Delaware | 0-26640 | 36-3943363 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
109 Northpark Boulevard, Covington, Louisiana | 70433-5001 |
(Address of principal executive offices) | (Zip Code) |
985-892-5521 | |
(Registrant's telephone number, including area code) |
(d) | Exhibits |
Press Release issued by Pool Corporation on April 19, 2018, announcing first quarter 2018 results and updating fiscal 2018 earnings guidance |
• | Net sales growth of 7% for Q1 2018 with 5% growth in base business sales |
• | Q1 2018 diluted EPS increase of 44% to $0.75, including tax benefits |
• | Updates 2018 earnings guidance range to $5.45 - $5.70 per diluted share from $5.36 - $5.61 to reflect $0.09 of additional tax benefit from ASU 2016-09 |
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
Net sales | $ | 585,900 | $ | 546,441 | ||||
Cost of sales | 419,827 | 392,820 | ||||||
Gross profit | 166,073 | 153,621 | ||||||
Percent | 28.3 | % | 28.1 | % | ||||
Selling and administrative expenses | 132,532 | 122,623 | ||||||
Operating income | 33,541 | 30,998 | ||||||
Percent | 5.7 | % | 5.7 | % | ||||
Interest and other non-operating expenses, net | 3,527 | 3,647 | ||||||
Income before income taxes and equity earnings | 30,014 | 27,351 | ||||||
(Benefit) provision for income taxes | (1,279 | ) | 5,119 | |||||
Equity earnings in unconsolidated investments, net | 46 | 38 | ||||||
Net income | 31,339 | 22,270 | ||||||
Net loss attributable to noncontrolling interest | — | 11 | ||||||
Net income attributable to Pool Corporation | $ | 31,339 | $ | 22,281 | ||||
Earnings per share: | ||||||||
Basic | $ | 0.78 | $ | 0.54 | ||||
Diluted | $ | 0.75 | $ | 0.52 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 40,370 | 41,192 | ||||||
Diluted | 41,862 | 42,877 | ||||||
Cash dividends declared per common share | $ | 0.37 | $ | 0.31 |
March 31, | March 31, | Change | ||||||||||||||
2018 | 2017 | $ | % | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 8,803 | $ | 13,409 | $ | (4,606 | ) | (34 | ) | % | ||||||
Receivables, net (1) | 75,889 | 61,264 | 14,625 | 24 | ||||||||||||
Receivables pledged under receivables facility | 238,707 | 228,755 | 9,952 | 4 | ||||||||||||
Product inventories, net (2) | 703,793 | 647,884 | 55,909 | 9 | ||||||||||||
Prepaid expenses and other current assets | 23,714 | 15,740 | 7,974 | 51 | ||||||||||||
Total current assets | 1,050,906 | 967,052 | 83,854 | 9 | ||||||||||||
Property and equipment, net | 109,310 | 97,140 | 12,170 | 13 | ||||||||||||
Goodwill | 189,759 | 185,062 | 4,697 | 3 | ||||||||||||
Other intangible assets, net | 12,926 | 13,172 | (246 | ) | (2 | ) | ||||||||||
Equity interest investments | 1,150 | 1,174 | (24 | ) | (2 | ) | ||||||||||
Other assets | 15,615 | 17,269 | (1,654 | ) | (10 | ) | ||||||||||
Total assets | $ | 1,379,666 | $ | 1,280,869 | $ | 98,797 | 8 | % | ||||||||
Liabilities, redeemable noncontrolling interest and stockholders’ equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 467,795 | $ | 465,928 | $ | 1,867 | — | % | ||||||||
Accrued expenses and other current liabilities | 45,504 | 48,982 | (3,478 | ) | (7 | ) | ||||||||||
Short-term borrowings and current portion of long-term debt | 20,786 | 9,775 | 11,011 | 113 | ||||||||||||
Total current liabilities | 534,085 | 524,685 | 9,400 | 2 | ||||||||||||
Deferred income taxes | 24,947 | 29,234 | (4,287 | ) | (15 | ) | ||||||||||
Long-term debt, net | 547,324 | 480,442 | 66,882 | 14 | ||||||||||||
Other long-term liabilities | 23,525 | 21,430 | 2,095 | 10 | ||||||||||||
Total liabilities | 1,129,881 | 1,055,791 | 74,090 | 7 | ||||||||||||
Redeemable noncontrolling interest | — | 2,424 | (2,424 | ) | (100 | ) | ||||||||||
Total stockholders’ equity | 249,785 | 222,654 | 27,131 | 12 | ||||||||||||
Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | 1,379,666 | $ | 1,280,869 | $ | 98,797 | 8 | % |
(1) | The allowance for doubtful accounts was $4.0 million at March 31, 2018 and $4.2 million at March 31, 2017. |
(2) | The inventory reserve was $7.4 million at March 31, 2018 and $7.3 million at March 31, 2017. |
Three Months Ended | |||||||||||||
March 31, | |||||||||||||
2018 | 2017 | Change | |||||||||||
Operating activities | |||||||||||||
Net income | $ | 31,339 | $ | 22,270 | $ | 9,069 | |||||||
Adjustments to reconcile net income to cash used in operating activities: | |||||||||||||
Depreciation | 6,299 | 5,557 | 742 | ||||||||||
Amortization | 470 | 365 | 105 | ||||||||||
Share-based compensation | 3,321 | 3,003 | 318 | ||||||||||
Equity earnings in unconsolidated investments, net | (46 | ) | (38 | ) | (8 | ) | |||||||
Other | 681 | 1,847 | (1,166 | ) | |||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||
Receivables | (117,377 | ) | (123,515 | ) | 6,138 | ||||||||
Product inventories | (168,518 | ) | (161,668 | ) | (6,850 | ) | |||||||
Prepaid expenses and other assets | (3,843 | ) | (2,617 | ) | (1,226 | ) | |||||||
Accounts payable | 222,285 | 234,581 | (12,296 | ) | |||||||||
Accrued expenses and other current liabilities | (18,760 | ) | (12,209 | ) | (6,551 | ) | |||||||
Net cash used in operating activities | (44,149 | ) | (32,424 | ) | (11,725 | ) | |||||||
Investing activities | |||||||||||||
Acquisition of businesses, net of cash acquired | (578 | ) | — | (578 | ) | ||||||||
Purchases of property and equipment, net of sale proceeds | (14,639 | ) | (19,121 | ) | 4,482 | ||||||||
Other investments, net | — | 2 | (2 | ) | |||||||||
Net cash used in investing activities | (15,217 | ) | (19,119 | ) | 3,902 | ||||||||
Financing activities | |||||||||||||
Proceeds from revolving line of credit | 148,335 | 213,189 | (64,854 | ) | |||||||||
Payments on revolving line of credit | (170,012 | ) | (206,319 | ) | 36,307 | ||||||||
Proceeds from asset-backed financing | 80,000 | 55,000 | 25,000 | ||||||||||
Payments on asset-backed financing | (20,000 | ) | (18,500 | ) | (1,500 | ) | |||||||
Proceeds from short-term borrowings and current portion of long-term debt | 10,798 | 11,441 | (643 | ) | |||||||||
Payments on short-term borrowings and current portion of long-term debt | (848 | ) | (2,771 | ) | 1,923 | ||||||||
Payments of deferred financing costs | (8 | ) | — | (8 | ) | ||||||||
Payments of deferred and contingent acquisition consideration | (265 | ) | (199 | ) | (66 | ) | |||||||
Proceeds from stock issued under share-based compensation plans | 7,808 | 6,149 | 1,659 | ||||||||||
Payments of cash dividends | (15,011 | ) | (12,799 | ) | (2,212 | ) | |||||||
Purchases of treasury stock | (2,592 | ) | (2,725 | ) | 133 | ||||||||
Net cash provided by financing activities | 38,205 | 42,466 | (4,261 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 24 | 530 | (506 | ) | |||||||||
Change in cash and cash equivalents | (21,137 | ) | (8,547 | ) | (12,590 | ) | |||||||
Cash and cash equivalents at beginning of period | 29,940 | 21,956 | 7,984 | ||||||||||
Cash and cash equivalents at end of period | $ | 8,803 | $ | 13,409 | $ | (4,606 | ) |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
March 31, | March 31, | March 31, | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Net sales | $ | 575,110 | $ | 545,484 | $ | 10,790 | $ | 957 | $ | 585,900 | $ | 546,441 | ||||||||||||
Gross profit | 162,975 | 153,416 | 3,098 | 205 | 166,073 | 153,621 | ||||||||||||||||||
Gross margin | 28.3 | % | 28.1 | % | 28.7 | % | 21.4 | % | 28.3 | % | 28.1 | % | ||||||||||||
Operating expenses | 128,123 | 122,084 | 4,409 | 539 | 132,532 | 122,623 | ||||||||||||||||||
Expenses as a % of net sales | 22.3 | % | 22.4 | % | 40.9 | % | 56.3 | % | 22.6 | % | 22.4 | % | ||||||||||||
Operating income (loss) | 34,852 | 31,332 | (1,311 | ) | (334 | ) | 33,541 | 30,998 | ||||||||||||||||
Operating margin | 6.1 | % | 5.7 | % | (12.2 | )% | (34.9 | )% | 5.7 | % | 5.7 | % |
Acquired | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
Tore Pty. Ltd. (Pool Power) (1) | January 2018 | 1 | January - March 2018 | |||
Chem Quip, Inc. (1) | December 2017 | 5 | January - March 2018 | |||
Intermark | December 2017 | 1 | January - March 2018 | |||
E-Grupa | October 2017 | 1 | January - March 2018 | |||
New Star Holdings Pty. Ltd. (Newline) | July 2017 | 1 | January - March 2018 | |||
Lincoln Aquatics (1) | April 2017 | 1 | January - March 2018 |
(1) | We acquired certain distribution assets of each of these companies. |
December 31, 2017 | 351 | ||
Acquired location | 1 | ||
New locations | 3 | ||
Consolidated location | (1 | ) | |
March 31, 2018 | 354 |
(Unaudited) | Three Months Ended | ||||||||
(In thousands) | March 31, | ||||||||
2018 | 2017 | ||||||||
Net income | $ | 31,339 | $ | 22,270 | |||||
Add: | |||||||||
Interest and other non-operating expenses (1) | 3,527 | 3,647 | |||||||
(Benefit) provision for income taxes | (1,279 | ) | 5,119 | ||||||
Share-based compensation | 3,321 | 3,003 | |||||||
Equity earnings in unconsolidated investments | (46 | ) | (38 | ) | |||||
Depreciation | 6,299 | 5,557 | |||||||
Amortization (2) | 276 | 229 | |||||||
Adjusted EBITDA | $ | 43,437 | $ | 39,787 |
(1) | Shown net of interest income and includes amortization of deferred financing costs as discussed below. |
(2) | Excludes amortization of deferred financing costs of $194 and $136 for the three months ended March 31, 2018 and March 31, 2017. |
(Unaudited) | Three Months Ended | ||||||||
(In thousands) | March 31, | ||||||||
2018 | 2017 | ||||||||
Adjusted EBITDA | $ | 43,437 | $ | 39,787 | |||||
Add: | |||||||||
Interest and other non-operating expenses, net of interest income | (3,333 | ) | (3,511 | ) | |||||
(Benefit) provision for income taxes | 1,279 | (5,119 | ) | ||||||
Other | 681 | 1,847 | |||||||
Change in operating assets and liabilities | (86,213 | ) | (65,428 | ) | |||||
Net cash used in operating activities | $ | (44,149 | ) | $ | (32,424 | ) |
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