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 October 18, 2012, announcing third quarter 2012 results and updating its 2012 earnings guidance range. |
• | Record year to date sales and EPS |
• | Q3 sales growth of 5%, including 3% from base business |
• | Q3 diluted EPS of $0.45, adjusted diluted EPS up 18% to a record $0.59 (excluding goodwill impairment) |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net sales | $ | 528,027 | $ | 503,584 | $ | 1,647,156 | $ | 1,522,896 | ||||||||
Cost of sales | 376,526 | 355,678 | 1,168,687 | 1,072,141 | ||||||||||||
Gross profit | 151,501 | 147,906 | 478,469 | 450,755 | ||||||||||||
Percent | 28.7 | % | 29.4 | % | 29.0 | % | 29.6 | % | ||||||||
Selling and administrative expenses | 103,544 | 106,993 | 316,357 | 311,345 | ||||||||||||
Goodwill impairment | 6,946 | — | 6,946 | — | ||||||||||||
Operating income | 41,011 | 40,913 | 155,166 | 139,410 | ||||||||||||
Percent | 7.8 | % | 8.1 | % | 9.4 | % | 9.2 | % | ||||||||
Interest expense, net | 1,687 | 1,641 | 5,364 | 5,110 | ||||||||||||
Income before income taxes and equity earnings | 39,324 | 39,272 | 149,802 | 134,300 | ||||||||||||
Provision for income taxes | 17,965 | 15,126 | 60,020 | 52,377 | ||||||||||||
Equity earnings in unconsolidated investments | 16 | 23 | 187 | 185 | ||||||||||||
Net income | $ | 21,375 | $ | 24,169 | $ | 89,969 | $ | 82,108 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.46 | $ | 0.50 | $ | 1.91 | $ | 1.70 | ||||||||
Diluted | $ | 0.45 | $ | 0.50 | $ | 1.87 | $ | 1.67 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 46,574 | 47,987 | 47,076 | 48,357 | ||||||||||||
Diluted | 47,787 | 48,772 | 48,205 | 49,157 | ||||||||||||
Cash dividends declared per common share | $ | 0.16 | $ | 0.14 | $ | 0.46 | $ | 0.41 |
September 30, | September 30, | Change | ||||||||||||||
2012 | 2011 | $ | % | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 28,818 | $ | 20,656 | $ | 8,162 | 40 | % | ||||||||
Receivables, net | 175,459 | 160,647 | 14,812 | 9 | ||||||||||||
Product inventories, net | 349,325 | 337,698 | 11,627 | 3 | ||||||||||||
Prepaid expenses and other current assets | 8,078 | 7,354 | 724 | 10 | ||||||||||||
Deferred income taxes | 11,561 | 10,145 | 1,416 | 14 | ||||||||||||
Total current assets | 573,241 | 536,500 | 36,741 | 7 | ||||||||||||
Property and equipment, net | 46,643 | 40,774 | 5,869 | 14 | ||||||||||||
Goodwill | 169,983 | 178,516 | (8,533 | ) | (5 | ) | ||||||||||
Other intangible assets, net | 11,270 | 11,953 | (683 | ) | (6 | ) | ||||||||||
Equity interest investments | 1,066 | 976 | 90 | 9 | ||||||||||||
Other assets, net | 29,180 | 29,493 | (313 | ) | (1 | ) | ||||||||||
Total assets | $ | 831,383 | $ | 798,212 | $ | 33,171 | 4 | % | ||||||||
Liabilities and stockholders’ equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 163,543 | $ | 120,221 | $ | 43,322 | 36 | % | ||||||||
Accrued expenses and other current liabilities | 102,805 | 70,718 | 32,087 | 45 | ||||||||||||
Current portion of long-term debt and other long-term liabilities | 23 | 22 | 1 | 5 | ||||||||||||
Total current liabilities | 266,371 | 190,961 | 75,410 | 39 | ||||||||||||
Deferred income taxes | 31,833 | 26,549 | 5,284 | 20 | ||||||||||||
Long-term debt | 214,328 | 268,700 | (54,372 | ) | (20 | ) | ||||||||||
Other long-term liabilities | 6,381 | 7,503 | (1,122 | ) | (15 | ) | ||||||||||
Total liabilities | 518,913 | 493,713 | 25,200 | 5 | ||||||||||||
Total stockholders’ equity | 312,470 | 304,499 | 7,971 | 3 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 831,383 | $ | 798,212 | $ | 33,171 | 4 | % |
1. | The allowance for doubtful accounts was $4.8 million at September 30, 2012 and $5.2 million at September 30, 2011. |
2. | The inventory reserve was $9.6 million at September 30, 2012 and $7.4 million at September 30, 2011. |
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2012 | 2011 | Change | |||||||||||
Operating activities | |||||||||||||
Net income | $ | 89,969 | $ | 82,108 | $ | 7,861 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation | 8,481 | 7,071 | 1,410 | ||||||||||
Amortization | 962 | 1,243 | (281 | ) | |||||||||
Share-based compensation | 6,236 | 6,143 | 93 | ||||||||||
Excess tax benefits from share-based compensation | (2,534 | ) | (2,229 | ) | (305 | ) | |||||||
Equity earnings in unconsolidated investments | (187 | ) | (185 | ) | (2 | ) | |||||||
Goodwill impairment | 6,946 | — | 6,946 | ||||||||||
Other | 278 | (3,892 | ) | 4,170 | |||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||
Receivables | (63,015 | ) | (55,941 | ) | (7,074 | ) | |||||||
Product inventories | 39,644 | 10,999 | 28,645 | ||||||||||
Prepaid expenses and other assets | 2,607 | 677 | 1,930 | ||||||||||
Accounts payable | (15,500 | ) | (49,542 | ) | 34,042 | ||||||||
Accrued expenses and other current liabilities | 50,643 | 35,522 | 15,121 | ||||||||||
Net cash provided by operating activities | 124,530 | 31,974 | 92,556 | ||||||||||
Investing activities | |||||||||||||
Acquisition of businesses, net of cash acquired | (4,580 | ) | (2,961 | ) | (1,619 | ) | |||||||
Purchase of property and equipment, net of sale proceeds | (13,717 | ) | (16,959 | ) | 3,242 | ||||||||
Other investments | (249 | ) | (177 | ) | (72 | ) | |||||||
Net cash used in investing activities | (18,546 | ) | (20,097 | ) | 1,551 | ||||||||
Financing activities | |||||||||||||
Proceeds from revolving line of credit | 482,669 | 446,649 | 36,020 | ||||||||||
Payments on revolving line of credit | (415,641 | ) | (376,649 | ) | (38,992 | ) | |||||||
Payments on long-term debt and other long-term liabilities | (100,017 | ) | (145 | ) | (99,872 | ) | |||||||
Payments of deferred acquisition consideration | — | (500 | ) | 500 | |||||||||
Excess tax benefits from share-based compensation | 2,534 | 2,229 | 305 | ||||||||||
Proceeds from stock issued under share-based compensation plans | 13,180 | 9,506 | 3,674 | ||||||||||
Payments of cash dividends | (21,669 | ) | (19,798 | ) | (1,871 | ) | |||||||
Purchases of treasury stock | (55,088 | ) | (62,842 | ) | 7,754 | ||||||||
Net cash used in financing activities | (94,032 | ) | (1,550 | ) | (92,482 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (621 | ) | 608 | (1,229 | ) | ||||||||
Change in cash and cash equivalents | 11,331 | 10,935 | 396 | ||||||||||
Cash and cash equivalents at beginning of period | 17,487 | 9,721 | 7,766 | ||||||||||
Cash and cash equivalents at end of period | $ | 28,818 | $ | 20,656 | $ | 8,162 |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||||
(in thousands) | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||
Net sales | $ | 518,504 | $ | 502,301 | $ | 9,523 | $ | 1,283 | $ | 528,027 | $ | 503,584 | ||||||||||||||
Gross profit | 148,738 | 147,541 | 2,763 | 365 | 151,501 | 147,906 | ||||||||||||||||||||
Gross margin | 28.7 | % | 29.4 | % | 29.0 | % | 28.4 | % | 28.7 | % | 29.4 | % | ||||||||||||||
Operating expenses | 100,315 | 106,619 | 3,229 | 374 | 103,544 | 106,993 | ||||||||||||||||||||
Expenses as a % of net sales | 19.3 | % | 21.2 | % | 33.9 | % | 29.2 | % | 19.6 | % | 21.2 | % | ||||||||||||||
Goodwill impairment | 6,946 | — | — | — | 6,946 | — | ||||||||||||||||||||
Operating income (loss) | 41,477 | 40,922 | (466 | ) | (9 | ) | 41,011 | 40,913 | ||||||||||||||||||
Operating margin | 8.0 | % | 8.1 | % | (4.9 | )% | (0.7 | )% | 7.8 | % | 8.1 | % |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||||
(in thousands) | Nine Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||
Net sales | $ | 1,608,947 | $ | 1,517,691 | $ | 38,209 | $ | 5,205 | $ | 1,647,156 | $ | 1,522,896 | ||||||||||||||
Gross profit | 467,582 | 449,285 | 10,887 | 1,470 | 478,469 | 450,755 | ||||||||||||||||||||
Gross margin | 29.1 | % | 29.6 | % | 28.5 | % | 28.2 | % | 29.0 | % | 29.6 | % | ||||||||||||||
Operating expenses | 305,354 | 309,438 | 11,003 | 1,907 | 316,357 | 311,345 | ||||||||||||||||||||
Expenses as a % of net sales | 19.0 | % | 20.4 | % | 28.8 | % | 36.6 | % | 19.2 | % | 20.4 | % | ||||||||||||||
Goodwill impairment | 6,946 | — | — | — | 6,946 | — | ||||||||||||||||||||
Operating income (loss) | 155,282 | 139,847 | (116 | ) | (437 | ) | 155,166 | 139,410 | ||||||||||||||||||
Operating margin | 9.7 | % | 9.2 | % | (0.3 | )% | (8.4 | )% | 9.4 | % | 9.2 | % |
Acquired (1) | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
CCR Distribution | March 2012 | 1 | March–September 2012 | |||
Ideal Distributors Ltd. | February 2012 | 4 | February–September 2012 | |||
G.L. Cornell Company | December 2011 | 1 | January–September 2012 | |||
Poolway Schwimmbadtechnik GmbH | November 2011 | 1 | January–September 2012 | |||
The Kilpatrick Company, Inc. | May 2011 | 4 | January–July 2012 and May–July 2011 | |||
Turf Equipment Supply Co. | December 2010 | 3 | January–February 2012 and January–February 2011 | |||
Pool Boat and Leisure, S.A. | December 2010 | 1 | January–February 2012 and January–February 2011 |
(1) | We acquired certain distribution assets of each of these companies. |
• | acquired sales centers (see table above); |
• | existing sales centers consolidated with acquired sales centers (0); |
• | closed sales centers (0); |
• | consolidated sales centers in cases where we do not expect to maintain the majority of the existing business (0); and |
• | sales centers opened in new markets (4). |
December 31, 2011 | 298 | |
Acquired | 5 | |
New locations | 9 | |
September 30, 2012 | 312 |
(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Net income | $ | 21,375 | $ | 24,169 | $ | 89,969 | $ | 82,108 | |||||||||
Add: | |||||||||||||||||
Interest expense (1) | 1,687 | 1,641 | 5,364 | 5,110 | |||||||||||||
Provision for income taxes | 17,965 | 15,126 | 60,020 | 52,377 | |||||||||||||
Share-based compensation | 1,930 | 2,059 | 6,236 | 6,143 | |||||||||||||
Goodwill impairment | 6,946 | — | 6,946 | — | |||||||||||||
Equity earnings in unconsolidated investments | (16 | ) | (23 | ) | (187 | ) | (185 | ) | |||||||||
Depreciation | 2,922 | 2,601 | 8,481 | 7,071 | |||||||||||||
Amortization (2) | 228 | 271 | 671 | 1,021 | |||||||||||||
Adjusted EBITDA | $ | 53,037 | $ | 45,844 | $ | 177,500 | $ | 153,645 |
(1) | Shown net of interest income and includes amortization of deferred financing costs as discussed below. |
(2) | Excludes amortization of deferred financing costs of $96 and $74 for the three months ended September 30, 2012 and September 30, 2011, respectively, and $291 and $222 for the nine months ended September 30, 2012 and September 30, 2011, respectively. |
(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||
Adjusted EBITDA | $ | 53,037 | $ | 45,844 | $ | 177,500 | $ | 153,645 | |||||||||
Add: | |||||||||||||||||
Interest expense, net of interest income | (1,591 | ) | (1,567 | ) | (5,073 | ) | (4,888 | ) | |||||||||
Provision for income taxes | (17,965 | ) | (15,126 | ) | (60,020 | ) | (52,377 | ) | |||||||||
Excess tax benefits from share-based compensation | (925 | ) | (208 | ) | (2,534 | ) | (2,229 | ) | |||||||||
Other | (970 | ) | (1,094 | ) | 278 | (3,892 | ) | ||||||||||
Change in operating assets and liabilities | 59,423 | 23,064 | 14,379 | (58,285 | ) | ||||||||||||
Net cash provided by operating activities | $ | 91,009 | $ | 50,913 | $ | 124,530 | $ | 31,974 |
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