Peter D. Arvan
President and Chief Executive Officer at Pool
Thank you, Melanie. And good morning to everyone on the call. Earlier today, we released our first quarter 2022 results and they were nothing short of spectacular. Revenue grew by 33% in the quarter ending at $1.4 billion. This marks our fifth consecutive quarter with sales over $1 billion and is the second biggest quarter ever for POOLCORP. Making this even more notable is that this tremendous growth compares to a very strong first quarter in 2021 when we posted growth of 57%.
Outdoor living remains a priority with homeowners across North America, which continues to keep demand for our products strong. New pool construction backlogs are solid and will keep builders busy for much of this year. Families continue to invest in their backyards and enjoy the benefits of a healthy outdoor living lifestyle. Pent-up demand for renovation continues on the installed base of pools and hardscapes fueled by a tight housing market and rising home values.
The maintenance and repair business is strong with most maintenance companies commenting that the tight labor market isn't allowing them to expand as fast as the market opportunities will allow. Fortunately, we have seen some improvements in the supply chain issues that plagued the industry last year. Our investment in inventory, infrastructure and relentless focus on execution, when combined with our vendors' capacity investments, had eased some shortages and allowed us to provide a better customer experience than a year ago.
Geographically, we continue to see strength in our four major Sunbelt markets as well as our seasonal markets despite some adverse weather in the Midwest and Northeast markets during this quarter. Arizona showed the strongest growth rate with base business sales increasing 33%, followed by California where we saw base business increase 31%. Florida was also very strong with 30% base business increased growth, and Texas, which had an extremely tough comp due to the freeze event last year, posted a 7% gain in its base business.
As a reminder, we believe this event last year added approximately $20 million of revenue to our first quarter in 2021. With that in mind, we are quite pleased with the Texas results. Demand was also robust in our seasonal markets as we saw base business grow by 28%. Overall, we view the weather in the first quarter of 2022 as much less favorable than we saw in the same period of last year.
When we reported full year 2021 results, we said that we believe new pool construction in 2021 was approximately 120,000 units. PK data has released their final number for 2021 and confirm the number of in-ground pools constructed was 117,000 units, which equates to a 22% growth rate over 2020. With nine months left in the year, we think it is a bit premature to call the 2022 number given the many unknowns, which include weather, labor availability and other economic indicators, but we remain very encouraged by what we are seeing so far this year. Most of our builder and remodel customers are reporting strong backlogs for new pools and a growing backlog of remodel projects created by builders focusing on new construction -- more on new construction than remodeled during the last couple of years.
Clearly, the southern migration where the attachment rate of swimming pools is much higher, de-urbanization, the continuation of the work from home trend and a tight housing market are all combining to fuel the industry's growth. It's important to remind you that new pool construction, albeit very important to us and the industry, represents the smallest portion of our business at less than 20%, with maintenance and repair, renovation and remodel representing approximately 60% and 20% respectively. We believe this is a very healthy balance and continue to invest in the margin-accretive maintenance and repair portion of our business that provides consistent growth with attractive margins. Porpoise Pool & Patio represents the latest and most significant investment in this area.
Turning to end markets, Commercial Pool revenues were also very healthy as we saw sales increased 34% in the quarter. This compares with the 26% growth that we saw in the fourth quarter and 24% growth that we saw for the full year of 2021. This market is healthy with maintenance and repair demand growing and a healthy backlog of construction and renovation projects in the pipeline. Our base business sales to independent retailers buoyed by strong demand in the year-round markets and strong early buy activity grew by 28% in the quarter. Results from Pinch A Penny were very similar and quite encouraging.
As we closed the first quarter, we crossed the first 100-day mark of our ownership of this strategic acquisition. Store traffic is brisk and demand is solid across the platform. Pinch A Penny added two new franchise locations in the quarter and have a robust development pipeline. We have combined resources on chemical sourcing and product management and have begun packaging some products for our independent pool stores under the proprietary POOLCORP brands. The operations teams have begun prioritizing the many synergies that we have identified. We are quite pleased with this investment as we believe it significantly strengthens our value proposition and extends our reach in the nondiscretionary part of the market serving the DIY pool owner an estimated $3 billion market opportunity.
Next up, let me provide some context on our base business product sales. Equipment, which includes heaters, pumps, filters, lighting and automation, grew by 18%. Considering the impact of the Texas freeze, we are very pleased with these results. By and large, the supply chain issues that continue to improve or these products with some exceptions that I will comment on shortly. Chemicals grew by 58%, which was driven by much better supply, coupled with solid demand.
Finally, building material sales, which is being fueled by strong demand in new construction and renovation activity, grew by 29%. This follows 20% growth in the fourth quarter and 28% growth for the full year in 2021, further supporting the theme that demand remains strong. Looking across all products, it is easy to see the strength in our business and how our unique value proposition allows us to leverage growth opportunities by providing unparalleled service to our customers while being the best channel to market for our supplier partners.
Switching continents now, I'd like to provide some comments on our European business. For the quarter, Europe grew by 5%, which compares to a very strong first quarter in 2021, where we saw sales increase by 115%. The weather situation in Europe when compared to last year's same period was clearly a challenge and product availability was also impacted by logistical slowdowns in Southern Europe.
The war in Eastern Europe is also having an effect as consumers are grappling with higher energy costs and the overall uncertainty in the East. We expect that as the weather warms, demand will increase. However, our seasoned team remains focused on execution and vigilant of market conditions. As a reminder, in 2021, this business represented approximately 5% of our overall revenue and 4% of our profit, so the impact is small and is contemplated in our guidance.
Horizon continues to perform very well. Overall, the base business in Horizon grew by 32% for the quarter, which compares to 22% growth in the fourth quarter and 24% growth for the same quarter in 2021. We are very pleased with our sustained progress on this growth platform and continue to invest in expanding the business. Overall, demand for housing, commercial construction and renovation of outdoor living spaces continues to grow and remains strong across all geographies and all products.
Working down the income statement, I'll discuss gross margins. For the quarter, we've reported gross margins of 31.7%, a 330 basis point improvement over the same period last year. Our supply chain initiatives, pricing, the Porpoise Pool & Patio acquisition, all combined to drive the increase. Melanie will add more color on this topic in her prepared remarks. Operating expenses as a percent of sales came in at an impressive 15% as compared to 16.2% for the same period last year. Our relentless focus on capacity creation and execution continue to pay dividends for us and help offset the inflation that we are seeing on operating costs. Pool 360 utilization, which is a cornerstone of our capacity creation activity grew by 28%, which shows how much customers value the convenience and time-saving and functionality that it provides.
Completing my comments on the income statement, we proudly reported operating income of $236 million, an 83% improvement over the first quarter of 2021. Not only is this another record first quarter profit, it is also the second most profitable quarter in our company's history. To do that in the first quarter of the year makes it even more impressive. Operating margins came in at 16.7%, a 450-basis-point improvement over the first quarter of 2021. Diluted earnings per share for the quarter totaled $4.41 an 82% increase over the same period last year.
Moving to the balance sheet. We significantly expanded our inventories during the quarter compared to the first quarter last year as supply chain issues eased and we bought ahead to ensure adequate supplies to meet the strong demand of the early buy season. We are in a very strong inventory position heading into our peak selling season to include chemicals where supply has been extremely tight in 2021. We expect that this will enable us to continue to gain market share, utilizing our capital strength and sales center network, leverage to meet the continued strong customer demand. Melanie will give more specific details on the balance sheet and cash flow in her comments.
Before I provide comments around our updated guidance, I'd like to add some color on a few topics that I ensure are on everyone's mind: inflation; material availability; and the near-term outlook. When we discuss the full year 2021 results, we mentioned that we believe inflation would be in the 9% to 10% range for the 2022 season and that we would expect that to pass through the channel as is normally the case. So far this year, this has generally played out as we expected on both accounts.
Inflation is higher in the first part of the year, but because of the timing of increases, we expect that it will end the year between 10% and 11%. Because this inflation traditionally passes through the channel, we made a strategic decision last year to invest incremental capital and inventory to address the supply chain uncertainties and improve our ability to fulfill elevated demand. In addition, in some cases, it provided us an opportunity to buy ahead of some anticipated price increases. This has and continues to provide benefit to our customers and our suppliers by bringing valuable inventory into the most expansive network of sales centers in the industry.
As of now, we have 414 locations, up from 410 at the end of the year with an additional six to eight planned for the balance of the year. To-date, this inflation has yet to dampen demand as many of the current projects are part of a robust backlog that the industry carried into 2022. At this point, very few cancellations or customer-driven delays are being reported, so we expect 2022 to be a very solid year. As you would expect, this inflation, along with the rising cost of labor and other costs, have increased the average price of an in-ground pool.
PK Data, a well-known source for information on the swimming pool industry just released their 2021 report and they show that the average price of an in-ground swimming pool in 2021 to be approximately $56,000, a 17% increase over 2020. Given this year's inflation, we would expect that to climb again in 2022. Many of our builders report that $100,000 plus pools are becoming more and more common and a focus area for many of our customers. Our customers tell us that they remain focused on the bigger projects, planning to catch up on smaller opportunities as time and labor allow.
The pool remodel market continues to have strong demand and a growing backlog with many builders and remodelers focusing on new construction for the last couple of years as demand grew. Most builders are reporting that they have sufficient demand to carry them through the 2022 season. Those same customers are reporting that the backlog for renovation and remodel is healthy and will provide growth opportunities going forward, especially when you consider the aging installed base and the new construction focus that we have seen for the last two seasons.
As it relates to maintenance and the repair part of our business, which let me remind you, is the largest portion of our business making up approximately 60% of our revenues and is essentially non-discretionary and continues to grow with the installed base growth. New products also are helping this category grow as many customers or consumers are opting for smart and energy-efficient technology when repair replacements are needed.
Material availability continues to improve. Capacity investments by our manufacturing partners, when combined with the increased investment in inventory are allowing us to provide better service to our customers when compared to a year ago.
Our chemical inventory, Trichlor in particular, is in much better shape than a year ago. This is driven by strategic sourcing activities along with the Porpoise Pool & Patio chemical packaging operation capabilities of Suncoast Chemical. Equipment inventories are also much improved this year, enabling us to start the season in a much better position than we did a year ago and not having to contend with the shock demand that the weather event of the Texas freeze triggered last year.
Lighting, automation and some variable speed pumps and motors are still suffering from the global chip shortage, but other products like heaters and valves are improved. We have seen some signs that products like above-ground pools and even spas may have peaked and are showing some weakness when compared to the elevated COVID demand. But, in total, these products represent less than 2% of our revenue.
Over time, POOLCORP has consistently demonstrated that our execution and strategic investments have enabled us to deliver solid results in a variety of economic environments. We expect to continue building upon our stellar track record. Considering all of this information and reflecting our confidence in the remainder of the year, we are pleased to update and raise our guidance for the full year 2022 to $18.34 to $19.09 per share, including the $0.18 ASU tax benefit in the first quarter from the previous $17.19 to $17.94, which included $0.19 ASU tax benefit.
Lastly, and before I turn the call over to Melanie for her comments, we would like to thank the team here at POOLCORP. Our customers and our supplier partners for their collective and tireless effort to help bring outdoor living to life. We could not be prouder of the team, more thankful for our customers and more appreciative of the partnerships with our manufacturers.
I will now turn the call over to Melanie Hart, our Chief Financial Officer, for her commentary.