overwhelming. I think one of the points here to stress is the fact that couple of things, certainly new pool construction levels can’t be any lower, to speak of, they are already so low. I mean people are patching up, but that’s going to start coming back soon. Then you go to Florida, as an example, Florida, as you know Jeff and many on the call know, was the first market to begin to feel the effects of the real estate market. The consequential impact on our business as well as those discretionary figures, and the fact that sales were flat in the second quarter is I think a strong sentiment, it is the first market also coming back as well. So, I think that bodes well.

When you think to next year, is it the recovery of the deferred maintenance component that gives you optimism more so than new construction or you’re feeling a little bit better about both elements of the business?

Just to clarify, there isn’t really any deferred maintenance, it will be deferred replacement. And I try to distinguish because the maintenance side has been pretty steady and case in point being, our chemical sales being up 9% for the year is evidence of the fact that maintenance is maintenance and there’s really little discretionary only impact they really speak of is weather. In terms of replacement, I see that coming back first, and I see that beginning to come back really next year now and we wont come back necessarily to the levels that we were three or four years ago in 2010. I anticipate that will come back probably over the course of the next couple to the rest three years.

Okay. And then the new construction component, how do you think about that for 2010 and beyond?

Well new construction is more of a wild card. The levels there are already depressed, very depressed. I don’t see those coming down or coming off anymore than they are now. But I see that coming back slower and really a lot of it depends on the real estate markets stabilizing. And once those markets stabilize and existing home values begin to recover pushing the cost of new homes then I think bank will begin to lend again against home values. And there will be some ability in the part of the consumers then to begin to invest but I see that lagging and 2010 in my mind not being significantly different than 2009.

And then once again looking a little longer term as earnings recovery or cash flow strong, you continue to gain cushion on your debt service covenants. How and when do you see acquisitions becoming again part of the grow story?

Well acquisitions continue to be part of the grow story. We haven’t deferred or [passed] on acquisition. When we went through the priority list, it still remains up there and I mean in fact is very high. It has to make sense obviously we maintain the same discipline in terms of return on invested capital and obviously the main driver there is the ability to expand the reach of our network and take advantage of operating efficiencies wherever possible. So that’s the driver there and if the right acquisition is available at the right valuation today, we will be executing today. And by the way, we would have done that three or six months ago as well. So I think there is obviously been two elements that impact back. One is where we have a high share of market and I’ll just elaborate here but this is important for people to appreciate. Well we have a high share of market, the value of an acquisition is less then we only have a low share market and a logic there is when we have high share of market given the nature our business been very local. We already serving the lion share of the competitors in that market, always the customers in that market. So therefore we don’t gain any new customer relationship per se out of the equation and that’s not to say that we don’t do those but in those cases the valuation is different. On the other hand, what we have a situation where we have limited to no market presence and we are looking at our the alternative of opening a new location versus an acquisition when we map one against the other in those cases, often times, an acquisition is more attractive given that it saves us at least several years of operating losses that we’d incur as we quite establish our presence in that market.

Your next question comes from the line of Anthony Lebiedzinski - Sidoti.

A couple of questions. First you mentioned in your remarks and in your press release that you did have a pick up in sales of maintenance repair products because of some regulatory changes, governing pool and spa safety. I was wondering if you could just quantify that and also talk about the sustainability of that trend.

Anthony as usual you are extremely absurd. The order of magnitude there is similar to the impact of currency and which is in both cases of about 2% of sales. So, therefore there is still a majority by every indications of the pools, commercial pools out there that are in noncompliance. So to the extent that those pools whether be through mandates on the part of the Consumer Product Safety Commission and it just taken by states or municipalities to enforce the law. We anticipate that will continue, that revenue stream will continue for at least the next 12 to 24 months as that’s put in place. The order of magnitude maybe a little different but that’s the fair expectation there. And the author of that was currency and I can’t really project currency. Hopefully though it won’t be adverse in the future as it is and as it was in the quarter and year-to-date.

Okay, got it. As far as your expense structure, you’ve done a good job right-sizing your cost structure now. Once we see an improvement in the economy and you guys start growing revenues. Would you say that the expenses then will grow at a slower rate than your sales?

Yes. It’s a good point. As indicated in my comments, we can do over 30% more sales from our existing facilities and with the existing professional staff. So, therefore to the extent that where that sales grow then we, certainly we’ll need to add cost particularly in the form of individuals working in our warehouse, more drivers, more trucks, more inside sales support, those kind of costs but the contribution margins at that point will be 20% or better. So, therefore logically there’s a lot to be had there in terms of an opportunity.

Okay. And you mention that your competitors in the irrigation landscape business are suffering as they are undercutting with their pricing. Do you see that as an opportunity later down the road for you guys to make acquisitions there or some weakened competitors?

Yes. When you dissect that business, I don’t believe there is any distributor in the U.S. that’s in the irrigation space that will be profitable this year. In fact I also when you go through those same numbers I believe a good many of the swimming pool distributors will also not be profitable this year. But logically the irrigation space given the fact it’s tied more towards new construction is more adversely impacted than the pool side that has a component of maintenance that’s nondiscretionary. So, acquisition opportunities will become available yes. There has been ongoing dialog with distributors in a number of markets for the last several years and those will continue and it’s just a matter of the right situation, the right opportunity, the right valuation all coming together.

Your next question comes from the line of Brent Rakers - Morgan Keegan.

Yes, good morning. I wanted to start first Manny with your comments about price inflation and then understand how to reconcile that with I think it was Mark’s comments earlier about gross margins in the second half and with the fact that costs on products have already been increased to you guys but you still expect to get another percent up in price in the second half. Why would that not boost the gross margins during the second half of the year?

The reason is that when you look at quarter-on-quarter, we still had in our weighted average costs in the early part of the second quarter, a lower weighted average cost than we currently have. The reason for that is because, while the lion’s share of the inventory purchase pre-price increase was sold by the end of the first quarter, there are still some lingering impact and that’s the 1% that roughly they were talking about.

Okay perfect. So, the match is running pretty clean through these price increase?

Yes. Yes.

Secondly, can you give me a sense of what the employee numbers increased during the quarter and maybe the impact I know you focused real hard on the seasonal hires, what the cost savings attributable to your lesser seasonal hires this year versus last year might have been to the SG&A savings.

Okay. Specifically I’ll tell you that in terms of our employee base in total, we were -- we had 10% less employees in total at the end of the first quarter and we also have 10% less employees at the end of June. And in terms of temp labor specifically, now temp labor is only one small factor that’s only on a year-to-date basis a difference of about $1.5 million. But really the savings come from reduced number of employees in the warehouses and onsite sales support and drivers. One point that Mark made was the fact that our fleet is down. Delivery fleet is down 10% and that includes both vehicles as well as drivers.

Your next question comes from the line of Keith Hughes - SunTrust.

Thank you. Your Florida data point was one of the best I’ve heard in several years in any product category in that state. Can you give any sort of feel for was it, what part of Florida was better than others, products, any sort of detail will be great.

Not really. I mean certainly what I will tell you is that the areas in Florida that were more affected by new construction are still feeling those headwinds, whereas those markets where you have a larger installed base of pools, those are the ones that are more positive. So for example, if you take in aggregate, Southeast Florida which would be West Palm, Broward and Miami Dade County, those areas have a very large installed base of pools and those areas are relatively fine or more positive. You take The Greater Tampa Bay area going from lets say a fringing on Brighton on the south up through Clearwater Largo in the north. Those areas held up better. On the other hand, the areas that are more inland or newer development areas. I will call like Port St Lucie County, Polk County. Those areas are more affected; again, more of that business there was tied to new construction proportionately. It’s a young group pool market. A lot of the pools there were put in the last 6, 7 years and therefore they’re needs are not as great.

You’re next question comes from the line of Joel Havard - Hilliard Lyons.

I appreciate the earlier comment on the headcount reduction. I wanted just one quick elaboration on that. Was the 10% Q1 versus Q4 followed by another 10% reduction Q2 versus Q1?

No, I’m sorry. To clarify, it’s 10% versus same month last year.

It’s remained there, okay, good. Then to put some additional quantification or at least a sense of proportion on that. The payroll reduction, the biggest piece followed by the incentive, I guess accrual reduction followed by transport or how would you describe that? This is as you cited it in the release this morning.

You’ve got that. It’s all right. The miscellaneous cost category after payroll and incentives such as miscellaneous cost category being the next largest cost category where we had a 12% reduction. That would be in front of the freight. Freight is a smaller part. It’s about 7% to 8% of our total SG&A cost even though the savings there are in the 27%, 28% range, the smaller piece. So I put that as a final list.

I’m presuming you guys are hoping for increased incentive compensation next year. You’re thoughts on transport. Are you kind of flat lining it from here? Are you allowing for some additional inflationary pressure on fuel well as you think about the second half and into ‘10?.

If we look at the second half, really, we are not seeing any significant or just been any significant differences on the freight side. There could be a component of fuel increase but again year- on-year we anticipate overall the savings will be similar. On that segment and to the hinders or variation as Mark mentioned that’s a smaller component to the total. The reason that the drastic improvement falls off in the second half is because of the changes and adjustments we’ve made in the August, September, timeframe of last year. And as we lack those in the second half of this year certainly that mitigates that benefit.

Your next question comes from the line of David Mann - Johnson Rice & Company. David Mann - Johnson Rice & Company: In terms of the expense guidance that you gave, can you just compare to the first quarter? I guess you said the first quarter you thought it would be down 8 to 10% now, 10% plus, what’s driving that difference? Where are you doing better?

On the initiatives undertaking by our people throughout the organization on working aspect every possible and just being creative and finding new ways to manage the business, taking a great degree of ownership and treating it as if they were where their own money that was being spent and not from third parties. David Mann - Johnson Rice & Company: And in terms of the bonus item, can you quantify how much the bonus benefited year-over-year?

The adjustment there is about of several million dollars in term of the quarter number. David Mann - Johnson Rice & Company: Closer to five or three or…

Yes, in the four to five range. Four for the quarter and five for the year, I guess little bit of guidance in terms of expense reduction excluding the bonus being 11% so. David Mann - Johnson Rice & Company: Okay. The $5 million you are saying is the year-to-date number?

Year-to-date number. Yes. David Mann - Johnson Rice & Company: Okay. How much in the guidance do you think bonus will be down? When you are talking about doing about five, how much year-over-year decline in bonus?

It maybe less than that because if we actually come through and then we certainly expect to do so with $5, there would be some recovery in bonus in the second half of the year. David Mann - Johnson Rice & Company: Okay. Then Manny on the last call you talked about how a lot of the retail customers. There was deferred inventory buying behavior going on in the first quarter. Can you just comment on how that played out into the second quarter and just what do you think in terms of the general health of some of those retail customers that you service?

Right. It’s good that you guys keep good notes and all the stuff. Just for all you guys on the call, typically our retail store customers stock up before the season starts in order to be fully ready for following the market hits. A lot of that as we did towards chemical products as well as various accessories, leaf net, brushes those kind of things. Those product categories define and that’s why I reference in terms of chemical sales specifically the fact that we are up 9% year-to-date. We were not quite running at that rate in the first quarter because of those retailers who were working closer to divest going into the season and essentially the market, we’ve done well. Now and there logically there’s some gain in share but still we’ve done well. Their financial health is fine, if those that are strictly retail should be doing no problem. The issue really from a stress on customers is more on those that are more heavily weighted towards new construction and to the extent that they’ve altered their business model and taking cost out and certainly change their personal lifestyles, those guy fine. For those that are still living as if it were 2005 or 2006, those guys are certainly in distress and probably no longer customers.

Your next question comes from the line of Joan Storms - Wedbush.

Hi. Thank you for taking my question and so nice to see it, finally a stabilization in the marketplace. All right, Mark I was wondering if you could, I don’t have this right in front of me and I apologize but there’s a couple of different pieces to your debt and I was wondering what the next piece is that’s coming due, have big is it and what’s your preliminary thinking on refinancing there?

Sure. I’m sorry Joan, just the last part of your question again?

What was your preliminary thinking on refinancing that piece?

Okay. Yes. We have a piece to our capital structure and the asset backed receivables securitization facility. That piece was up for renewal in May and we extended the term for three months, so that expires in mid to late August. That’s a $25 million facility. We’ve brought our borrowing down on that. Our capacity excluding that facility is more than adequate for our needs in the current period. So as we get into next year, when we look at working capital build and our needs there, we may look at some additional capacity. We will look at it but we may not add it. So, that would be kind of our current consideration going into the season or whether we need some short term capacity there. Longer term, the private placement, well we have a term loan, $60 million term loan. The original value is amortized down to about $51 million now. That is amortized through the end of 2010 and then following that is a private placement $100 million which comes due in 2011 or early 2012 and the revolver is due in late 2012.

Your next question comes from the line of Kathryn Thompson - Thompson Research Group.

Hi. Thank you. Just on the maintenance. Could you give your D&A and CapEx guidance for the year and also remind us of the overall interest expense target for the year?

Sure. In terms of D&A, we can essentially take from the cash flow statements and essentially double the year-to-date number as the D&A expectation for the year.

And CapEx …

Which would be approximately $11.5 million to $12 million and then there is another $6 million on share based compensation. So, the total will be more like $17 million to $18 million. Okay. What was your second part of your question? In terms of interest expense, it would be a little bit more modest in the second half of the year than the first half given the fact that we have lower average borrowings in the second half.

Okay. Going back to the bonus contribution in the quarter and save that $4 million for the quarter and $5 million for the year and so in your last conference call you said about 95% was not too far off.

Right.

We are sure what the street number was in terms of guidance. But it appears that a little over half of essentially the raise guidance is can be contributed to your lower bonus contribution. Is that a correct way to think about this?

No. Because what happened there last year, Kathryn was that we were over accrued in the first half of the year given where the actual year ended up. What happens is that we make a projection in terms of what our earnings will be. A good portion of our incentive compensation is whether it be the local, regional division or my level, it’s directly or indirectly tied to earnings. So therefore as the earnings base eroded during the year. We had to make adjustments during the year. So, in the second half of the year in fact we had to reduce the bonus accrual because of that erosion of earnings and then therefore we through the first half retrospectively were over accrued. This year we are looking at the numbers for the year and if it comes out the way we expected then our accruals will map close to operating profits realized during the year. Therefore the current accrual is more accurate to the extent that we exceed $1 to a $1.5. The incentive comp would be even greater than we estimate to the extent we fall short of $1, $1.5 the final incentive comp accrual for the year will obviously be less.

Thanks. But still year-over-year, year-to-date it’s $5 million lower?

Yes.

Okay. Just in closing, any inventory targets for the year?

To maintain the same level of change as you have seen in the June numbers which are mid-teens type of percent change year-on-year.

Okay.

So that’s a reasonable expectation at this juncture.

Your next question comes from the line of [Jacob Shrum] with [Inaudible].

Hi guys. Do you agree with free cash flow this year came in at $42 million, last year at $52 million, just want to make sure I have my numbers are right?

You’re saying for this year’s free cash flow?

Yes this quarter, just net income plus D&A, less CapEx was $42 million versus last year at $52 million?

That’s on a year-to-date.

There are no further questions at this time. I turn the call back over to you.

Thank you, Kim, Jacob if you are still on the line if you could get back with Craig and reconcile the numbers I’m not sure what the numbers you were referring to were coming from. Thank you all again for listening to our second quarter 2009 results conference call. Our next call is schedule for Tuesday, October 27. There is a slight change in our schedule since I won’t be available on the normal Thursday that we have our call in October but so we are putting it out to Tuesday, October 27, 2009 when we will discuss our third quarter results conference call. Thank you again for listening, bye.

This concludes today’s conference call. You may now disconnect.