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, 2018, announcing third quarter 2018 results and updating fiscal 2018 earnings guidance |
• | Net sales growth of 9% for Q3 2018, with 8% growth in base business sales |
• | Q3 2018 diluted EPS increase of 43% to $1.66; YTD growth of 34% to $5.20, each including tax benefits |
• | Updates 2018 earnings guidance range to $5.58 - $5.78 per diluted share from previous $5.50 - $5.70 range |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 811,311 | $ | 743,401 | $ | 2,455,015 | $ | 2,278,005 | |||||||
Cost of sales | 576,308 | 526,795 | 1,745,283 | 1,618,114 | |||||||||||
Gross profit | 235,003 | 216,606 | 709,732 | 659,891 | |||||||||||
Percent | 29.0 | % | 29.1 | % | 28.9 | % | 29.0 | % | |||||||
Selling and administrative expenses | 142,666 | 134,678 | 421,812 | 392,779 | |||||||||||
Operating income | 92,337 | 81,928 | 287,920 | 267,112 | |||||||||||
Percent | 11.4 | % | 11.0 | % | 11.7 | % | 11.7 | % | |||||||
Interest and other non-operating expenses, net | 4,931 | 4,009 | 14,449 | 11,608 | |||||||||||
Income before income taxes and equity earnings | 87,406 | 77,919 | 273,471 | 255,504 | |||||||||||
Provision for income taxes | 18,206 | 29,179 | 55,989 | 89,951 | |||||||||||
Equity earnings in unconsolidated investments, net | 61 | 43 | 167 | 121 | |||||||||||
Net income | 69,261 | 48,783 | 217,649 | 165,674 | |||||||||||
Net loss attributable to noncontrolling interest | — | — | — | 294 | |||||||||||
Net income attributable to Pool Corporation | $ | 69,261 | $ | 48,783 | $ | 217,649 | $ | 165,968 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 1.71 | $ | 1.20 | $ | 5.39 | $ | 4.04 | |||||||
Diluted | $ | 1.66 | $ | 1.16 | $ | 5.20 | $ | 3.89 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 40,422 | 40,659 | 40,416 | 41,065 | |||||||||||
Diluted | 41,797 | 42,207 | 41,831 | 42,691 | |||||||||||
Cash dividends declared per common share | $ | 0.45 | $ | 0.37 | $ | 1.27 | $ | 1.05 |
September 30, | September 30, | Change | ||||||||||||||
2018 | 2017 | $ | % | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 35,693 | $ | 36,398 | $ | (705 | ) | (2 | ) | % | ||||||
Receivables, net (1) | 90,775 | 90,142 | 633 | 1 | ||||||||||||
Receivables pledged under receivables facility | 196,998 | 172,654 | 24,344 | 14 | ||||||||||||
Product inventories, net (2) | 609,983 | 484,287 | 125,696 | 26 | ||||||||||||
Prepaid expenses and other current assets | 19,457 | 14,832 | 4,625 | 31 | ||||||||||||
Total current assets | 952,906 | 798,313 | 154,593 | 19 | ||||||||||||
Property and equipment, net | 109,942 | 103,880 | 6,062 | 6 | ||||||||||||
Goodwill | 189,029 | 189,024 | 5 | — | ||||||||||||
Other intangible assets, net | 12,305 | 13,206 | (901 | ) | (7 | ) | ||||||||||
Equity interest investments | 1,163 | 1,168 | (5 | ) | — | |||||||||||
Other assets | 18,413 | 16,333 | 2,080 | 13 | ||||||||||||
Total assets | $ | 1,283,758 | $ | 1,121,924 | $ | 161,834 | 14 | % | ||||||||
Liabilities and stockholders’ equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 204,706 | $ | 209,062 | $ | (4,356 | ) | (2 | ) | % | ||||||
Accrued expenses and other current liabilities | 75,639 | 87,887 | (12,248 | ) | (14 | ) | ||||||||||
Short-term borrowings and current portion of long-term debt | 9,343 | 8,609 | 734 | 9 | ||||||||||||
Total current liabilities | 289,688 | 305,558 | (15,870 | ) | (5 | ) | ||||||||||
Deferred income taxes | 24,802 | 27,244 | (2,442 | ) | (9 | ) | ||||||||||
Long-term debt, net | 571,360 | 555,964 | 15,396 | 3 | ||||||||||||
Other long-term liabilities | 25,170 | 22,614 | 2,556 | 11 | ||||||||||||
Total liabilities | 911,020 | 911,380 | (360 | ) | — | |||||||||||
Total stockholders’ equity | 372,738 | 210,544 | 162,194 | 77 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 1,283,758 | $ | 1,121,924 | $ | 161,834 | 14 | % |
(1) | The allowance for doubtful accounts was $5.4 million at September 30, 2018 and $4.1 million at September 30, 2017. |
(2) | The inventory reserve was $8.8 million at September 30, 2018 and $7.8 million at September 30, 2017. |
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2018 | 2017 | Change | |||||||||||
Operating activities | |||||||||||||
Net income | $ | 217,649 | $ | 165,674 | $ | 51,975 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation | 19,499 | 17,947 | 1,552 | ||||||||||
Amortization | 1,408 | 1,132 | 276 | ||||||||||
Share-based compensation | 9,793 | 9,496 | 297 | ||||||||||
Equity earnings in unconsolidated investments, net | (167 | ) | (121 | ) | (46 | ) | |||||||
Other | 3,584 | 1,074 | 2,510 | ||||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | |||||||||||||
Receivables | (93,911 | ) | (90,204 | ) | (3,707 | ) | |||||||
Product inventories | (80,142 | ) | 9,057 | (89,199 | ) | ||||||||
Prepaid expenses and other assets | 143 | (1,523 | ) | 1,666 | |||||||||
Accounts payable | (40,143 | ) | (27,328 | ) | (12,815 | ) | |||||||
Accrued expenses and other current liabilities | 13,547 | 26,816 | (13,269 | ) | |||||||||
Net cash provided by operating activities | 51,260 | 112,020 | (60,760 | ) | |||||||||
Investing activities | |||||||||||||
Acquisition of businesses, net of cash acquired | (578 | ) | (6,879 | ) | 6,301 | ||||||||
Purchases of property and equipment, net of sale proceeds | (27,976 | ) | (37,709 | ) | 9,733 | ||||||||
Other investments, net | — | 4 | (4 | ) | |||||||||
Net cash used in investing activities | (28,554 | ) | (44,584 | ) | 16,030 | ||||||||
Financing activities | |||||||||||||
Proceeds from revolving line of credit | 820,967 | 918,338 | (97,371 | ) | |||||||||
Payments on revolving line of credit | (813,996 | ) | (857,609 | ) | 43,613 | ||||||||
Proceeds from asset-backed financing | 193,400 | 156,600 | 36,800 | ||||||||||
Payments on asset-backed financing | (138,400 | ) | (97,800 | ) | (40,600 | ) | |||||||
Proceeds from short-term borrowings and current portion of long-term debt | 16,118 | 25,001 | (8,883 | ) | |||||||||
Payments on short-term borrowings and current portion of long-term debt | (17,610 | ) | (17,497 | ) | (113 | ) | |||||||
Payments of deferred financing costs | (8 | ) | (909 | ) | 901 | ||||||||
Payments of deferred and contingent acquisition consideration | (265 | ) | (199 | ) | (66 | ) | |||||||
Purchase of redeemable noncontrolling interest | — | (2,573 | ) | 2,573 | |||||||||
Proceeds from stock issued under share-based compensation plans | 12,732 | 8,647 | 4,085 | ||||||||||
Payments of cash dividends | (51,371 | ) | (43,165 | ) | (8,206 | ) | |||||||
Purchases of treasury stock | (38,906 | ) | (141,580 | ) | 102,674 | ||||||||
Net cash used in financing activities | (17,339 | ) | (52,746 | ) | 35,407 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 386 | (248 | ) | 634 | |||||||||
Change in cash and cash equivalents | 5,753 | 14,442 | (8,689 | ) | |||||||||
Cash and cash equivalents at beginning of period | 29,940 | 21,956 | 7,984 | ||||||||||
Cash and cash equivalents at end of period | $ | 35,693 | $ | 36,398 | $ | (705 | ) |
(Unaudited) | Base Business | Excluded | Total | ||||||||||||||||||||
(in thousands) | Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Net sales | $ | 800,971 | $ | 738,391 | $ | 10,340 | $ | 5,010 | $ | 811,311 | $ | 743,401 | |||||||||||
Gross profit | 231,841 | 215,078 | 3,162 | 1,528 | 235,003 | 216,606 | |||||||||||||||||
Gross margin | 28.9 | % | 29.1 | % | 30.6 | % | 30.5 | % | 29.0 | % | 29.1 | % | |||||||||||
Operating expenses | 139,392 | 132,663 | 3,274 | 2,015 | 142,666 | 134,678 | |||||||||||||||||
Expenses as a % of net sales | 17.4 | % | 18.0 | % | 31.7 | % | 40.2 | % | 17.6 | % | 18.1 | % | |||||||||||
Operating income (loss) | 92,449 | 82,415 | (112 | ) | (487 | ) | 92,337 | 81,928 | |||||||||||||||
Operating margin | 11.5 | % | 11.2 | % | (1.1 | )% | (9.7 | )% | 11.4 | % | 11.0 | % |
(Unaudited) | Base Business | Excluded | Total | ||||||||||||||||||||
(in thousands) | Nine Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Net sales | $ | 2,419,766 | $ | 2,266,386 | $ | 35,249 | $ | 11,619 | $ | 2,455,015 | $ | 2,278,005 | |||||||||||
Gross profit | 699,058 | 656,433 | 10,674 | 3,458 | 709,732 | 659,891 | |||||||||||||||||
Gross margin | 28.9 | % | 29.0 | % | 30.3 | % | 29.8 | % | 28.9 | % | 29.0 | % | |||||||||||
Operating expenses | 409,791 | 388,299 | 12,021 | 4,480 | 421,812 | 392,779 | |||||||||||||||||
Expenses as a % of net sales | 16.9 | % | 17.1 | % | 34.1 | % | 38.6 | % | 17.2 | % | 17.2 | % | |||||||||||
Operating income (loss) | 289,267 | 268,134 | (1,347 | ) | (1,022 | ) | 287,920 | 267,112 | |||||||||||||||
Operating margin | 12.0 | % | 11.8 | % | (3.8 | )% | (8.8 | )% | 11.7 | % | 11.7 | % |
Acquired | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
Tore Pty. Ltd. (Pool Power) (1) | January 2018 | 1 | January - September 2018 | |||
Chem Quip, Inc. (1) | December 2017 | 5 | January - September 2018 | |||
Intermark | December 2017 | 1 | January - September 2018 | |||
E-Grupa | October 2017 | 1 | January - September 2018 | |||
New Star Holdings Pty. Ltd. (Newline) | July 2017 | 1 | January - September 2018 and July - September 2017 | |||
Lincoln Aquatics (1) | April 2017 | 1 | January - July 2018 and May - July 2017 |
(1) | We acquired certain distribution assets of each of these companies. |
December 31, 2017 | 351 | ||
Acquired location | 1 | ||
New locations | 9 | ||
Consolidated location | (1 | ) | |
September 30, 2018 | 360 |
(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Net income | $ | 69,261 | $ | 48,783 | $ | 217,649 | $ | 165,674 | |||||||||
Add: | |||||||||||||||||
Interest and other non-operating expenses (1) | 4,931 | 4,009 | 14,449 | 11,608 | |||||||||||||
Provision for income taxes | 18,206 | 29,179 | 55,989 | 89,951 | |||||||||||||
Share-based compensation | 3,312 | 3,197 | 9,793 | 9,496 | |||||||||||||
Equity earnings in unconsolidated investments | (61 | ) | (43 | ) | (167 | ) | (121 | ) | |||||||||
Depreciation | 6,611 | 6,330 | 19,499 | 17,947 | |||||||||||||
Amortization (2) | 276 | 253 | 827 | 724 | |||||||||||||
Adjusted EBITDA | $ | 102,536 | $ | 91,708 | $ | 318,039 | $ | 295,279 |
(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 September 30, 2018 and September 30, 2017, respectively, and $581 and $408 for the nine months ended September 30, 2018 and September 30, 2017, respectively. |
(Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||
(In thousands) | September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Adjusted EBITDA | $ | 102,536 | $ | 91,708 | $ | 318,039 | $ | 295,279 | |||||||||
Add: | |||||||||||||||||
Interest and other non-operating expenses, net of interest income | (4,737 | ) | (3,873 | ) | (13,868 | ) | (11,200 | ) | |||||||||
Provision for income taxes | (18,206 | ) | (29,179 | ) | (55,989 | ) | (89,951 | ) | |||||||||
Other | 1,723 | (1,048 | ) | 3,584 | 1,074 | ||||||||||||
Change in operating assets and liabilities | 6,753 | 95,758 | (200,506 | ) | (83,182 | ) | |||||||||||
Net cash provided by operating activities | $ | 88,069 | $ | 153,366 | $ | 51,260 | $ | 112,020 |
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