S | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
£ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
POOL CORPORATION | ||
(Exact name of registrant as specified in its charter) | ||
Delaware | 36-3943363 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | 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) |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Page | |||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales | $ | 578,157 | $ | 528,027 | $ | 1,738,911 | $ | 1,647,156 | |||||||
Cost of sales | 415,600 | 376,526 | 1,243,427 | 1,168,687 | |||||||||||
Gross profit | 162,557 | 151,501 | 495,484 | 478,469 | |||||||||||
Selling and administrative expenses | 109,182 | 103,544 | 323,184 | 316,357 | |||||||||||
Goodwill impairment | — | 6,946 | — | 6,946 | |||||||||||
Operating income | 53,375 | 41,011 | 172,300 | 155,166 | |||||||||||
Interest expense, net | 1,544 | 1,687 | 5,239 | 5,364 | |||||||||||
Income before income taxes and equity (loss) earnings | 51,831 | 39,324 | 167,061 | 149,802 | |||||||||||
Provision for income taxes | 19,496 | 17,965 | 64,808 | 60,020 | |||||||||||
Equity (loss) earnings in unconsolidated investments | (3 | ) | 16 | 52 | 187 | ||||||||||
Net income | $ | 32,332 | $ | 21,375 | $ | 102,305 | $ | 89,969 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 0.70 | $ | 0.46 | $ | 2.20 | $ | 1.91 | |||||||
Diluted | $ | 0.68 | $ | 0.45 | $ | 2.14 | $ | 1.87 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 46,380 | 46,574 | 46,475 | 47,076 | |||||||||||
Diluted | 47,598 | 47,787 | 47,720 | 48,205 | |||||||||||
Cash dividends declared per common share | $ | 0.19 | $ | 0.16 | $ | 0.54 | $ | 0.46 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 32,332 | $ | 21,375 | $ | 102,305 | $ | 89,969 | |||||||
Other comprehensive (loss) income: | |||||||||||||||
Foreign currency translation adjustments | (128 | ) | (135 | ) | (361 | ) | (466 | ) | |||||||
Change in unrealized gains and losses on interest rate swaps, net of tax of $187, $407, $(582) and $1,260 | (291 | ) | (635 | ) | 913 | (1,970 | ) | ||||||||
Total other comprehensive (loss) income | (419 | ) | (770 | ) | 552 | (2,436 | ) | ||||||||
Comprehensive income | $ | 31,913 | $ | 20,605 | $ | 102,857 | $ | 87,533 |
September 30, | September 30, | December 31, | ||||||||||
2013 | 2012 | 2012 (1) | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 24,222 | $ | 28,818 | $ | 12,463 | ||||||
Receivables, net | 180,898 | 174,385 | 113,859 | |||||||||
Product inventories, net | 365,596 | 349,325 | 400,308 | |||||||||
Prepaid expenses and other current assets | 9,474 | 8,078 | 11,280 | |||||||||
Deferred income taxes | 3,742 | 6,946 | 5,186 | |||||||||
Total current assets | 583,932 | 567,552 | 543,096 | |||||||||
Property and equipment, net | 51,537 | 46,643 | 46,566 | |||||||||
Goodwill | 169,983 | 169,983 | 169,983 | |||||||||
Other intangible assets, net | 10,390 | 11,270 | 11,053 | |||||||||
Equity interest investments | 1,112 | 1,066 | 1,160 | |||||||||
Other assets, net | 9,920 | 8,207 | 8,718 | |||||||||
Total assets | $ | 826,874 | $ | 804,721 | $ | 780,576 | ||||||
Liabilities and stockholders’ equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 142,777 | $ | 163,543 | $ | 199,787 | ||||||
Accrued expenses and other current liabilities | 64,737 | 98,755 | 48,186 | |||||||||
Current portion of long-term debt and other long-term liabilities | 15 | 23 | 23 | |||||||||
Total current liabilities | 207,529 | 262,321 | 247,996 | |||||||||
Deferred income taxes | 15,463 | 9,221 | 13,453 | |||||||||
Long-term debt | 260,432 | 214,328 | 230,882 | |||||||||
Other long-term liabilities | 7,619 | 6,381 | 6,622 | |||||||||
Total liabilities | 491,043 | 492,251 | 498,953 | |||||||||
Stockholders’ equity: | ||||||||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 46,068,927, 46,596,813 and 46,303,728 shares issued and outstanding at September 30, 2013, September 30, 2012 and December 31, 2012, respectively | 46 | 47 | 46 | |||||||||
Additional paid-in capital | 305,831 | 265,129 | 276,334 | |||||||||
Retained earnings | 29,536 | 47,510 | 5,377 | |||||||||
Accumulated other comprehensive income (loss) | 418 | (216 | ) | (134 | ) | |||||||
Total stockholders’ equity | 335,831 | 312,470 | 281,623 | |||||||||
Total liabilities and stockholders’ equity | $ | 826,874 | $ | 804,721 | $ | 780,576 |
Nine Months Ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Operating activities | ||||||||
Net income | $ | 102,305 | $ | 89,969 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 9,716 | 8,481 | ||||||
Amortization | 922 | 962 | ||||||
Share-based compensation | 6,090 | 6,236 | ||||||
Excess tax benefits from share-based compensation | (4,367 | ) | (2,534 | ) | ||||
Equity earnings in unconsolidated investments | (52 | ) | (187 | ) | ||||
Goodwill impairment | — | 6,946 | ||||||
Other | (194 | ) | 278 | |||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||
Receivables | (65,638 | ) | (63,015 | ) | ||||
Product inventories | 34,709 | 39,644 | ||||||
Prepaid expenses and other assets | 1,063 | 2,607 | ||||||
Accounts payable | (57,641 | ) | (15,500 | ) | ||||
Accrued expenses and other current liabilities | 26,933 | 50,643 | ||||||
Net cash provided by operating activities | 53,846 | 124,530 | ||||||
Investing activities | ||||||||
Acquisition of businesses, net of cash acquired | (1,244 | ) | (4,580 | ) | ||||
Purchase of property and equipment, net of sale proceeds | (14,407 | ) | (13,717 | ) | ||||
Other investments, net | 76 | (249 | ) | |||||
Net cash used in investing activities | (15,575 | ) | (18,546 | ) | ||||
Financing activities | ||||||||
Proceeds from revolving line of credit | 596,642 | 482,669 | ||||||
Payments on revolving line of credit | (567,092 | ) | (415,641 | ) | ||||
Payments on long-term debt and other long-term liabilities | (10 | ) | (100,017 | ) | ||||
Payments of deferred financing costs | (754 | ) | — | |||||
Excess tax benefits from share-based compensation | 4,367 | 2,534 | ||||||
Proceeds from stock issued under share-based compensation plans | 19,040 | 13,180 | ||||||
Payments of cash dividends | (25,120 | ) | (21,669 | ) | ||||
Purchases of treasury stock | (53,027 | ) | (55,088 | ) | ||||
Net cash used in financing activities | (25,954 | ) | (94,032 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (558 | ) | (621 | ) | ||||
Change in cash and cash equivalents | 11,759 | 11,331 | ||||||
Cash and cash equivalents at beginning of period | 12,463 | 17,487 | ||||||
Cash and cash equivalents at end of period | $ | 24,222 | $ | 28,818 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income | $ | 32,332 | $ | 21,375 | $ | 102,305 | $ | 89,969 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 46,380 | 46,574 | 46,475 | 47,076 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options and employee stock purchase plan | 1,218 | 1,213 | 1,245 | 1,129 | ||||||||||||
Diluted | 47,598 | 47,787 | 47,720 | 48,205 | ||||||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.70 | $ | 0.46 | $ | 2.20 | $ | 1.91 | ||||||||
Diluted | $ | 0.68 | $ | 0.45 | $ | 2.14 | $ | 1.87 | ||||||||
Anti-dilutive stock options excluded from diluted earnings per share computations | — | 4 | — | 964 |
Derivative | Effective Date | Notional Amount (in millions) | Fixed Interest Rate | |||
Interest rate swap 1 | November 21, 2011 | $25.0 | 1.185% | |||
Interest rate swap 2 | November 21, 2011 | $25.0 | 1.185% | |||
Interest rate swap 3 | December 21, 2011 | $50.0 | 1.100% | |||
Interest rate swap 4 | January 17, 2012 | $25.0 | 1.050% | |||
Interest rate swap 5 | January 19, 2012 | $25.0 | 0.990% |
Fair Value at | ||||||||
September 30, | ||||||||
Level 2 | 2013 | 2012 | ||||||
Unrealized Losses on Interest Rate Swaps | $ | (1,909 | ) | $ | (3,650 | ) |
a. | a base rate, which is the highest of (i) the Wells Fargo Bank, National Association prime rate, (ii) the Federal Funds Rate plus 0.500% and (iii) the London Interbank Offered Rate (LIBOR) Market Index Rate plus 1.000%; or |
b. | the LIBOR. |
a. | a base rate, which is the greatest of (i) the Canadian Reference Bank prime rate and (ii) the annual rate of interest equal to the sum of the Canadian Dealer Offered Rate (CDOR) plus 1.000%; or |
b. | the CDOR. |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Cost of sales | 71.9 | 71.3 | 71.5 | 71.0 | ||||||||
Gross profit | 28.1 | 28.7 | 28.5 | 29.0 | ||||||||
Operating expenses | 18.9 | 19.6 | 18.6 | 19.2 | ||||||||
Goodwill impairment | — | 1.3 | — | 0.4 | ||||||||
Operating income | 9.2 | 7.8 | 9.9 | 9.4 | ||||||||
Interest expense, net | 0.3 | 0.3 | 0.3 | 0.3 | ||||||||
Income before income taxes and equity (loss) earnings | 9.0 | % | 7.4 | % | 9.6 | % | 9.1 | % |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Net sales | $ | 576,057 | $ | 527,974 | $ | 2,100 | $ | 53 | $ | 578,157 | $ | 528,027 | ||||||||||||
Gross profit | 162,021 | 151,480 | 536 | 21 | 162,557 | 151,501 | ||||||||||||||||||
Gross margin | 28.1 | % | 28.7 | % | 25.5 | % | 39.6 | % | 28.1 | % | 28.7 | % | ||||||||||||
Operating expenses | 108,625 | 103,434 | 557 | 110 | 109,182 | 103,544 | ||||||||||||||||||
Expenses as a % of net sales | 18.9 | % | 19.6 | % | 26.5 | % | 207.5 | % | 18.9 | % | 19.6 | % | ||||||||||||
Goodwill impairment | — | 6,946 | — | — | — | 6,946 | ||||||||||||||||||
Operating income (loss) | 53,396 | 41,100 | (21 | ) | (89 | ) | 53,375 | 41,011 | ||||||||||||||||
Operating margin | 9.3 | % | 7.8 | % | (1.0 | )% | (167.9 | )% | 9.2 | % | 7.8 | % |
Acquired (1) | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
B. Shapiro Supply, LLC | May 2013 | 1 | July - September 2013 | |||
Swimming Pool Supply Center, Inc. | March 2013 | 1 | July - September 2013 |
(1) | We acquired certain distribution assets of each of these companies. |
December 31, 2012 | 312 | |
Acquired | 2 | |
New locations | 9 | |
September 30, 2013 | 323 |
Three Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in millions) | 2013 | 2012 | Change | |||||||||||
Net sales | $ | 578.2 | $ | 528.0 | $ | 50.2 | 10% |
• | continued improvement in consumer discretionary expenditures, including some market recovery in remodeling and replacement activity, as evidenced by sales growth rates for product offerings such as building materials (see discussion below), heaters, pumps, and lighting; |
• | market share gains attributed to continued improvements in customer service levels and increased construction and renovation activity consistent with the improvements in the housing market, as evidenced by sales growth rates for irrigation systems and landscape equipment product offerings; |
• | better weather comparisons in the third quarter relative to the first half of 2013, resulting in an uptick in sales in our seasonal markets, supported by continued growth in our largest, year-round markets (net sales growth of 7% in our seasonal markets more closely aligned with sales growth of 11% in our largest, year-round markets); |
• | one additional selling day (approximately 1% to 2%); and |
• | inflationary product cost increases (estimated at approximately 1% to 2%). |
Three Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in millions) | 2013 | 2012 | Change | |||||||||||
Gross profit | $ | 162.6 | $ | 151.5 | $ | 11.1 | 7% | |||||||
Gross margin | 28.1 | % | 28.7 | % |
• | changes in our product mix, as double-digit sales growth for higher value, lower margin products such as heaters, variable speed pumps, LED lighting, irrigation systems and landscape equipment positively contributed to sales and gross profit dollars but negatively impacted our margins; |
• | growth in sales to larger, lower margin customers, primarily those focused on remodeling and construction activities; |
• | higher sales growth rates in our lower margin, year-round markets compared to our seasonal markets; and |
• | increased presence of Internet retailers who set low industry reference prices for certain products. |
Three Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in millions) | 2013 | 2012 | Change | |||||||||||
Operating expenses | $ | 109.2 | $ | 103.5 | $ | 5.7 | 5% | |||||||
Operating expenses as a % of net sales | 18.9 | % | 19.6 | % |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Nine Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Net sales | $ | 1,727,856 | $ | 1,642,211 | $ | 11,055 | $ | 4,945 | $ | 1,738,911 | $ | 1,647,156 | ||||||||||||
Gross profit | 492,469 | 476,984 | 3,015 | 1,485 | 495,484 | 478,469 | ||||||||||||||||||
Gross margin | 28.5 | % | 29.0 | % | 27.3 | % | 30.0 | % | 28.5 | % | 29.0 | % | ||||||||||||
Operating expenses | 319,525 | 314,315 | 3,659 | 2,042 | 323,184 | 316,357 | ||||||||||||||||||
Expenses as a % of net sales | 18.5 | % | 19.1 | % | 33.1 | % | 41.3 | % | 18.6 | % | 19.2 | % | ||||||||||||
Goodwill impairment | — | 6,946 | — | — | — | 6,946 | ||||||||||||||||||
Operating income (loss) | 172,944 | 155,723 | (644 | ) | (557 | ) | 172,300 | 155,166 | ||||||||||||||||
Operating margin | 10.0 | % | 9.5 | % | (5.8 | )% | (11.3 | )% | 9.9 | % | 9.4 | % |
Acquired (1) | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
B. Shapiro Supply, LLC | May 2013 | 1 | May - September 2013 | |||
Swimming Pool Supply Center, Inc. | March 2013 | 1 | March - September 2013 | |||
CCR Distribution | March 2012 | 1 | January - May 2013 and March - May 2012 | |||
Ideal Distributors Ltd. | February 2012 | 4 | January - April 2013 and February - April 2012 | |||
G.L. Cornell Company | December 2011 | 1 | January - February 2013 and January - February 2012 | |||
Poolway Schwimmbadtechnik GmbH | November 2011 | 1 | January - February 2013 and January - February 2012 |
(1) | We acquired certain distribution assets of each of these companies. |
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in millions) | 2013 | 2012 | Change | |||||||||||
Net sales | $ | 1,738.9 | $ | 1,647.2 | $ | 91.7 | 6% |
• | market share gains attributed to continued improvements in customer service levels, sales growth rates for certain product offerings such as building materials (see discussion below), heaters, pumps and lighting and higher base business sales growth for irrigation systems and landscape equipment due in part to the gradual recovery of the housing market in some of our key states; |
• | continued improvement in consumer discretionary expenditures, including some market recovery in remodeling activity; and |
• | inflationary product cost increases (estimated at approximately 1% to 2%). |
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in millions) | 2013 | 2012 | Change | |||||||||||
Gross profit | $ | 495.5 | $ | 478.5 | $ | 17.0 | 4% | |||||||
Gross margin | 28.5 | % | 29.0 | % |
Nine Months Ended | ||||||||||||||
September 30, | ||||||||||||||
(in millions) | 2013 | 2012 | Change | |||||||||||
Operating expenses | $ | 323.2 | $ | 316.4 | $ | 6.8 | 2% | |||||||
Operating expenses as a % of net sales | 18.6 | % | 19.2 | % |
(Unaudited) | QUARTER | |||||||||||||||||||||||||||||||
(in thousands) | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||
Third | Second | First | Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||||
Statement of Income (Loss) Data | ||||||||||||||||||||||||||||||||
Net sales | $ | 578,157 | $ | 790,392 | $ | 370,362 | $ | 306,818 | $ | 528,027 | $ | 757,175 | $ | 361,954 | $ | 270,422 | ||||||||||||||||
Gross profit | 162,557 | 228,166 | 104,761 | 88,938 | 151,501 | 222,405 | 104,563 | 80,835 | ||||||||||||||||||||||||
Operating income (loss) | 53,375 | 111,993 | 6,932 | (10,297 | ) | 41,011 | 108,134 | 6,021 | (14,343 | ) | ||||||||||||||||||||||
Net income (loss) | 32,332 | 66,533 | 3,440 | (7,997 | ) | 21,375 | 64,943 | 3,651 | (10,115 | ) | ||||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||||||||||||||
Receivables, net | $ | 180,898 | $ | 281,064 | $ | 188,294 | $ | 113,859 | $ | 174,385 | $ | 269,060 | $ | 200,640 | $ | 109,273 | ||||||||||||||||
Product inventories, net | 365,596 | 424,679 | 494,321 | 400,308 | 349,325 | 402,266 | 462,810 | 386,924 | ||||||||||||||||||||||||
Accounts payable | 142,777 | 239,976 | 338,026 | 199,787 | 163,543 | 267,990 | 319,462 | 177,437 | ||||||||||||||||||||||||
Total debt | 260,432 | 300,426 | 278,542 | 230,882 | 214,328 | 309,813 | 299,011 | 247,300 |
Weather | Possible Effects | |
Hot and dry | • | Increased purchases of chemicals and supplies for existing swimming pools |
• | Increased purchases of above-ground pools and irrigation products | |
Unseasonably cool weather or extraordinary amounts of rain | • | Fewer pool and landscape installations |
• | Decreased purchases of chemicals and supplies | |
• | Decreased purchases of impulse items such as above-ground pools and accessories | |
Unseasonably early warming trends in spring/late cooling trends in fall | • | A longer pool and landscape season, thus positively impacting our sales |
(primarily in the northern half of the U.S. and Canada) | ||
Unseasonably late warming trends in spring/early cooling trends in fall | • | A shorter pool and landscape season, thus negatively impacting our sales |
(primarily in the northern half of the U.S. and Canada) |
• | cash flows generated from operating activities; |
• | the adequacy of available bank lines of credit; |
• | acquisitions; |
• | scheduled debt payments; |
• | dividend payments; |
• | capital expenditures; |
• | the timing and extent of share repurchases; and |
• | the ability to attract long-term capital with satisfactory terms. |
• | maintenance and new sales center capital expenditures; |
• | strategic acquisitions executed opportunistically; |
• | payment of cash dividends as and when declared by our Board of Directors (Board); |
• | repurchase of common stock at Board-defined parameters; and |
• | repayment of debt. |
Nine Months Ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
Operating activities | $ | 53,846 | $ | 124,530 | ||||
Investing activities | (15,575 | ) | (18,546 | ) | ||||
Financing activities | (25,954 | ) | (94,032 | ) |
• | Maximum Average Total Leverage Ratio. On the last day of each fiscal quarter, our average total leverage ratio must be less than 3.25 to 1.00. Average Total Leverage Ratio is the ratio of the trailing twelve months (TTM) Average Total Funded Indebtedness plus the TTM Average Accounts Securitization Proceeds divided by the TTM EBITDA (as those terms are defined in the Credit Facility). As of September 30, 2013, our average total leverage ratio equaled 1.39 (compared to 1.41 as of June 30, 2013) and the TTM average total debt amount used in this calculation was $255.8 million. |
• | Minimum Fixed Charge Coverage Ratio. On the last day of each fiscal quarter, our fixed charge ratio must be greater than or equal to 2.25 to 1.00. Fixed Charge Ratio is the ratio of the TTM EBITDAR divided by TTM Interest Expense paid or payable in cash plus TTM Rental Expense (as those terms are defined in the Credit Facility). As of September 30, 2013, our fixed charge ratio equaled 4.21 (compared to 4.06 as of June 30, 2013) and TTM Rental Expense was $49.2 million. |
• | those that require the use of assumptions about matters that are inherently and highly uncertain at the time the estimates are made; and |
• | those for which changes in the estimate or assumptions, or the use of different estimates and assumptions, could have a material impact on our consolidated results of operations or financial condition. |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan (2) | Maximum Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan (3) | ||||||||||
July 1-31, 2013 | 205,899 | $ | 52.58 | 190,949 | $ | 71,780,695 | ||||||||
August 1-31, 2013 | 476,479 | $ | 53.56 | 476,479 | $ | 46,262,395 | ||||||||
September 1-30, 2013 | 118,295 | $ | 52.80 | 118,295 | $ | 40,016,665 | ||||||||
Total | 800,673 | $ | 53.19 | 785,723 |
(1) | These shares may include shares of our common stock surrendered to us by employees in order to satisfy tax withholding obligations in connection with certain exercises of employee stock options or lapses upon vesting of restrictions on previously restricted share awards, and/or to cover the exercise price of such options granted under our share-based compensation plans. There were 14,950 shares surrendered for this purpose in the third quarter of 2013. |
(2) | In August 2012, our Board authorized a new $100.0 million share repurchase program for the repurchase of shares of our common stock in the open market at prevailing market prices or in privately negotiated transactions. |
(3) | As of October 25, 2013, $31.5 million of the authorized amount remained available under our current share repurchase program. |
POOL CORPORATION | ||
By: | /s/ Mark W. Joslin | |
Mark W. Joslin | ||
Vice President and Chief Financial Officer, and duly authorized signatory on behalf of the registrant |
Incorporated by Reference | ||||||||||
No. | Description | Filed with this Form 10-Q | Form | File No. | Date Filed | |||||
3.1 | Restated Certificate of Incorporation of the Company. | 10-Q | 000-26640 | 8/9/2006 | ||||||
3.2 | Restated Composite Bylaws of the Company. | 8-K | 000-26640 | 12/20/2012 | ||||||
4.1 | Form of certificate representing shares of common stock of the Company. | 8-K | 000-26640 | 5/19/2006 | ||||||
10.1 | Fourth Amendment to Credit Agreement and First Amendment to Subsidiary Guaranty Agreement | 8-K | 000-26640 | 9/24/2013 | ||||||
10.2 | Receivables Sale and Contribution Agreement , dated as of October 11, 2013, between SCP Distributors LLC, Horizon Distributors, Inc., Superior Pool Products LLC and Poolfx Supply LLC, as Originators and Superior Commerce LLC, as Buyer. | 8-K | 000-26640 | 10/17/2013 | ||||||
10.3 | Receivables Purchase Agreement, dated as of October 11, 2013 among Superior Commerce LLC as Seller, SCP Distributors LLC, as the Servicer, the Purchasers from time to time party thereto, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Victory Group Co-Agent and Wells Fargo Bank, National Association, as the Wells Group Co-Agent and as Administrative Agent | 8-K | 000-26640 | 10/17/2013 | ||||||
10.4 | Performance Undertaking, dated as of October 11, 2013, by and between Pool Corporation and Superior Commerce LLC. | 8-K | 000-26640 | 10/17/2013 | ||||||
Certification by Mark W. Joslin pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | |||||||||
Certification by Manuel J. Perez de la Mesa pursuant to Rule 13a-14(a) and 15d‑14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | X | |||||||||
Certification by Manuel J. Perez de la Mesa and Mark W. Joslin pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | X | |||||||||
101.INS | + | XBRL Instance Document | X | |||||||
101.SCH | + | XBRL Taxonomy Extension Schema Document | X | |||||||
101.CAL | + | XBRL Taxonomy Extension Calculation Linkbase Document | X | |||||||
101.DEF | + | XBRL Taxonomy Extension Definition Linkbase Document | X | |||||||
101.LAB | + | XBRL Taxonomy Extension Label Linkbase Document | X | |||||||
101.PRE | + | XBRL Taxonomy Extension Presentation Linkbase Document | X |
1. | Consolidated Statements of Income for the three and nine months ended September 30, 2013 and September 30, 2012; |
2. | Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and September 30, 2012 |
3. | Consolidated Balance Sheets at September 30, 2013, December 31, 2012 and September 30, 2012; |
4. | Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and September 30, 2012; and |
5. | Notes to Consolidated Financial Statements. |
1. | I have reviewed this quarterly report on Form 10-Q of Pool Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
Date: | October 31, 2013 | /s/ Mark W. Joslin |
Mark W. Joslin | ||
Vice President and Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Pool Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
Date: | October 31, 2013 | /s/ Manuel J. Perez de la Mesa |
Manuel J. Perez de la Mesa | ||
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Manuel J. Perez de la Mesa | |
Manuel J. Perez de la Mesa | |
President and Chief Executive Officer | |
/s/ Mark W. Joslin | |
Mark W. Joslin | |
Vice President and Chief Financial Officer | |
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Acquisitions (Details)
|
Sep. 30, 2013
|
---|---|
B. Shapiro Supply, LLC [Member]
|
|
Business Acquisition [Line Items] | |
Number of sales centers | 1 |
SPSC, Inc. [Member]
|
|
Business Acquisition [Line Items] | |
Number of sales centers | 1 |
Ideal Distributors Ltd. [Member]
|
|
Business Acquisition [Line Items] | |
Number of sales centers | 4 |
CCR Distribution [Member]
|
|
Business Acquisition [Line Items] | |
Number of sales centers | 1 |
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Consolidated Statements of Comprehensive Income (Parenthetical) (Unaudited) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2013
|
Sep. 30, 2012
|
Sep. 30, 2013
|
Sep. 30, 2012
|
|
Other comprehensive income (loss): | ||||
Tax effect of change in unrealized gains and losses on interest rate swaps | $ 187 | $ 407 | $ (582) | $ 1,260 |
Acquisitions
|
9 Months Ended |
---|---|
Sep. 30, 2013
|
|
Business Combinations [Abstract] | |
Acquisitions | Note 3 – Acquisitions In May 2013, we acquired certain distribution assets of B. Shapiro Supply, LLC, a swimming pool and hardscape products distributor with one sales center location in Warminster, Pennsylvania. In March 2013, we acquired certain distribution assets of Swimming Pool Supply Center, Inc., a local swimming pool products distributor with one sales center location in Los Angeles, California. This sales center will operate as a satellite location to more efficiently serve our west Los Angeles customers. We completed our preliminary acquisition accounting for these acquisitions, subject to adjustments in accordance with the terms of the purchase agreements during the respective one year measurement periods. These acquisitions did not have a material impact on our financial position or results of operations. In February 2012, we acquired the distribution assets of Ideal Distributors Ltd., a regional swimming pool products distributor with four sales center locations in British Columbia, Canada. In March 2012, we acquired the distribution assets of CCR Distribution, a swimming pool products distributor with one sales center in Ontario, Canada. We completed the acquisition accounting for each of our 2012 acquisitions. These acquisitions did not have a material impact on our financial position or results of operations. |
Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)
|
Sep. 30, 2013
|
Dec. 31, 2012
|
Sep. 30, 2012
|
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 46,068,927 | 46,303,728 | 46,596,813 |
Common stock, outstanding (in shares) | 46,068,927 | 46,303,728 | 46,596,813 |
Summary of Significant Accounting Policies
|
9 Months Ended |
---|---|
Sep. 30, 2013
|
|
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 1 – Summary of Significant Accounting Policies Pool Corporation (the Company, which may be referred to as we, us or our) prepared the unaudited interim Consolidated Financial Statements following U.S. generally accepted accounting principles (GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim financial information. As permitted under those rules, we have condensed or omitted certain footnotes and other financial information required for complete financial statements. The Consolidated Financial Statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results including the elimination of all significant intercompany accounts and transactions among our wholly owned subsidiaries. A description of our significant accounting policies is included in our 2012 Annual Report on Form 10-K. You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our Annual Report. The results for our three and nine month periods ended September 30, 2013 are not necessarily indicative of the expected results for our fiscal year ending December 31, 2013. Recent Accounting Pronouncements On January 1, 2013, we adopted the Financial Accounting Standards Board Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). Under the new standard we are required to disclose the effect on income statement line items from the reclassification of a component of accumulated other comprehensive income into net income. If a reclassification does not impact net income, we are required to disclose the resulting financial statement effects and reference the applicable accounting guidance. The adoption of this guidance did not have an impact on our financial position or results of operations. We included the required disclosures in Note 4. Reclassifications For comparative purposes, we reclassified certain amounts in our 2012 financial statements to conform to the 2013 presentation. These changes included the reclassification of both our deferred tax balances and deferred tax valuation allowances between current and non‑current line items to reflect net presentation on the Consolidated Balance Sheets as of September 30, 2012. We also changed the presentation of deferred service charge income between Accrued expenses and other current liabilities and Receivables, net on the Consolidated Balance Sheets as of September 30, 2012. |
Fair Value Measurements and Interest Rate Swaps
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Interest Rate Swaps | Note 4 – Fair Value Measurements and Interest Rate Swaps Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts. We use significant other observable market data or assumptions (Level 2 inputs as defined in the accounting guidance) that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. Our fair value estimates reflect an income approach based on the terms of the interest rate contracts and inputs corroborated by observable market data including interest rate curves. We have five interest rate swap contracts in place to reduce our exposure to fluctuations in interest rates on our unsecured syndicated senior credit facility (the Credit Facility). These swaps convert the variable interest rate to a fixed interest rate on borrowings under the Credit Facility. Each of these swap contracts terminates on October 19, 2016. The following table provides additional details related to each of these swap contracts:
We recognize any differences between the variable interest rate payments and the fixed interest rate settlements from our swap counterparties as an adjustment to interest expense over the life of the swaps. We have designated these swaps as cash flow hedges and we record the changes in the estimated fair value of the swaps to Accumulated other comprehensive income (loss) on our Consolidated Balance Sheets. If our interest rate swaps became ineffective, we would immediately recognize the changes in the estimated fair value of our swaps in earnings. Since inception, we have not recognized any gains or losses on these swaps through income and there has been no effect on income from hedge ineffectiveness. A portion of the change in the estimated fair value of our interest rate swap contracts between periods relates to future interest expense. Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive income (loss) to Interest expense, net on the Consolidated Statements of Income. These amounts were not material in the first nine months of 2013. The table below presents the estimated fair value of our interest rate swap contracts (in thousands):
We include unrealized losses in Accrued expenses and other current liabilities and unrealized gains in Prepaid expenses and other current assets on the Consolidated Balance Sheets. Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap contracts. In this case, we would still be obligated to pay the variable interest payments underlying the Credit Facility. Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap contracts if we continue to be in a net pay position. The carrying values of cash, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments and the carrying value of long-term debt approximates fair value. Our determination of the estimated fair value of long-term debt reflects a discounted cash flow model using our estimates, primarily those related to assumptions for borrowing rates (Level 3 inputs as defined in the accounting guidance). |
Earnings Per Share
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 2 – Earnings Per Share We calculate basic earnings per share (EPS) by dividing net income by the weighted average number of common shares outstanding. We include outstanding unvested restricted stock awards of our common stock in the basic weighted average share calculation. Diluted EPS includes the dilutive effects of other share-based awards. Stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because their effect is anti-dilutive. The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS):
|
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