• Pool Corporation Reports Record Third Quarter Results and Updates 2022 Earnings Guidance

    Источник: Nasdaq GlobeNewswire / 20 окт 2022 06:00:01   America/Chicago

    Highlights

    • Record net sales of $1.6 billion, up 14% from Q3 2021
    • Operating income of $263.9 million, up 11% from Q3 2021
    • Q3 2022 diluted EPS of $4.78, an increase of 5% from Q3 2021 or an increase of 7% to $4.76, without tax benefits in both periods
    • Narrows annual earnings guidance range to $18.50 - $19.05 per diluted share

    COVINGTON, La., Oct. 20, 2022 (GLOBE NEWSWIRE) -- Pool Corporation (Nasdaq/GSM:POOL) today reported record results for the third quarter of 2022 and updated its 2022 earnings guidance.

    “Our teams delivered another record-breaking quarter. Our sales activity, lifted by increased pricing, showed stable demand for our products. Combined with focused execution, we surpassed $5.0 billion in year-to-date net sales. We've observed increased demand for higher value products and customizations for new pools and remodeling projects, even though the issuance of new pool permits year-to-date has moderated. Over the long-term, we expect that our vast network and the steady growth in the installed base of pools will sustain the industry-leading position that we have built on over our 27 years as a public company,” commented Peter D. Arvan, president and CEO.

    Third quarter ended September 30, 2022 compared to the third quarter ended September 30, 2021

    Net sales increased 14% in the third quarter of 2022 to a record $1.6 billion compared to $1.4 billion in the third quarter of 2021. Base business sales grew 10% strengthened by sales growth in our Sun Belt markets, while sales in our northern markets were limited by less favorable weather conditions compared to last year. Net sales benefited approximately 9% to 10% from inflationary product cost increases and were aided by healthy demand for our products and warmer weather throughout much of the United States. We estimate that these increases were partially offset by the following:

    • 1% impact from softness in our European markets, reflecting the impact of the macro-economic environment;
    • 1% from currency exchange rate fluctuations;
    • 1% from one less selling day in Q3 2022 versus Q3 2021; and
    • anticipated net sales shift of $9.0 million from Q3 2022 to Q4 2022 due to Hurricane Ian.

    Gross profit increased 14% to a record $503.7 million in the third quarter of 2022 from $441.9 million in the same period of 2021. Base business gross profit improved 7% over the third quarter of 2021. Gross margin decreased 10 basis points to 31.2% in the third quarter of 2022 compared to 31.3% in the third quarter of 2021. Base business gross margin decreased 80 basis points.

    Selling and administrative expenses (operating expenses) increased 17% to $239.8 million in the third quarter of 2022 compared to $204.6 million in the third quarter of 2021, including a 1% benefit from currency exchange rate fluctuations. As a percentage of net sales, operating expenses increased to 14.8% in the third quarter of 2022 compared to 14.5% in the same period of 2021. The increase in operating expenses reflects inflationary increases and incremental costs to support our business growth, including recent acquisitions.

    Operating income in the third quarter of 2022 increased 11% to $263.9 million compared to $237.3 million in the same period in 2021. Operating margin was 16.3% in the third quarter of 2022 compared to 16.8% in the third quarter of 2021.

    Interest and other non-operating expenses, net for the third quarter of 2022 increased $9.4 million compared to the third quarter of 2021, reflecting higher average debt levels and higher average interest rates.

    We recorded a $0.6 million tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in the quarter ended September 30, 2022, compared to a tax benefit of $4.2 million realized in the same period of 2021. This resulted in a $0.02 per diluted share tax benefit in the third quarter of 2022, down from a $0.10 per diluted share tax benefit realized in the same period of 2021.

    Net income increased 3% to $190.1 million in the third quarter of 2022 compared to $184.7 million in the third quarter of 2021 as operating income gains were partially offset by higher interest expense and lower tax benefits. Earnings per diluted share increased 5% to $4.78 in the third quarter of 2022 compared to $4.54 in the same period of 2021. Without the impact from ASU 2016-09 in both periods, earnings per diluted share increased 7% to $4.76 in the third quarter of 2022 compared to $4.44 in the third quarter of 2021. See the reconciliation of GAAP to non-GAAP measures in the addendum of this release.

    Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021

    Net sales for the nine months ended September 30, 2022 increased 19% to a record $5.1 billion from $4.3 billion in the nine months ended September 30, 2021. Base business sales increased 14% for the period. Gross margin improved 140 basis points to 31.8% from 30.4% in the same period last year. Base business gross margin increased 80 basis points.

    Operating expenses for the nine months ended September 30, 2022 increased 19% compared to the first nine months of 2021. Operating income for the nine months ended September 30, 2022 increased 30% to a record $918.5 million compared to $704.9 million in the same period last year.   Operating margin for the nine months ended September 30, 2022 was 18.1% compared to 16.5% for the nine months ended September 30, 2021, while base business operating margin increased 140 basis points.

    Net income for the nine months ended September 30, 2022 increased 25% to a record $676.6 million compared to $543.0 million for the nine months ended September 30, 2021. We recorded a $9.5 million, or $0.24 per diluted share, tax benefit from ASU 2016-09 in the nine months ended September 30, 2022 compared to a $15.9 million, or $0.39 per diluted share, tax benefit in the same period of 2021. Interest and other non-operating expenses, net for the first nine months of 2022 increased $18.6 million compared to the same period last year, primarily due to higher average debt levels between periods.

    Earnings per diluted share increased 26% to $16.82 in the first nine months of 2022 compared to $13.32 in the same period of 2021. Without the impact from ASU 2016-09 in both periods, earnings per diluted share was $16.58 in the first nine months of 2022 compared to $12.93 in the same period of 2021. See the reconciliation of GAAP to non-GAAP measures in the addendum of this release.

    Balance Sheet and Liquidity

    On the balance sheet at September 30, 2022, total net receivables, including pledged receivables, increased 15% compared to September 30, 2021, driven by our sales growth and recent acquisitions. Inventory levels increased 48% to $1.5 billion compared to September 30, 2021, which compares to the 77% increase that we reported as of June 30, 2022 (compared to June 30, 2021). Our inventory balance reflects increased purchasing to ensure product availability and stock new locations, in addition to impacts from inflation and recent acquisitions. Total debt outstanding was $1.5 billion at September 30, 2022 compared to $362.8 million at September 30, 2021. Our debt balance has increased between periods as we have utilized debt proceeds to fund recent acquisitions, share repurchases and investments in working capital.

    Net cash provided by operations was $307.5 million in the first nine months of 2022 compared to $359.1 million in the first nine months of 2021. The decrease in our operating cash flows was driven by federal tax payments of $79.5 million in 2022, which were allowed to be deferred and included in accrued expenses and other liabilities at December 31, 2021. As a result, total cash paid for income taxes was $237.6 million in the first nine months of 2022 versus $66.8 million in the first nine months of 2021. Additional impacts on our cash flows relate to growth-driven working capital outflows, including increased inventory purchases, which were partially offset by an increase in net income.

    Adjusted EBITDA (as defined in the addendum to this release) increased 30% to $959.2 million for the nine months ended September 30, 2022 compared to $737.1 million in the same period of the prior year.

    Outlook

    “Overall, we believe long-term industry dynamics (including product upgrade trends, growth in the installed base of pools and increasing pool values) remain positive. We are well-positioned to achieve strong results through the remainder of the year and beyond, because we have the best talent in the industry, a broad product offering for our customers and a customer-focused discipline ingrained in our culture. Based on our results to-date and expectations for the remainder of the year, we are narrowing our annual earnings guidance range to $18.50 to $19.05 per diluted share, including the impact of year-to-date tax benefits of $0.24,” said Arvan.

    About Pool Corporation

    POOLCORP is the world’s largest wholesale distributor of swimming pool and related backyard products. POOLCORP operates 417 sales centers in North America, Europe and Australia, through which it distributes more than 200,000 national brand and private label products to roughly 120,000 wholesale customers. For more information, please visit www.poolcorp.com.

    Forward-Looking Statements

    This news release includes “forward-looking” statements that involve risks and uncertainties that are generally identifiable through the use of words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “should” and similar expressions and include projections of earnings. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date of this release, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Actual results may differ materially due to a variety of factors, including impacts on our business from the COVID-19 pandemic and the extent to which home-centric trends will continue, accelerate or reverse; the sensitivity of our business to weather conditions; changes in the economy, consumer discretionary spending, the housing market or inflation rates; our ability to maintain favorable relationships with suppliers and manufacturers; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in POOLCORP’s 2021 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports and filings filed with the Securities and Exchange Commission (SEC) as updated by POOLCORP's subsequent filings with the SEC.

    CONTACT:
    Curtis J. Scheel
    Director of Investor Relations
    985.801.5341
    curtis.scheel@poolcorp.com

    POOL CORPORATION
    Consolidated Statements of Income
    (Unaudited)
    (In thousands, except per share data)

     Three Months Ended Nine Months Ended
     September 30, September 30,
      2022   2021   2022   2021 
    Net sales$1,615,339  $1,411,448  $5,083,807  $4,260,027 
    Cost of sales 1,111,652   969,549   3,466,126   2,965,311 
    Gross profit 503,687   441,899   1,617,681   1,294,716 
    Percent 31.2%  31.3%  31.8%  30.4%
            
    Selling and administrative expenses (1) 239,810   204,623   699,192   589,823 
    Operating income 263,877   237,276   918,489   704,893 
    Percent 16.3%  16.8%  18.1%  16.5%
            
    Interest and other non-operating expenses, net 11,707   2,317   25,428   6,862 
    Income before income taxes and equity in earnings 252,170   234,959   893,061   698,031 
    Provision for income taxes 62,205   50,386   216,687   155,240 
    Equity in earnings of unconsolidated investments, net 90   92   226   224 
    Net income$190,055  $184,665  $676,600  $543,015 
            
    Earnings per share attributable to common stockholders: (2)       
    Basic$4.82  $4.60  $16.99  $13.53 
    Diluted$4.78  $4.54  $16.82  $13.32 
    Weighted average common shares outstanding:       
    Basic 39,214   40,101   39,599   40,146 
    Diluted 39,580   40,691   40,012   40,766 
            
    Cash dividends declared per common share$1.00  $0.80  $2.80  $2.18 

    (1) Selling and administrative expenses for the three and nine months ended September 30, 2021 include a $1.4 million note receivable recovery.

    (2) Earnings per share under the two-class method is calculated using net income attributable to common stockholders (net income reduced by earnings allocated to participating securities), which was $189.0 million and $672.8 million for the three and nine months ended September 30, 2022, respectively. Participating securities excluded from weighted average common shares outstanding were 213 thousand and 223 thousand for the three and nine months ended September 30, 2022, respectively.

    POOL CORPORATION
    Condensed Consolidated Balance Sheets
    (Unaudited)
    (In thousands)

      September 30, September 30,  Change 
      2022 2021  $ % 
                 
    Assets           
    Current assets:           
     Cash and cash equivalents$49,079 $83,475 $(34,396) (41)%
     Receivables, net (1) 189,173  174,987  14,186  8  
     Receivables pledged under receivables facility 360,623  301,163  59,460  20  
     Product inventories, net (2) 1,539,572  1,043,407  496,165  48  
     Prepaid expenses and other current assets 61,032  23,368  37,664  161  
    Total current assets 2,199,479  1,626,400  573,079  35  
                 
    Property and equipment, net 184,387  111,339  73,048  66  
    Goodwill 691,786  281,300  410,486  146  
    Other intangible assets, net 307,389  12,067  295,322  2,447  
    Equity interest investments 1,190  1,242  (52) (4) 
    Operating lease assets 255,611  221,007  34,604  16  
    Other assets 48,213  28,878  19,335  67  
    Total assets$3,688,055 $2,282,233 $1,405,822  62 %
                 
    Liabilities and stockholders’ equity           
    Current liabilities:           
     Accounts payable$442,226 $414,156 $28,070  7 %
     Accrued expenses and other current liabilities 210,448  231,794  (21,346) (9) 
     Short-term borrowings and current portion of long-term debt 12,208  10,744  1,464  14  
     Current operating lease liabilities 72,378  65,442  6,936  11  
    Total current liabilities 737,260  722,136  15,124  2  
                 
    Deferred income taxes 45,247  30,275  14,972  49  
    Long-term debt, net 1,500,337  352,075  1,148,262  326  
    Other long-term liabilities 26,744  34,176  (7,432) (22) 
    Non-current operating lease liabilities 187,589  158,359  29,230  18  
    Total liabilities 2,497,177  1,297,021  1,200,156  93  
    Total stockholders’ equity 1,190,878  985,212  205,666  21  
    Total liabilities and stockholders’ equity$3,688,055 $2,282,233 $1,405,822  62 %

    (1)   The allowance for doubtful accounts was $8.9 million at September 30, 2022 and $5.4 million at September 30, 2021.
    (2)   The inventory reserve was $23.4 million at September 30, 2022 and $15.7 million at September 30, 2021.

    POOL CORPORATION
    Condensed Consolidated Statements of Cash Flows
    (Unaudited)
    (In thousands)

      Nine Months Ended    
      September 30,    
      2022   2021   Change 
    Operating activities         
    Net income$676,600  $543,015  $133,585  
    Adjustments to reconcile net income to net cash provided by operating activities:         
     Depreciation 23,172   21,027   2,145  
     Amortization 6,523   1,064   5,459  
     Share-based compensation 11,691   11,755   (64) 
     Equity in earnings of unconsolidated investments, net (226)  (224)  (2) 
     Other 12,644   5,256   7,388  
    Changes in operating assets and liabilities, net of effects of acquisitions:         
     Receivables (181,775)  (186,772)  4,997  
     Product inventories (223,268)  (267,341)  44,073  
     Prepaid expenses and other assets (31,171)  (22,674)  (8,497) 
     Accounts payable 46,564   146,616   (100,052) 
     Accrued expenses and other current liabilities (33,284)  107,343   (140,627) 
    Net cash provided by operating activities 307,470   359,065   (51,595) 
              
    Investing activities         
    Acquisition of businesses, net of cash acquired (8,309)  (17,887)  9,578  
    Purchases of property and equipment, net of sale proceeds (27,965)  (24,223)  (3,742) 
    Other investments, net 1,760   —   1,760  
    Net cash used in investing activities (34,514)  (42,110)  7,596  
              
    Financing activities         
    Proceeds from revolving line of credit 1,629,740   791,508   838,232  
    Payments on revolving line of credit (1,629,688)  (730,277)  (899,411) 
    Proceeds from term loan under credit facility 250,000   —   250,000  
    Proceeds from asset-backed financing 215,000   310,000   (95,000) 
    Payments on asset-backed financing (130,000)  (415,000)  285,000  
    Payments on term facility (6,937)  (6,938)  1  
    Proceeds from short-term borrowings and current portion of long-term debt 27,396   7,880   19,516  
    Payments on short-term borrowings and current portion of long-term debt (26,960)  (9,006)  (17,954) 
    Payments of deferred financing costs —   (1,610)  1,610  
    Payments of deferred and contingent acquisition consideration (1,374)  (362)  (1,012) 
    Proceeds from stock issued under share-based compensation plans 7,201   11,524   (4,323) 
    Payments of cash dividends (111,572)  (87,509)  (24,063) 
    Purchases of treasury stock (471,210)  (137,975)  (333,235) 
    Net cash used in financing activities (248,404)  (267,765)  19,361  
    Effect of exchange rate changes on cash and cash equivalents 206   157   49  
    Change in cash and cash equivalents 24,758   49,347   (24,589) 
    Cash and cash equivalents at beginning of period 24,321   34,128   (9,807) 
    Cash and cash equivalents at end of period$49,079  $83,475  $(34,396) 

    ADDENDUM

    Base Business

    The following table breaks out our consolidated results into the base business component and the excluded component (sales centers excluded from base business):

    (Unaudited) Base Business Excluded Total
    (in thousands) Three Months Ended Three Months Ended Three Months Ended
      September 30, September 30, September 30,
       2022   2021   2022   2021   2022   2021 
    Net sales $1,552,211  $1,409,867  $63,128  $1,581  $1,615,339  $1,411,448 
                 
    Gross profit  472,873   441,521   30,814   378   503,687   441,899 
    Gross margin  30.5%  31.3%  48.8%  23.9%  31.2%  31.3%
                 
    Operating expenses  220,239   204,277   19,571   346   239,810   204,623 
    Expenses as a % of net sales  14.2%  14.5%  31.0%  21.9%  14.8%  14.5%
                 
    Operating income  252,634   237,244   11,243   32   263,877   237,276 
    Operating margin  16.3%  16.8%  17.8%  2.0%  16.3%  16.8%


    (Unaudited) Base Business Excluded Total
    (in thousands) Nine Months Ended Nine Months Ended Nine Months Ended
      September 30, September 30, September 30,
       2022   2021   2022   2021   2022   2021 
    Net sales $4,844,310  $4,250,543  $239,497  $9,484  $5,083,807  $4,260,027 
                 
    Gross profit  1,511,996   1,292,470   105,685   2,246   1,617,681   1,294,716 
    Gross margin  31.2%  30.4%  44.1%  23.7%  31.8%  30.4%
                 
    Operating expenses  640,907   587,989   58,285   1,834   699,192   589,823 
    Expenses as a % of net sales  13.2%  13.8%  24.3%  19.3%  13.8%  13.8%
                 
    Operating income  871,089   704,481   47,400   412   918,489   704,893 
    Operating margin  18.0%  16.6%  19.8%  4.3%  18.1%  16.5%

    We have excluded the following acquisitions from our base business results for the periods identified:





    Acquired     		 

    Acquisition
    Date    		 Net
    Sales Centers
    Acquired    		 

    Periods
    Excluded
    Tri-State Pool Distributors April 2022 1 May - September 2022
    Porpoise Pool & Patio, Inc. December 2021 1 January - September 2022
    Wingate Supply, Inc. December 2021 1 January - September 2022
    Vak Pak Builders Supply, Inc. June 2021 1 January - August 2022 and June 2021 - August 2021
    Pool Source, LLC April 2021 1 January - June 2022 and
    April - June 2021
    TWC Distributors, Inc. December 2020 10 January - February 2022 and January - February 2021

    When calculating our base business results, we exclude sales centers that are acquired, closed or opened in new markets for a period of 15 months. We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that are consolidated with acquired sales centers.

    We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales. After 15 months of operations, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.

    The table below summarizes the changes in our sales center count in the first nine months of 2022.

    December 31, 2021410
    Acquired locations1
    New locations6
    September 30, 2022417

    Adjusted EBITDA

    We define Adjusted EBITDA as net income or net loss plus interest and other non-operating expenses, income taxes, depreciation, amortization, share-based compensation, goodwill and other impairments (or recoveries) and equity in earnings or loss in unconsolidated investments.  Other companies may calculate Adjusted EBITDA differently than we do, which may limit its usefulness as a comparative measure.

    Adjusted EBITDA is not a measure of performance as determined by generally accepted accounting principles (GAAP). We believe Adjusted EBITDA should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, net cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP.

    We have included Adjusted EBITDA as a supplemental disclosure because we believe that it is widely used by our investors, industry analysts and others as a useful supplemental performance measure. We believe that Adjusted EBITDA, when viewed with our GAAP results and the accompanying reconciliations, provides an additional measure that enables management and investors to monitor factors and trends affecting our ability to service debt, pay taxes and fund capital expenditures.
      
    The table below presents a reconciliation of net income to Adjusted EBITDA.

    (Unaudited) Three Months Ended  Nine Months Ended 
    (in thousands) September 30,  September 30, 
       2022   2021   2022   2021  
    Net income$190,055  $184,665  $676,600  $543,015  
     Add:            
     Interest and other non-operating expenses (1) 11,707   2,317   25,428   6,862  
     Provision for income taxes 62,205   50,386   216,687   155,240  
     Share-based compensation 4,120   4,206   11,691   11,755  
     Equity in earnings of unconsolidated investments, net (90)  (92)  (226)  (224) 
     Note receivable recovery —   (1,400)  —   (1,400) 
     Depreciation 7,796   7,143   23,172   21,027  
     Amortization (2) 1,950   260   5,878   821  
    Adjusted EBITDA$277,743  $247,485  $959,230  $737,096  

    (1)   Shown net of losses on foreign currency transactions of $390 thousand and $349 thousand for the three months ended September 30, 2022 and September 30, 2021, respectively, and $504 thousand and $240 thousand for the nine months ended September 30, 2022 and September 30, 2021, respectively, and includes amortization of deferred financing costs as discussed in Note 2 below.

    (2)   Excludes amortization of deferred financing costs of $215 thousand and $81 thousand for the three months ended September 30, 2022 and September 30, 2021, respectively, and $645 thousand and $243 thousand for the nine months ended September 30, 2022 and September 30, 2021, respectively. This non-cash expense is included in Interest and other non-operating expenses, net on the Consolidated Statements of Income.

    Adjusted Diluted EPS

    We have included adjusted diluted EPS, a non-GAAP financial measure, in this press release as a supplemental disclosure, because we believe this measure is useful to investors and others in assessing our period-to-period operating performance.

    Adjusted diluted EPS is a key measure used by management to demonstrate the impact of tax benefits from ASU 2016-09 on our diluted EPS and to provide investors and others with additional information about our potential future operating performance to supplement GAAP measures.

    We believe this measure should be considered in addition to, not as a substitute for, diluted EPS presented in accordance with GAAP, and in the context of our other disclosures in this press release. Other companies may calculate this non-GAAP financial measure differently than we do, which may limit its usefulness as a comparative measure.  

    The table below presents a reconciliation of diluted EPS to adjusted diluted EPS.

    (Unaudited) Three Months Ended Nine Months Ended 
      September 30, September 30, 
       2022   2021   2022   2021  
    Diluted EPS $4.78  $4.54  $16.82  $13.32  
    ASU 2016-09 tax benefit  (0.02)  (0.10)  (0.24)  (0.39) 
    Adjusted diluted EPS $4.76  $4.44  $16.58  $12.93  


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