Peter D. Arvan
President and Chief Executive Officer at Pool
Thank you, Melanie, and good morning to everyone on the call. This morning, we were pleased to report another solid quarter for the business. Net sales, including acquisitions, came in at $1.6 billion, a 14% improvement, with base business posting a 10% improvement over the same period in 2021. Our results were fueled by solid demand for nondiscretionary maintenance and repair products, continued new pool construction activity, strong renovation and remodel activity and inflation in the 9% to 10% range.
Now that we have closed the third quarter, we are fairly certain that new pool construction activity in 2022 will be down when compared to 2021. We would estimate that new pool construction units this year will be 10% to 15% less than the previous season. As expected, remodel activity has tapped into the free capacity of our builders to keep them busy. From a macro perspective, inflation, adoption of smart pool products, consistent demand for nondiscretionary maintenance on the installed base of pools and the leveraging of our operating network are all enabling continued share gain and growth.
Now, let me provide some specifics on what we have seen in our four largest big business year-round markets. As expected, Florida continues to be very strong with base business revenue up 20% for the quarter. Arizona also posted strong results with revenue up 18%, while Texas and California finished the quarter with solid results, up 10% and 16% respectively. Our year-round markets grew 15% for the quarter, and seasonal markets grew 5% as less favorable weather impacted the buildable days and pool usage in the northern seasonal markets.
Looking at end markets, I'm pleased to report that commercial pool product demand remains strong with sales up 28% for the quarter. This is in line with total year-to-date growth rate of 27%. Retail sales excluding Pinch A Penny were up slightly at plus 4%, which reflects some inventory correction in the channel and less favorable weather in the seasonal markets.
Looking at Pinch A Penny as a standalone, we continue to be very pleased with the results. Retail sales through the franchise stores are up 16% over prior year third quarter. From a product perspective, equipment sales growth is solid, posting gains of 9% for the period. This category includes pumps, heaters, lights, filters and automation. Chemical sales were up 32% for the quarter as the trichlor shortage and inventory issues have abated. At this point, the only chemicals that remain in short supply are liquid bleach and cal hypo, which are used to shock the swimming pool. Lastly, building material grew 14% in the quarter, reflecting solid demand in a still labor-constrained market.
Let me now add some commentary on our European operations that, as a reminder, make up about 4% of our total revenue. After a tremendous year last year, the teams in Europe have been impacted by less-than-favorable weather, a very tough economy, spiraling energy cost and the war in Ukraine. This has combined to create a significant headwind for our team as we saw sales decline to 24% in the quarter, 11% on a constant currency basis. This follows two solid years of growth in the quarter, where combined sales grew approximately 44% in the same quarter. The Horizon team continued to perform well as we posted base business revenue growth of 12% in the quarter, bringing the year-to-date sales growth to 17%. We continue to expand this platform and remain confident in our ability to grow.
Turning to gross margins for the quarter. Our overall gross margin was 31.2%, which is a decline of 10 basis points when compared to last year. Generally, we are pleased with the stability of our gross margins with the year-to-date results being a very solid 31.8%, which is a 140 basis point improvement over prior year.
From an expense perspective, the team again delivered incredible results. Our operating expenses for the quarter were up 17%, which slightly exceeds our revenue growth but is in line with expectations given the acquisitions, new location and investments in growth. From a base business perspective, operating expenses were up 8% with revenue up 10% in the period. You can see clearly that our capacity creation activities continue to deliver value for our customers, team and supplier partners alike.
Pool360 and our other digital platforms continue to grow. In the third quarter, Pool360 sales increased 14%. As previously mentioned, we released a new version of Pool360 this year and are in the rollout phases. As a percentage of our revenues, sales through Pool360 are at 12%. This is an area that we expect to expand as more and more customers experience the benefit of using this improved app and other B2B tools in our arsenal.
Wrapping up the income statement. You will note that our operating income came in at a solid $264 million, which is an 11% increase over the previous year same period. Operating margins came in at 16.3% for the quarter with our year-to-date operating margin at a strong 18.1%.
Finally, with three full quarters behind us and a favorable outlook for the balance of the year, we are updating our earnings guidance for the full year 2022 to $18.50 per share to $19.05 per share. Excluding the ASU adjustment, the range is $18.26 to $18.81 per share. This represents an incredible 22% improvement at the midpoint on top of a tremendous year in 2021.
As you can see, the POOLCORP team continues to raise the bar within the industry and deliver very strong results in a dynamic economic environment. The last two and a half years have been both challenging and at the same time transformative for the industry. No single company was or is better positioned to capitalize on these challenges and opportunities than POOLCORP. The depth of our team, our expansive footprint, our strong balance sheet and sheer grit and determination have allowed us to not only gain share but gain efficiencies at the same time.
The industry has transformed as well and is now larger driven by (1) a higher installed base, which is approximately 6% larger when compared to the 2019 installed base of in-ground swimming pools and (2) structural inflation that has increased the size of the industry by approximately 30%. Pool owners continue to upgrade their equipment pads with new technology as normal repairs are needed and replacements are made. This too increases the size of the market as people invest in technologies that make their lives easier and may not have been available when their pools were built.
Consider the average age of a pool in North America is around 25 years old with about half of those pools operating with little to no automation or modern features. Clearly, the jump in new pool construction activity in 2020 and 2021 helped drive our growth. At the same time, however, the nondiscretionary maintenance and increasing content on the replacement items as well as the structural inflation on the growing installed base have allowed us to grow this year despite the fact that new pool construction activity may be down from the previous year by as much as 15%.
With announced inflation from the major equipment manufacturers in the 4% to 5% range for 2023, we expect this to mitigate potential declines in new pool construction and a less robust renovation market, should those market conditions occur. Additionally, we are confident that the strategic investments that we made with the acquisition of Porpoise Pool & Patio to improve our value proposition for the retail and DIY segments that we serve through our thousands of independent retailer customers will drive continued growth. We also continue to expand the number of Pinch A Penny franchise locations in the Sun Belt markets gaining an even stronger foothold in key year-round markets as we added seven franchise locations this year with more in development for next year. This acquisition also brought us strategic capabilities in chemical packaging, making us more vertically integrated and improving our margins and capabilities.
We further gained incredible customer technology platforms and applications that we intend to leverage across our entire business to grow our independent retailers' and customers' businesses. We have remained disciplined in our capital allocation, maintaining a leverage ratio well below the 1.5 to 2 times target that we have historically observed. And we have returned $572 million to our shareholders this past year in the form of share buybacks and increased dividends.
Our industry is somewhat unique given the high recurring revenue nature of the business. We also enjoy a market-leading position, expanding capabilities and an unmatched track record. While no one is certain about what challenges we will face in the future, we can be certain that we will rise to the occasion. Our mix of business is most heavily weighted on nondiscretionary spending, and we provide best-in-class service and value for our customers.
Additionally, we do not believe that inflation across most of our product categories will revert to previous levels as this would be unprecedented and not sustainable given the historic cost increases that our manufacturer partners have absorbed.
Thank you. And I will now turn the call over to Melanie Hart, our Vice President and Chief Financial Officer, for her commentary.
