Hello and welcome to the Pool Corporation Second Quarter 2016 Conference Call and Webcast. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. 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, sir. Mark W. Joslin - Chief Financial Officer & Senior Vice President: Thank you, operator. Good morning, everyone, and welcome to our Q2 2016 earnings call. 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 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. Now, I'll turn the call over to our President and CEO, Manny Perez de la Mesa. Manny? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Thank you, Mark, and good morning to everyone on the call. Our team managed to navigate stops and starts of the season to realize 21% earnings per share growth year-to-date and 13% earnings per share growth in the quarter. While generally favorable industry conditions contributed to our results, it is our execution derived from the commitment of our people that make it all happen. Looking at sales, our domestic blue base business sales were up 8.6% year-to-date, including an increase of 5.1% in the quarter. The lower second quarter sales growth was related to the early start of the season as communicated last quarter with our sales as projected in the second quarter. We believe that we continued to grow market share, especially in…

Thank you. We will now begin the question-and-answer session. And the first question comes from Matt Duncan with Stephens, Inc.

Hey. Good morning, guys. Nice quarter. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Thank you. Mark W. Joslin - Chief Financial Officer & Senior Vice President: Good morning.

Hey, Manny. Can you talk a little bit about, on the discretionary spending that you say you think you guys are benefiting from right now, how much of that is – how much is it, first, helping your sales growth? And is it manifesting itself more from additional refurb, remodel activity? Is it more construction? Are you seeing a mix up effect where people are opting for higher-end items? Just how is that discretionary spend increasing showing up in the business? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: We see it in two areas, Matt. First – and, by the way, this is all within the context of remodel and replacement activity. Obviously, maintenance and repair is not affected. And new construction, the impact there has been very modest. So really the biggest component of the increase has been within the context of remodel and replace. And particularly apartment and (11:16) the product areas that are more discretionary, if you go to the equipment pad, it would be in items like heaters and lights and controls. And obviously, in terms of the remodel, it would be the remodeling of the pool itself, replacing the plaster finish, and associated tile and coping. The other element, which you touched on, is that, as part of that process, there has been a gradual migration to higher-end products. If you go to, for example, plaster, we have several brands of a proprietary Pool finishes, and the highest end of those brands, JewelScapes, which is a glass bead finish, is capturing progressively a bigger share of the pie. And we just launched that a few years ago. And that's, again, gaining progressively more traction every year. And the same thing applies when you go to the equipment pad, the replacement, the enhancements, given the investments and developments, part of manufacturers in those product categories. They develop new tools that make the equipment either more energy-efficient or providing more value in terms of, for example, I'll call it the light show that you can create in your pool, increasing aesthetic appeal all the way around. All those kinds of investments and developments on their part have also increased the mix in terms of, well, again, within remodel and replace, to a higher-end product line, more higher-end products.

Very, very helpful. I'm going to nitpick just for a second here. The SG&A cost as a percent of sales were flat year-over-year despite pretty good sales growth. Is that a catch-up on incentive comp accrual or is there some other cost that was added there? Mark W. Joslin - Chief Financial Officer & Senior Vice President: Yeah. Matt, just recall that, in last year, we had a relatively weak second quarter and, therefore, our incentive costs for the year were low. So looking at the year-over-year, in incentive, they are up about $4 million due to better performance this year relative to last year, so.

Got it, makes sense. Okay. And then last thing just on the guidance. So you beat by $0.05 in the quarter and it sounds like the acquisition that you did is profitable. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Yes.

Just curious why maybe the guidance didn't move up a little bit more than the $0.05. Is it just a little bit of conservatism as we wait to see the year play out? Mark, you made a comment that there's a chance you could put up a 10%, a double-digit operating margin for the year. It seems like if you did, you would be at the high-end or above the guidance range. So, just curious sort of what the thought process was on the $0.05 increase. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Well, two parts. One is the $0.05 is what we've realized in the quarter. The benefit from accretion standpoint for most transactions happen in fact in the second quarter with the contribution in the balance of the year being either very modest or non-existent. And we're shooting for 10%. That's our goal to achieve. And, again, that's on the high-end as you well note. And it's something we're striving for, but not something that may very well be realized this year, but certainly next year.

Okay. So basically we're treating it like the 10%, not a layup. It's a good stretch goal. You think you can get there and if you got there you'd be at the high-end of the range is what we should interpret that? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Exactly. Mark W. Joslin - Chief Financial Officer & Senior Vice President: Right.

Perfect. All right. Thank you, guys. I appreciate it. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Thank you.

Thank you. And the next question comes from Ken Zener with KeyBanc.

Good morning, gentlemen. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Good morning, sir. Mark W. Joslin - Chief Financial Officer & Senior Vice President: Good morning.

So I wonder – I apologize if I missed it in the first few minutes. But last year in the second quarter – last year you had a rare lowering of estimates tied to lower flat sales, I believe, specifically in Texas and California. Did you comment on those states at all today? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: I did not comment on the – by states.

Would you mind giving that? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: No, no. You'll have to bear with me a second. But, first, last year in Texas, we had very high levels of rainfall. This year the impact was still high levels of rainfall, but not as bad as last year. So Texas, in our blue business, which is obviously the biggest part of our business, was up 4%. Now, again, that 4% means that it wasn't particularly great either. So Texas was again relatively modest, a little lower than our 5% overall growth in the domestic blue business. Mark W. Joslin - Chief Financial Officer & Senior Vice President: That's for the quarter. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: For the quarter. Yes, for the quarter. In terms of California, California was a bit cool last year. This year, the weather was frankly nicer. You live there yourself, so you experienced it. And in that particular case, our domestic blue business sales quote for the quarter there was just over 10%. So California lifted our average up a little bit. Texas brought it down a hair, again, in terms of our 5.1% that we realized in domestic base business for the quarter.

Now if I could, because last year California drought, Texas obviously the rain, but in California specifically, do you think it was up 10%? And what was that year-to-date? Was that because of the weak comp last year or are we seeing the strong home prices at the state scene really driving a lot more? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: No. I wouldn't read too much there.

Thanks. What's the dynamics there? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Yeah. I wouldn't read too much into it because for the total year last year California was up 7%. So it was fine.

Thumbs again (17:52). Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Exactly. And this year, on a year-to-date basis, California is up 9%. So, again, not enough shaking one way or the other.

Understood, understood. Because last year it was – seems like an anomaly when you had that weakness and adjusted your estimates. The deals that you've done in the last year and even including the recent irrigation company, did those things – had you been working on that? Do they just show up at your door? Is that something that perhaps might accelerate? What - Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: No, they don't show up at our door. Well, it's tough to get to Covington without directions. So, therefore, that's highly unlikely to happen.

Even with instructions it's hard. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Yeah. With – let me see. We have ongoing contact within the domestic and international pool business and within the domestic irrigation business with distributors, period. And there is an open – call it an openness that we try to convey in terms of knowing who they are and knowing what their objectives are. And within that context to the extent that a particular distributor falls into our target geography, we try to cultivate a greater relationship to see if they want to be part of the organization. And that sometimes takes a year or two years to come to fruition and sometimes it's taken more than 10 years to come to fruition. We are, Ken, as you know, very deliberate and patient in our approach in terms of building our business. And we're not going to run and try to do 20 transactions in one year because, first of all, integrating those is a nightmare. And, secondly, our key is building value over time for shareholders. And that's not going to happen if we try to rush and do too many things at one time. So it's a very deliberate process and it's looked at on a market-by-market basis looking at the attributes of the market and whether an acquisition makes sense. We've also opened up over 100 of our own locations where an acquisition didn't make sense and we just decided to do it ourselves. So we look at, it's – and elsewhere – you also know our markets are very unique. So, our customers are unique to the market and in many cases our products are unique to the market. That applies whether it's blue or green or teal or brown. And therefore given that uniqueness of each market we look at the dynamics of the market, the attractiveness of the market long-term, how that market is currently being served and by who and whether an acquisition or new opening is best. And if it's an acquisition being best, then we look at who the best one or two alternatives should be to fill that void for us.

Thank you.

Thank you. And the next question comes from David Mann with Johnson Rice. David M. Mann - Johnson Rice & Co. LLC: Yes. Thank you. Good morning and nice quarter. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Sure. David M. Mann - Johnson Rice & Co. LLC: Could of questions. Just curious if you can give us the domestic blue comps by months. And given the warm weather, the heatwave, what are the trends looking like July to-date? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Okay. In terms of the comps by month, I don't have it readily available, but I will tell you that May was the softest of the three months. And particularly in the seasonal markets in the Sun Belt, it was largely the same, or very close to the same, each one of the three months, adjusted for the sales days of the month. But in the seasonal markets, Snowbelt basically, May was soft and then June got back to normal. In terms of July, pretty much as expected, pretty much as we expected to be happening for the first, whatever, 13 business days. David M. Mann - Johnson Rice & Co. LLC: Okay. In terms of the acquisition, can you give us a sense of what the sales and EBIT contribution would look like for the year? And also, what kind of multiple did you pay for that acquisition? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Sure. First of all – and just for context and color, we highlight the acquisition in Texas that we did on the irrigation side, but we also did a couple of smaller acquisitions on the blue side – well, blue and…

Thank you. And the next question comes from David Manthey with R.W. Baird. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Hi. Good morning. First off, Manny, in your slide deck you often talk about the aging of the installed base of pools. And I'm wondering just as we're looking at that and thinking about how that plays out, do you have an assumption for the average life of a Gunite pool? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: That's a very good question, David. Properly maintained, the Gunite pool can last somewhere between 1,000 years to 2,000 years. And the caveat is properly maintained. Just like a house needs the roof to be replaced every so often and painted, the same thing applies to a pool. So the actual structure itself again properly maintained can last virtually forever, at least longer than our lifetimes. The caveat is the individual products, right. So, for example, let's take the pool surface itself, not the structure, but the surface. The surface is analogous of the paint on a house or on a wall. And typically the challenge there is the water and how well-balanced the water is not. If the water is well-balanced, the pool surface can last 15 years, 20 years and not have any real significant discoloration or impairments. On the other hand, if the water chemistry is not properly balanced, that life could be shortened to maybe as little as seven years or eight years. So the big variable there is the water and how well balanced the water is or not. When you turn to the equipment, there's some degree of impact there in terms of how the equipment is run and how often it's used and how it's…

Thank you. And the next question comes from David Mandell with William Blair. David M. Mandell - William Blair & Co. LLC: Good morning. Can you provide a little more color about the gross margin improvement in the base business? What kind of initiatives do you have going on there? Are they new? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Yes. Let me see there's two parts to that. One is, when we look at our business, the highest leverage growth opportunity is selling more of the same to the same type customers or the same customers. And to that end, initiatives are focused on even further refining and improving our service levels as well as our sales execution to drive awareness and further integrate ourselves with the customer using tools like Pool360 that I mentioned earlier, as well as a plethora of other tools, marketing and technology tools that we have to, again, help our customers sell more, so we in turn sell more to them, as well as gaining share of existing customers. So, more of the same to the same is a big driver, highest leverage item, overall, given the leverage priority number one. Part two is selling more products to existing customers. And, again, second highest in leverage, selling more products to existing customers. For example – best example of that is, order of magnitude, is building materials. As we have broadened our offering and brought that offering to more and more individual markets, that's enabled us to grow our share of customers' pie for product they may have been buying from other sources, because, frankly, we did not offer those products in that market. So, as we run that – brought those products to market in those markets, it's…

Thank you And the next question comes from Garik Shmois with Longbow.

Hey. Good morning, guys. This is Mark Zikeli on for Garik today. Manny, in your prepared remarks, I think you said it was a quote, "start-stop type of year." After a good 1Q, I'm just kind of curious what you meant by that, and were there any weather headwinds in the quarter? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Yes. Great that you picked that up. As I mentioned earlier, I think in a question from David Mann on bi-monthly, what happened in the quarter, basically the season got off to a really strong start because of the, relatively speaking, milder winter. And so guys that were involved in remodeling pools started working earlier than they otherwise would, or certainly earlier than they did last year, as one example. Retail stores, because of the mild winter, were stocked earlier than they otherwise would have been. But what happens is, once you got to like the third week of April – and this is more in the Snowbelt – third week of April, it got cold. And for the better part of a month or so, it was a lot colder than normal. So basically, the season got off to a very strong start. And then it kind of like stopped and then, just before Memorial Day, it got warm again and then it got back to normal the balance of the quarter. So the impact there and maybe, given the weighting that the Snowbelt has to our business, particularly in the May, June months – May, June and July months, the fact that it started, stopped and started again is the point I was making. And the impact again is what I described.

Okay. As far as the M&A goes of the irrigation business and its impact for this year, you said it was $0.03 for the year. Is that included in your new guidance? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Yes. Well, $0.02 is already in the bag of sorts and the other $0.01 is factored in, yes.

Okay. And any change to the share count assumption? Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: I believe that's nothing significant because our second quarter share repurchases were pretty modest in the big picture. So no changes of note there.

Okay. Best of luck. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Thanks you, sir.

Thank you. As there are no more questions, I would like to return the call to management for any closing comments. Manuel J. Perez de la Mesa - President, Chief Executive Officer & Director: Thank you, Keith, and thank you all for listening. Our next earnings call, mark it on your calendars, is scheduled for October 20 – Thursday, October 20 same time, 10 AM Central, 11 AM Eastern, 8 AM Pacific when we'll discuss our third quarter results. Have a great day.

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