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 July 17, 2014, announcing second quarter 2014 earnings results and reaffirming 2014 earnings guidance. |
• | Record second quarter and year to date results |
• | Q2 base business sales growth of 7% |
• | Q2 gross margin improvement of 25 basis points |
• | Q2 diluted EPS of $1.61, up 16% over Q2 2013 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net sales | $ | 848,240 | $ | 790,392 | $ | 1,254,584 | $ | 1,160,754 | ||||||||
Cost of sales | 601,264 | 562,226 | 893,508 | 827,827 | ||||||||||||
Gross profit | 246,976 | 228,166 | 361,076 | 332,927 | ||||||||||||
Percent | 29.1 | % | 28.9 | % | 28.8 | % | 28.7 | % | ||||||||
Selling and administrative expenses | 124,477 | 116,173 | 229,931 | 214,002 | ||||||||||||
Operating income | 122,499 | 111,993 | 131,145 | 118,925 | ||||||||||||
Percent | 14.4 | % | 14.2 | % | 10.5 | % | 10.2 | % | ||||||||
Interest expense, net | 1,894 | 2,081 | 3,827 | 3,695 | ||||||||||||
Income before income taxes and equity earnings | 120,605 | 109,912 | 127,318 | 115,230 | ||||||||||||
Provision for income taxes | 46,796 | 43,416 | 49,400 | 45,312 | ||||||||||||
Equity earnings in unconsolidated investments | 54 | 37 | 133 | 55 | ||||||||||||
Net income | $ | 73,863 | $ | 66,533 | $ | 78,051 | $ | 69,973 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 1.65 | $ | 1.43 | $ | 1.74 | $ | 1.50 | ||||||||
Diluted | $ | 1.61 | $ | 1.39 | $ | 1.69 | $ | 1.47 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 44,769 | 46,659 | 44,972 | 46,523 | ||||||||||||
Diluted | 45,971 | 47,882 | 46,160 | 47,758 | ||||||||||||
Cash dividends declared per common share | $ | 0.22 | $ | 0.19 | $ | 0.41 | $ | 0.35 |
June 30, | June 30, | Change | ||||||||||||||
2014 | 2013 | $ | % | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 27,563 | $ | 26,936 | $ | 627 | 2 | % | ||||||||
Receivables, net | 97,527 | 281,064 | (183,537 | ) | (65 | ) | ||||||||||
Receivables pledged under receivables facility | 208,973 | — | 208,973 | 100 | ||||||||||||
Product inventories, net | 451,507 | 424,679 | 26,828 | 6 | ||||||||||||
Prepaid expenses and other current assets | 10,055 | 10,219 | (164 | ) | (2 | ) | ||||||||||
Deferred income taxes | 5,416 | 5,103 | 313 | 6 | ||||||||||||
Total current assets | 801,041 | 748,001 | 53,040 | 7 | ||||||||||||
Property and equipment, net | 57,275 | 51,110 | 6,165 | 12 | ||||||||||||
Goodwill | 173,800 | 169,983 | 3,817 | 2 | ||||||||||||
Other intangible assets, net | 10,725 | 10,592 | 133 | 1 | ||||||||||||
Equity interest investments | 1,263 | 1,190 | 73 | 6 | ||||||||||||
Other assets, net | 11,344 | 9,133 | 2,211 | 24 | ||||||||||||
Total assets | $ | 1,055,448 | $ | 990,009 | $ | 65,439 | 7 | % | ||||||||
Liabilities and stockholders’ equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 233,549 | $ | 239,976 | $ | (6,427 | ) | (3 | ) | % | ||||||
Accrued expenses and other current liabilities | 89,200 | 79,844 | 9,356 | 12 | ||||||||||||
Current portion of long-term debt and other long-term liabilities | — | 20 | (20 | ) | (100 | ) | ||||||||||
Total current liabilities | 322,749 | 319,840 | 2,909 | 1 | ||||||||||||
Deferred income taxes | 19,979 | 15,263 | 4,716 | 31 | ||||||||||||
Long-term debt | 430,971 | 300,426 | 130,545 | 43 | ||||||||||||
Other long-term liabilities | 10,432 | 7,871 | 2,561 | 33 | ||||||||||||
Total liabilities | 784,131 | 643,400 | 140,731 | 22 | ||||||||||||
Total stockholders’ equity | 271,317 | 346,609 | (75,292 | ) | (22 | ) | ||||||||||
Total liabilities and stockholders’ equity | $ | 1,055,448 | $ | 990,009 | $ | 65,439 | 7 | % |
1. | The allowance for doubtful accounts was $4.4 million at June 30, 2014 and June 30, 2013. |
2. | The inventory reserve was $8.5 million at June 30, 2014 and June 30, 2013. |
Six Months Ended | |||||||||||||
June 30, | |||||||||||||
2014 | 2013 | Change | |||||||||||
Operating activities | |||||||||||||
Net income | $ | 78,051 | $ | 69,973 | $ | 8,078 | |||||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||
Depreciation | 7,021 | 6,338 | 683 | ||||||||||
Amortization | 696 | 622 | 74 | ||||||||||
Share-based compensation | 4,657 | 4,111 | 546 | ||||||||||
Excess tax benefits from share-based compensation | (3,920 | ) | (3,187 | ) | (733 | ) | |||||||
Equity earnings in unconsolidated investments | (133 | ) | (55 | ) | (78 | ) | |||||||
Other | (73 | ) | (1,633 | ) | 1,560 | ||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||
Receivables | (180,075 | ) | (165,713 | ) | (14,362 | ) | |||||||
Product inventories | (21,936 | ) | (24,134 | ) | 2,198 | ||||||||
Prepaid expenses and other assets | (1,350 | ) | 459 | (1,809 | ) | ||||||||
Accounts payable | 18,065 | 39,458 | (21,393 | ) | |||||||||
Accrued expenses and other current liabilities | 48,109 | 40,783 | 7,326 | ||||||||||
Net cash used in operating activities | (50,888 | ) | (32,978 | ) | (17,910 | ) | |||||||
Investing activities | |||||||||||||
Acquisition of businesses, net of cash acquired | (4,612 | ) | (1,188 | ) | (3,424 | ) | |||||||
Purchase of property and equipment, net of sale proceeds | (11,921 | ) | (10,500 | ) | (1,421 | ) | |||||||
Other investments, net | 96 | 29 | 67 | ||||||||||
Net cash used in investing activities | (16,437 | ) | (11,659 | ) | (4,778 | ) | |||||||
Financing activities | |||||||||||||
Proceeds from revolving line of credit | 457,218 | 399,472 | 57,746 | ||||||||||
Payments on revolving line of credit | (380,665 | ) | (329,928 | ) | (50,737 | ) | |||||||
Proceeds from asset-backed financing | 121,600 | — | 121,600 | ||||||||||
Payments on asset-backed financing | (13,600 | ) | — | (13,600 | ) | ||||||||
Payments on long-term debt and other long-term liabilities | — | (10 | ) | 10 | |||||||||
Excess tax benefits from share-based compensation | 3,920 | 3,187 | 733 | ||||||||||
Proceeds from stock issued under share-based compensation plans | 6,335 | 13,489 | (7,154 | ) | |||||||||
Payments of cash dividends | (18,410 | ) | (16,308 | ) | (2,102 | ) | |||||||
Purchases of treasury stock | (88,745 | ) | (10,437 | ) | (78,308 | ) | |||||||
Net cash provided by financing activities | 87,653 | 59,465 | 28,188 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (771 | ) | (355 | ) | (416 | ) | |||||||
Change in cash and cash equivalents | 19,557 | 14,473 | 5,084 | ||||||||||
Cash and cash equivalents at beginning of period | 8,006 | 12,463 | (4,457 | ) | |||||||||
Cash and cash equivalents at end of period | $ | 27,563 | $ | 26,936 | $ | 627 |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net sales | $ | 841,210 | $ | 789,171 | $ | 7,030 | $ | 1,221 | $ | 848,240 | $ | 790,392 | ||||||||||||
Gross profit | 244,614 | 227,833 | 2,362 | 333 | 246,976 | 228,166 | ||||||||||||||||||
Gross margin | 29.1 | % | 28.9 | % | 33.6 | % | 27.3 | % | 29.1 | % | 28.9 | % | ||||||||||||
Operating expenses | 122,832 | 115,797 | 1,645 | 376 | 124,477 | 116,173 | ||||||||||||||||||
Expenses as a % of net sales | 14.6 | % | 14.7 | % | 23.4 | % | 30.8 | % | 14.7 | % | 14.7 | % | ||||||||||||
Operating income (loss) | 121,782 | 112,036 | 717 | (43 | ) | 122,499 | 111,993 | |||||||||||||||||
Operating margin | 14.5 | % | 14.2 | % | 10.2 | % | (3.5 | )% | 14.4 | % | 14.2 | % |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Six Months Ended | Six Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Net sales | $ | 1,245,828 | $ | 1,159,416 | $ | 8,756 | $ | 1,338 | $ | 1,254,584 | $ | 1,160,754 | ||||||||||||
Gross profit | 358,158 | 332,552 | 2,918 | 375 | 361,076 | 332,927 | ||||||||||||||||||
Gross margin | 28.7 | % | 28.7 | % | 33.3 | % | 28.0 | % | 28.8 | % | 28.7 | % | ||||||||||||
Operating expenses | 227,373 | 213,526 | 2,558 | 476 | 229,931 | 214,002 | ||||||||||||||||||
Expenses as a % of net sales | 18.3 | % | 18.4 | % | 29.2 | % | 35.6 | % | 18.3 | % | 18.4 | % | ||||||||||||
Operating income (loss) | 130,785 | 119,026 | 360 | (101 | ) | 131,145 | 118,925 | |||||||||||||||||
Operating margin | 10.5 | % | 10.3 | % | 4.1 | % | (7.5 | )% | 10.5 | % | 10.2 | % |
Acquired (1) | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
DFW Stone Supply, LLC | March 2014 | 2 | March - June 2014 | |||
Atlantic Chemical & Aquatics Inc. | February 2014 | 2 | February - June 2014 | |||
B. Shapiro Supply, LLC | May 2013 | 1 | January - June 2014 and May - June 2013 | |||
Swimming Pool Supply Center, Inc. | March 2013 | 1 | January - May 2014 and March - May 2013 |
December 31, 2013 | 321 | ||
Acquired locations | 4 | ||
New locations | 2 | ||
Consolidated locations | (1 | ) | |
June 30, 2014 | 326 |
(Unaudited) | Three Months Ended | Six Months Ended | |||||||||||||||
(In thousands) | June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income | $ | 73,863 | $ | 66,533 | $ | 78,051 | $ | 69,973 | |||||||||
Add: | |||||||||||||||||
Interest expense (1) | 1,894 | 2,081 | 3,827 | 3,695 | |||||||||||||
Provision for income taxes | 46,796 | 43,416 | 49,400 | 45,312 | |||||||||||||
Share-based compensation | 2,599 | 2,206 | 4,657 | 4,111 | |||||||||||||
Equity earnings in unconsolidated investments | (54 | ) | (37 | ) | (133 | ) | (55 | ) | |||||||||
Depreciation | 3,587 | 3,265 | 7,021 | 6,338 | |||||||||||||
Amortization (2) | 235 | 204 | 430 | 429 | |||||||||||||
Adjusted EBITDA | $ | 128,920 | $ | 117,668 | $ | 143,253 | $ | 129,803 |
(1) | Shown net of interest income and includes amortization of deferred financing costs as discussed below. |
(2) | Excludes amortization of deferred financing costs of $133 and $97 for the three months ended June 30, 2014 and June 30, 2013, respectively, and $266 and $193 for the six months ended |
(Unaudited) | Three Months Ended | Six Months Ended | |||||||||||||||
(In thousands) | June 30, | June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Adjusted EBITDA | $ | 128,920 | $ | 117,668 | $ | 143,253 | $ | 129,803 | |||||||||
Add: | |||||||||||||||||
Interest expense, net of interest income | (1,761 | ) | (1,984 | ) | (3,561 | ) | (3,502 | ) | |||||||||
Provision for income taxes | (46,796 | ) | (43,416 | ) | (49,400 | ) | (45,312 | ) | |||||||||
Excess tax benefits from share-based compensation | (2,433 | ) | (1,484 | ) | (3,920 | ) | (3,187 | ) | |||||||||
Other | (408 | ) | (1,595 | ) | (73 | ) | (1,633 | ) | |||||||||
Change in operating assets and liabilities | (91,065 | ) | (62,181 | ) | (137,187 | ) | (109,147 | ) | |||||||||
Net cash (used in) provided by operating activities | $ | (13,543 | ) | $ | 7,008 | $ | (50,888 | ) | $ | (32,978 | ) |
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