Note 3. Revenue
The Company primarily sells pool equipment including pumps, filters, heaters, cleaners, salt chlorinators, automation, lighting, safety and flow control products to its customers. An arrangement with a customer contains a single performance obligation for sale of the products. Transfer of the individual product is considered the performance obligation. The Company ships its products via Free on Board shipping point and recognizes revenue at the point-in-time of shipment to the customer. The Company’s standard customer payment terms are net thirty days. The Company has established an early-buy program for select customers for purchases made outside of peak season that extends favorable payment terms, generally not to exceed 180 days, and applies the practical expedient in Accounting Standards Codification (the “ASC”) 606-10-32-18 to not adjust the amount of consideration for the effects of a significant financing component. The Company recognizes revenue net of rebates and other discounts.
Under some arrangements, the Company and its customer agree to an annual incentive agreement. These incentive agreements establish all potential rebates and discounts. The transaction price is reduced for certain customer programs and offerings including pricing arrangements and other volume-based rebates and discounts that represent variable consideration.
Volume-based rebates are negotiated at or prior to the time of sale with the customer and are redeemable only if the customer achieves a specified cumulative level of sales or sales increase. Under these rebate programs, at the time of sale, the Company determines the most likely amount of the rebate based on forecasted sales levels. These forecasts are updated at least quarterly for each customer, and the anticipated cost of the rebate reduces gross sales.
The following table disaggregates net sales between product groups and geographic regions, respectively (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Years Ended December 31, |
| | | | | | | | | | 2025 | | 2024 | | 2023 |
| Product groups | | | | | | | | | | | | | | |
| Residential pool | | | | | | | | | | $ | 1,010,086 | | | $ | 952,234 | | | $ | 904,028 | |
| Commercial pool | | | | | | | | | | 65,260 | | | 49,578 | | | 38,972 | |
| Flow control | | | | | | | | | | 46,809 | | | 49,794 | | | 49,452 | |
| Total | | | | | | | | | | $ | 1,122,155 | | | $ | 1,051,606 | | | $ | 992,452 | |
| | | | | | | | | | | | | | |
| Geographic | | | | | | | | | | | | | | |
| United States | | | | | | | | | | $ | 883,306 | | | $ | 823,926 | | | $ | 761,596 | |
| Canada | | | | | | | | | | 75,852 | | | 71,572 | | | 61,680 | |
| Europe | | | | | | | | | | 97,071 | | | 92,199 | | | 93,311 | |
| Rest of World | | | | | | | | | | 65,926 | | | 63,909 | | | 75,865 | |
| Total International | | | | | | | | | | 238,849 | | | 227,680 | | | 230,856 | |
| Total | | | | | | | | | | $ | 1,122,155 | | | $ | 1,051,606 | | | $ | 992,452 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.