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 20, 2016, announcing third quarter 2016 earnings results and updating its 2016 earnings guidance range. |
• | Net sales growth of 7% with base business net sales growth of 5% for the quarter |
• | Operating income growth of 13% for the quarter, 17% year to date |
• | Q3 2016 diluted EPS increased 14% to $1.03 with year to date diluted EPS up 20% to $3.39 |
• | Updated 2016 earnings guidance range to $3.40 - $3.46 per diluted share |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net sales | $ | 691,429 | $ | 645,779 | $ | 2,125,568 | $ | 1,948,064 | |||||||
Cost of sales | 491,878 | 461,491 | 1,512,258 | 1,390,715 | |||||||||||
Gross profit | 199,551 | 184,288 | 613,310 | 557,349 | |||||||||||
Percent | 28.9 | % | 28.5 | % | 28.9 | % | 28.6 | % | |||||||
Selling and administrative expenses | 125,385 | 118,776 | 367,194 | 347,106 | |||||||||||
Operating income | 74,166 | 65,512 | 246,116 | 210,243 | |||||||||||
Percent | 10.7 | % | 10.1 | % | 11.6 | % | 10.8 | % | |||||||
Interest and other non-operating expenses, net | 2,989 | 2,473 | 9,954 | 6,368 | |||||||||||
Income before income taxes and equity earnings | 71,177 | 63,039 | 236,162 | 203,875 | |||||||||||
Provision for income taxes | 26,807 | 23,704 | 90,244 | 78,489 | |||||||||||
Equity earnings in unconsolidated investments, net | 51 | 68 | 113 | 259 | |||||||||||
Net income | 44,421 | 39,403 | 146,031 | 125,645 | |||||||||||
Net loss attributable to noncontrolling interest | 113 | 44 | 309 | 144 | |||||||||||
Net income attributable to Pool Corporation | $ | 44,534 | $ | 39,447 | $ | 146,340 | $ | 125,789 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.06 | $ | 0.92 | $ | 3.48 | $ | 2.91 | |||||||
Diluted | $ | 1.03 | $ | 0.90 | $ | 3.39 | $ | 2.83 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 42,020 | 42,826 | 42,092 | 43,266 | |||||||||||
Diluted | 43,119 | 43,939 | 43,201 | 44,407 | |||||||||||
Cash dividends declared per common share | $ | 0.31 | $ | 0.26 | $ | 0.88 | $ | 0.74 |
September 30, | September 30, | Change | ||||||||||||||
2016 | 2015 | $ | % | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 30,292 | $ | 29,504 | $ | 788 | 3 | % | ||||||||
Receivables, net | 81,072 | 70,399 | 10,673 | 15 | ||||||||||||
Receivables pledged under receivables facility | 152,333 | 149,375 | 2,958 | 2 | ||||||||||||
Product inventories, net | 455,156 | 412,587 | 42,569 | 10 | ||||||||||||
Prepaid expenses and other current assets | 12,084 | 11,062 | 1,022 | 9 | ||||||||||||
Deferred income taxes | 5,288 | 3,256 | 2,032 | 62 | ||||||||||||
Total current assets | 736,225 | 676,183 | 60,042 | 9 | ||||||||||||
Property and equipment, net | 84,643 | 66,296 | 18,347 | 28 | ||||||||||||
Goodwill | 185,486 | 172,150 | 13,336 | 8 | ||||||||||||
Other intangible assets, net | 13,645 | 11,393 | 2,252 | 20 | ||||||||||||
Equity interest investments | 1,152 | 1,196 | (44 | ) | (4 | ) | ||||||||||
Other assets | 16,370 | 13,682 | 2,688 | 20 | ||||||||||||
Total assets | $ | 1,037,521 | $ | 940,900 | $ | 96,621 | 10 | % | ||||||||
Liabilities, redeemable noncontrolling interest and stockholders’ equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 199,922 | $ | 170,582 | $ | 29,340 | 17 | % | ||||||||
Accrued expenses and other current liabilities | 126,654 | 77,298 | 49,356 | 64 | ||||||||||||
Short-term borrowings and current portion of long-term debt and other long-term liabilities | 1,298 | 1,799 | (501 | ) | (28 | ) | ||||||||||
Total current liabilities | 327,874 | 249,679 | 78,195 | 31 | ||||||||||||
Deferred income taxes | 28,359 | 22,755 | 5,604 | 25 | ||||||||||||
Long-term debt, net | 388,891 | 391,571 | (2,680 | ) | (1 | ) | ||||||||||
Other long-term liabilities | 17,945 | 13,216 | 4,729 | 36 | ||||||||||||
Total liabilities | 763,069 | 677,221 | 85,848 | 13 | ||||||||||||
Redeemable noncontrolling interest | 2,467 | 2,457 | 10 | — | ||||||||||||
Total stockholders’ equity | 271,985 | 261,222 | 10,763 | 4 | ||||||||||||
Total liabilities, redeemable noncontrolling interest and stockholders’ equity | $ | 1,037,521 | $ | 940,900 | $ | 96,621 | 10 | % |
1. | The allowance for doubtful accounts was $3.7 million at September 30, 2016 and $3.5 million at September 30, 2015. |
2. | The inventory reserve was $8.1 million at September 30, 2016 and $8.3 million at September 30, 2015. |
3. | Net financing costs of $1.2 million were included in Long-term debt, net at September 30, 2016 and net financing costs of $1.5 million at September 30, 2015 were reclassed from Other assets to Long-term debt, net upon adoption of ASU 2015-03 in the first quarter of 2016. |
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2016 | 2015 | Change | |||||||||||
Operating activities | |||||||||||||
Net income | $ | 146,031 | $ | 125,645 | $ | 20,386 | |||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||
Depreciation | 15,020 | 11,920 | 3,100 | ||||||||||
Amortization | 1,288 | 771 | 517 | ||||||||||
Share-based compensation | 7,373 | 7,112 | 261 | ||||||||||
Excess tax benefits from share-based compensation | (6,582 | ) | (4,916 | ) | (1,666 | ) | |||||||
Equity earnings in unconsolidated investments, net | (113 | ) | (259 | ) | 146 | ||||||||
Other | 3,799 | 2,314 | 1,485 | ||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||
Receivables | (71,936 | ) | (78,662 | ) | 6,726 | ||||||||
Product inventories | 23,624 | 52,463 | (28,839 | ) | |||||||||
Prepaid expenses and other assets | (1,094 | ) | 296 | (1,390 | ) | ||||||||
Accounts payable | (49,479 | ) | (66,035 | ) | 16,556 | ||||||||
Accrued expenses and other current liabilities | 75,239 | 27,334 | 47,905 | ||||||||||
Net cash provided by operating activities | 143,170 | 77,983 | 65,187 | ||||||||||
Investing activities | |||||||||||||
Acquisition of businesses, net of cash acquired | (19,314 | ) | (602 | ) | (18,712 | ) | |||||||
Purchases of property and equipment, net of sale proceeds | (30,388 | ) | (21,299 | ) | (9,089 | ) | |||||||
Payments to fund credit agreement | (3,852 | ) | (6,300 | ) | 2,448 | ||||||||
Collections from credit agreement | 3,300 | 4,557 | (1,257 | ) | |||||||||
Other investments, net | 21 | 75 | (54 | ) | |||||||||
Net cash used in investing activities | (50,233 | ) | (23,569 | ) | (26,664 | ) | |||||||
Financing activities | |||||||||||||
Proceeds from revolving line of credit | 873,854 | 721,835 | 152,019 | ||||||||||
Payments on revolving line of credit | (866,801 | ) | (690,677 | ) | (176,124 | ) | |||||||
Proceeds from asset-backed financing | 145,000 | 128,400 | 16,600 | ||||||||||
Payments on asset-backed financing | (90,000 | ) | (85,800 | ) | (4,200 | ) | |||||||
Proceeds from short-term borrowings, long-term debt and other long-term liabilities | 15,705 | 4,948 | 10,757 | ||||||||||
Payments on short-term borrowings, long-term debt and other long-term liabilities | (16,107 | ) | (4,678 | ) | (11,429 | ) | |||||||
Excess tax benefits from share-based compensation | 6,582 | 4,916 | 1,666 | ||||||||||
Proceeds from stock issued under share-based compensation plans | 10,978 | 10,906 | 72 | ||||||||||
Payments of cash dividends | (37,007 | ) | (32,008 | ) | (4,999 | ) | |||||||
Purchases of treasury stock | (117,901 | ) | (90,306 | ) | (27,595 | ) | |||||||
Net cash used in financing activities | (75,697 | ) | (32,464 | ) | (43,233 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (185 | ) | (7,276 | ) | 7,091 | ||||||||
Change in cash and cash equivalents | 17,055 | 14,674 | 2,381 | ||||||||||
Cash and cash equivalents at beginning of period | 13,237 | 14,830 | (1,593 | ) | |||||||||
Cash and cash equivalents at end of period | $ | 30,292 | $ | 29,504 | $ | 788 |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Net sales | $ | 677,198 | $ | 645,779 | $ | 14,231 | $ | — | $ | 691,429 | $ | 645,779 | ||||||||||||
Gross profit | 195,133 | 184,288 | 4,418 | — | 199,551 | 184,288 | ||||||||||||||||||
Gross margin | 28.8 | % | 28.5 | % | 31.0 | % | — | % | 28.9 | % | 28.5 | % | ||||||||||||
Operating expenses | 122,436 | 118,776 | 2,949 | — | 125,385 | 118,776 | ||||||||||||||||||
Expenses as a % of net sales | 18.1 | % | 18.4 | % | 20.7 | % | — | % | 18.1 | % | 18.4 | % | ||||||||||||
Operating income | 72,697 | 65,512 | 1,469 | — | 74,166 | 65,512 | ||||||||||||||||||
Operating margin | 10.7 | % | 10.1 | % | 10.3 | % | — | % | 10.7 | % | 10.1 | % |
(Unaudited) | Base Business | Excluded | Total | ||||||||||||||||||||
(in thousands) | Nine Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Net sales | $ | 2,089,745 | $ | 1,947,386 | $ | 35,823 | $ | 678 | $ | 2,125,568 | $ | 1,948,064 | |||||||||||
Gross profit | 602,623 | 557,174 | 10,687 | 175 | 613,310 | 557,349 | |||||||||||||||||
Gross margin | 28.8 | % | 28.6 | % | 29.8 | % | 25.8 | % | 28.9 | % | 28.6 | % | |||||||||||
Operating expenses | 360,025 | 346,805 | 7,169 | 301 | 367,194 | 347,106 | |||||||||||||||||
Expenses as a % of net sales | 17.2 | % | 17.8 | % | 20.0 | % | 44.4 | % | 17.3 | % | 17.8 | % | |||||||||||
Operating income (loss) | 242,598 | 210,369 | 3,518 | (126 | ) | 246,116 | 210,243 | ||||||||||||||||
Operating margin | 11.6 | % | 10.8 | % | 9.8 | % | (18.6 | )% | 11.6 | % | 10.8 | % |
Acquired (1) | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
Metro Irrigation Supply Company Ltd. | April 2016 | 8 | April - September 2016 | |||
The Melton Corporation | November 2015 | 2 | January - September 2016 | |||
Seaboard Industries, Inc. | October 2015 | 3 | January - September 2016 | |||
Poolwerx Development LLC | April 2015 | 1 | January - June 2016 and April - June 2015 | |||
St. Louis Hardscape Material & Supply, LLC | December 2014 | 1 | January - March 2016 and January - March 2015 |
(1) | We acquired certain distribution assets of each of these companies. |
December 31, 2015 | 336 | ||
Acquired locations | 8 | ||
New locations | 4 | ||
Consolidated locations | (2 | ) | |
September 30, 2016 | 346 |
(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net income | $ | 44,421 | $ | 39,403 | $ | 146,031 | $ | 125,645 | |||||||||
Add: | |||||||||||||||||
Interest and other non-operating expenses (1) | 2,989 | 2,473 | 9,954 | 6,368 | |||||||||||||
Provision for income taxes | 26,807 | 23,704 | 90,244 | 78,489 | |||||||||||||
Share-based compensation | 2,523 | 2,262 | 7,373 | 7,112 | |||||||||||||
Goodwill impairment | 613 | — | 613 | — | |||||||||||||
Equity earnings in unconsolidated investments | (51 | ) | (68 | ) | (113 | ) | (259 | ) | |||||||||
Depreciation | 5,277 | 4,233 | 15,020 | 11,920 | |||||||||||||
Amortization (2) | 418 | 82 | 796 | 300 | |||||||||||||
Adjusted EBITDA | $ | 82,997 | $ | 72,089 | $ | 269,918 | $ | 229,575 |
(1) | Shown net of interest income and includes amortization of deferred financing costs as discussed below. |
(2) | Excludes amortization of deferred financing costs of $135 and $157 for the three months ended September 30, 2016 and September 30, 2015, respectively, and $492 and $471 for the nine months ended September 30, 2016 and September 30, 2015, respectively. |
(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Adjusted EBITDA | $ | 82,997 | $ | 72,089 | $ | 269,918 | $ | 229,575 | |||||||||
Add: | |||||||||||||||||
Interest and other non-operating expenses, net of interest income | (2,854 | ) | (2,316 | ) | (9,462 | ) | (5,897 | ) | |||||||||
Provision for income taxes | (26,807 | ) | (23,704 | ) | (90,244 | ) | (78,489 | ) | |||||||||
Excess tax benefits from share-based compensation | (3,379 | ) | (348 | ) | (6,582 | ) | (4,916 | ) | |||||||||
Other | 916 | 975 | 3,186 | 2,314 | |||||||||||||
Change in operating assets and liabilities | 106,054 | 87,933 | (23,646 | ) | (64,604 | ) | |||||||||||
Net cash provided by operating activities | $ | 156,927 | $ | 134,629 | $ | 143,170 | $ | 77,983 |
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