Pool Corporation Reports Record Second Quarter Results and Updates 2022 Earnings Guidance
Pool Corporation reported a record net sales of $2.1 billion for Q2 2022, a 15% increase from Q2 2021. Operating income rose 24% to $418.9 million with an operating margin improvement of 150 bps. Diluted EPS reached $7.63, up 20%. The annual earnings guidance was raised to $18.38 - $19.13 per diluted share, reflecting tax benefits. While strong demand and pool installations contributed positively, supply chain constraints and adverse weather in certain markets posed challenges.
- Record net sales of $2.1 billion, up 15% from Q2 2021.
- Operating income increased 24% to $418.9 million.
- Diluted EPS rose 20% to $7.63.
- Annual earnings guidance raised to $18.38 - $19.13 per diluted share.
- Supply chain and labor constraints continue to impact operations.
- 1% negative impact from currency exchange rate fluctuations.
Highlights
- Record net sales of
$2.1 billion , up15% from Q2 2021 - Operating income of
$418.9 million , up24% from Q2 2021 with a 150 bps improvement in operating margin - Q2 2022 diluted EPS of
$7.63 , an increase of20% from Q2 2021 - Increases annual earnings guidance range to
$18.38 -$19.13 per diluted share to reflect additional tax benefits
COVINGTON, La., July 21, 2022 (GLOBE NEWSWIRE) -- Pool Corporation (Nasdaq/GSM:POOL) today reported record results for the second quarter of 2022 and updated its 2022 earnings guidance.
“Our net sales for the second quarter of 2022 increased
Second quarter ended June 30, 2022 compared to the second quarter ended June 30, 2021
Net sales increased
Gross profit increased
Selling and administrative expenses (operating expenses) increased
Operating income in the second quarter of 2022 increased
We recorded a
Net income increased
Six months ended June 30, 2022 compared to the six months ended June 30, 2021
Net sales for the six months ended June 30, 2022 increased
Operating expenses for the six months ended June 30, 2022 increased
We recorded a
Net income for the six months ended June 30, 2022 increased
Balance Sheet and Liquidity
On the balance sheet at June 30, 2022, total net receivables, including pledged receivables, increased
Net cash provided by operations was
Outlook
“We expect continued growth in the second half of the year, on top of the substantial growth that we experienced last year. We remain confident in the long-term stability of our business as
About Pool Corporation
POOLCORP is the world’s largest wholesale distributor of swimming pool and related backyard products. POOLCORP operates 416 sales centers in North America, Europe and Australia, through which it distributes more than 200,000 national brand and private label products to roughly 120,000 wholesale customers. For more information, please visit www.poolcorp.com.
Forward-Looking Statements
This news release includes “forward-looking” statements that involve risks and uncertainties that are generally identifiable through the use of words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “should” and similar expressions and include projections of earnings. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date of this release, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Actual results may differ materially due to a variety of factors, including impacts on our business from the COVID-19 pandemic and the extent to which home-centric trends will continue, accelerate or reverse; the sensitivity of our business to weather conditions; changes in the economy, consumer discretionary spending, the housing market or inflation rates; our ability to maintain favorable relationships with suppliers and manufacturers; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in POOLCORP’s 2021 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports and filings filed with the Securities and Exchange Commission (SEC) as updated by POOLCORP's subsequent filings with the SEC.
CONTACT:
Curtis J. Scheel
Director of Investor Relations
985.801.5341
curtis.scheel@poolcorp.com
POOL CORPORATION
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net sales | $ | 2,055,818 | $ | 1,787,833 | $ | 3,468,468 | $ | 2,848,579 | |||||||
Cost of sales | 1,389,014 | 1,236,148 | 2,354,474 | 1,995,762 | |||||||||||
Gross profit | 666,804 | 551,685 | 1,113,994 | 852,817 | |||||||||||
Percent | 32.4 | % | 30.9 | % | 32.1 | % | 29.9 | % | |||||||
Selling and administrative expenses | 247,916 | 213,099 | 459,382 | 385,200 | |||||||||||
Operating income | 418,888 | 338,586 | 654,612 | 467,617 | |||||||||||
Percent | 20.4 | % | 18.9 | % | 18.9 | % | 16.4 | % | |||||||
Interest and other non-operating expenses, net | 8,523 | 1,963 | 13,722 | 4,545 | |||||||||||
Income before income taxes and equity in earnings | 410,365 | 336,623 | 640,890 | 463,072 | |||||||||||
Provision for income taxes | 103,160 | 76,985 | 154,482 | 104,854 | |||||||||||
Equity in earnings of unconsolidated investments, net | 78 | 57 | 136 | 132 | |||||||||||
Net income | $ | 307,283 | $ | 259,695 | $ | 486,544 | $ | 358,350 | |||||||
Earnings per share attributable to common stockholders:(1) | |||||||||||||||
Basic | $ | 7.71 | $ | 6.47 | $ | 12.16 | $ | 8.92 | |||||||
Diluted | $ | 7.63 | $ | 6.37 | $ | 12.03 | $ | 8.78 | |||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 39,660 | 40,125 | 39,795 | 40,169 | |||||||||||
Diluted | 40,064 | 40,745 | 40,231 | 40,800 | |||||||||||
Cash dividends declared per common share | $ | 1.00 | $ | 0.80 | $ | 1.80 | $ | 1.38 |
(1) Earnings per share under the two-class method is calculated using net income attributable to common stockholders (net income reduced by earnings allocated to participating securities), which was
POOL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
June 30, | June 30, | Change | ||||||||||||
2022 | 2021 | $ | % | |||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 91,481 | $ | 58,465 | $ | 33,016 | 56 | % | ||||||
Receivables, net (1) | 239,639 | 210,318 | 29,321 | 14 | ||||||||||
Receivables pledged under receivables facility | 516,946 | 375,248 | 141,698 | 38 | ||||||||||
Product inventories, net (2) | 1,579,101 | 894,654 | 684,447 | 77 | ||||||||||
Prepaid expenses and other current assets | 43,317 | 18,716 | 24,601 | 131 | ||||||||||
Total current assets | 2,470,484 | 1,557,401 | 913,083 | 59 | ||||||||||
Property and equipment, net | 183,480 | 111,661 | 71,819 | 64 | ||||||||||
Goodwill | 692,972 | 283,284 | 409,688 | 145 | ||||||||||
Other intangible assets, net | 309,375 | 12,350 | 297,025 | 2,405 | ||||||||||
Equity interest investments | 1,179 | 1,293 | (114 | ) | (9 | ) | ||||||||
Operating lease assets | 259,571 | 221,068 | 38,503 | 17 | ||||||||||
Other assets | 45,044 | 26,978 | 18,066 | 67 | ||||||||||
Total assets | $ | 3,962,105 | $ | 2,214,035 | $ | 1,748,070 | 79 | % | ||||||
Liabilities and stockholders’ equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 604,225 | $ | 439,453 | $ | 164,772 | 37 | % | ||||||
Accrued expenses and other current liabilities | 195,529 | 184,437 | 11,092 | 6 | ||||||||||
Short-term borrowings and current portion of long-term debt | 19,731 | 10,058 | 9,673 | 96 | ||||||||||
Current operating lease liabilities | 71,550 | 63,786 | 7,764 | 12 | ||||||||||
Total current liabilities | 891,035 | 697,734 | 193,301 | 28 | ||||||||||
Deferred income taxes | 42,380 | 30,440 | 11,940 | 39 | ||||||||||
Long-term debt, net | 1,575,667 | 413,058 | 1,162,609 | 281 | ||||||||||
Other long-term liabilities | 32,109 | 38,079 | (5,970 | ) | (16 | ) | ||||||||
Non-current operating lease liabilities | 191,856 | 159,976 | 31,880 | 20 | ||||||||||
Total liabilities | 2,733,047 | 1,339,287 | 1,393,760 | 104 | ||||||||||
Total stockholders’ equity | 1,229,058 | 874,748 | 354,310 | 41 | ||||||||||
Total liabilities and stockholders’ equity | $ | 3,962,105 | $ | 2,214,035 | $ | 1,748,070 | 79 | % |
(1) The allowance for doubtful accounts was
(2) The inventory reserve was
POOL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended | ||||||||||||
June 30, | ||||||||||||
2022 | 2021 | Change | ||||||||||
Operating activities | ||||||||||||
Net income | $ | 486,544 | $ | 358,350 | $ | 128,194 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation | 15,376 | 13,884 | 1,492 | |||||||||
Amortization | 4,358 | 723 | 3,635 | |||||||||
Share-based compensation | 7,571 | 7,549 | 22 | |||||||||
Equity in earnings of unconsolidated investments, net | (136 | ) | (132 | ) | (4 | ) | ||||||
Other | 7,185 | 4,812 | 2,373 | |||||||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||
Receivables | (384,245 | ) | (295,342 | ) | (88,903 | ) | ||||||
Product inventories | (251,090 | ) | (114,792 | ) | (136,298 | ) | ||||||
Prepaid expenses and other assets | (20,573 | ) | (16,865 | ) | (3,708 | ) | ||||||
Accounts payable | 208,017 | 170,368 | 37,649 | |||||||||
Accrued expenses and other current liabilities | (44,276 | ) | 58,673 | (102,949 | ) | |||||||
Net cash provided by operating activities | 28,731 | 187,228 | (158,497 | ) | ||||||||
Investing activities | ||||||||||||
Acquisition of businesses, net of cash acquired | (7,629 | ) | (15,162 | ) | 7,533 | |||||||
Purchases of property and equipment, net of sale proceeds | (19,802 | ) | (17,333 | ) | (2,469 | ) | ||||||
Net cash used in investing activities | (27,431 | ) | (32,495 | ) | 5,064 | |||||||
Financing activities | ||||||||||||
Proceeds from revolving line of credit | 1,122,186 | 549,008 | 573,178 | |||||||||
Payments on revolving line of credit | (1,128,902 | ) | (505,636 | ) | (623,266 | ) | ||||||
Proceeds from term loan under credit facility | 250,000 | — | 250,000 | |||||||||
Proceeds from asset-backed financing | 215,000 | 260,000 | (45,000 | ) | ||||||||
Payments on asset-backed financing | (50,000 | ) | (290,000 | ) | 240,000 | |||||||
Payments on term facility | (4,625 | ) | (4,625 | ) | — | |||||||
Proceeds from short-term borrowings and current portion of long-term debt | 24,767 | 4,466 | 20,301 | |||||||||
Payments on short-term borrowings and current portion of long-term debt | (16,808 | ) | (6,277 | ) | (10,531 | ) | ||||||
Payments of deferred and contingent acquisition consideration | (1,374 | ) | (362 | ) | (1,012 | ) | ||||||
Proceeds from stock issued under share-based compensation plans | 5,107 | 7,918 | (2,811 | ) | ||||||||
Payments of cash dividends | (72,028 | ) | (55,418 | ) | (16,610 | ) | ||||||
Purchases of treasury stock | (278,680 | ) | (90,135 | ) | (188,545 | ) | ||||||
Net cash provided by (used in) financing activities | 64,643 | (131,061 | ) | 195,704 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,217 | 665 | 552 | |||||||||
Change in cash and cash equivalents | 67,160 | 24,337 | 42,823 | |||||||||
Cash and cash equivalents at beginning of period | 24,321 | 34,128 | (9,807 | ) | ||||||||
Cash and cash equivalents at end of period | $ | 91,481 | $ | 58,465 | $ | 33,016 |
ADDENDUM
Base Business
The following table breaks out our consolidated results into the base business component and the excluded component (sales centers excluded from base business):
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Net sales | $ | 1,963,974 | $ | 1,782,894 | $ | 91,844 | $ | 4,939 | $ | 2,055,818 | $ | 1,787,833 | ||||||||||||
Gross profit | 625,843 | 550,509 | 40,961 | 1,176 | 666,804 | 551,685 | ||||||||||||||||||
Gross margin | 31.9 | % | 30.9 | % | 44.6 | % | 23.8 | % | 32.4 | % | 30.9 | % | ||||||||||||
Operating expenses | 226,728 | 212,425 | 21,188 | 674 | 247,916 | 213,099 | ||||||||||||||||||
Expenses as a % of net sales | 11.5 | % | 11.9 | % | 23.1 | % | 13.6 | % | 12.1 | % | 11.9 | % | ||||||||||||
Operating income | 399,115 | 338,084 | 19,773 | 502 | 418,888 | 338,586 | ||||||||||||||||||
Operating margin | 20.3 | % | 19.0 | % | 21.5 | % | 10.2 | % | 20.4 | % | 18.9 | % |
(Unaudited) | Base Business | Excluded | Total | |||||||||||||||||||||
(in thousands) | Six Months Ended | Six Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Net sales | $ | 3,292,100 | $ | 2,840,676 | $ | 176,368 | $ | 7,903 | $ | 3,468,468 | $ | 2,848,579 | ||||||||||||
Gross profit | 1,039,122 | 850,948 | 74,872 | 1,869 | 1,113,994 | 852,817 | ||||||||||||||||||
Gross margin | 31.6 | % | 30.0 | % | 42.5 | % | 23.6 | % | 32.1 | % | 29.9 | % | ||||||||||||
Operating expenses | 420,655 | 383,710 | 38,727 | 1,490 | 459,382 | 385,200 | ||||||||||||||||||
Expenses as a % of net sales | 12.8 | % | 13.5 | % | 22.0 | % | 18.9 | % | 13.2 | % | 13.5 | % | ||||||||||||
Operating income | 618,467 | 467,238 | 36,145 | 379 | 654,612 | 467,617 | ||||||||||||||||||
Operating margin | 18.8 | % | 16.4 | % | 20.5 | % | 4.8 | % | 18.9 | % | 16.4 | % |
We have excluded the following acquisitions from our base business results for the periods identified:
Acquired | Acquisition Date | Net Sales Centers Acquired | Periods Excluded | |||
Tri-State Pool Distributors | April 2022 | 1 | May - June 2022 | |||
Porpoise Pool & Patio, Inc. | December 2021 | 1 | January - June 2022 | |||
Wingate Supply, Inc. | December 2021 | 1 | January - June 2022 | |||
Vak Pak Builders Supply, Inc. | June 2021 | 1 | January - June 2022 and June 2021 | |||
Pool Source, LLC | April 2021 | 1 | January - June 2022 and April - June 2021 | |||
TWC Distributors, Inc. | December 2020 | 10 | January - February 2022 and January - February 2021 |
When calculating our base business results, we exclude sales centers that are acquired, closed or opened in new markets for a period of 15 months. We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that are consolidated with acquired sales centers.
We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales. After 15 months of operations, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.
The table below summarizes the changes in our sales center count in the first six months of 2022.
December 31, 2021 | 410 |
Acquired locations | 1 |
New locations | 5 |
June 30, 2022 | 416 |
Adjusted EBITDA
We define Adjusted EBITDA as net income or net loss plus interest and other non-operating expenses, income taxes, depreciation, amortization, share-based compensation, goodwill and other impairments (recoveries) and equity in earnings or loss in unconsolidated investments. Other companies may calculate Adjusted EBITDA differently than we do, which may limit its usefulness as a comparative measure.
Adjusted EBITDA is not a measure of performance as determined by generally accepted accounting principles (GAAP). We believe Adjusted EBITDA should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, net cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP.
We have included Adjusted EBITDA as a supplemental disclosure because we believe that it is widely used by our investors, industry analysts and others as a useful supplemental performance measure. We believe that Adjusted EBITDA, when viewed with our GAAP results and the accompanying reconciliations, provides an additional measure that enables management and investors to monitor factors and trends affecting our ability to service debt, pay taxes and fund capital expenditures.
The table below presents a reconciliation of net income to Adjusted EBITDA.
(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||||
(in thousands) | June 30, | June 30, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income | $ | 307,283 | $ | 259,695 | $ | 486,544 | $ | 358,350 | ||||||||
Add: | ||||||||||||||||
Interest and other non-operating expenses (1) | 8,523 | 1,963 | 13,722 | 4,545 | ||||||||||||
Provision for income taxes | 103,160 | 76,985 | 154,482 | 104,854 | ||||||||||||
Share-based compensation | 3,914 | 3,712 | 7,571 | 7,549 | ||||||||||||
Equity in earnings of unconsolidated investments, net | (78 | ) | (57 | ) | (136 | ) | (132 | ) | ||||||||
Depreciation | 7,713 | 7,000 | 15,376 | 13,884 | ||||||||||||
Amortization (2) | 1,951 | 221 | 3,928 | 561 | ||||||||||||
Adjusted EBITDA | $ | 432,466 | $ | 349,519 | $ | 681,487 | $ | 489,611 |
(1) Shown net of losses (gains) on foreign currency transactions of
(2) Excludes amortization of deferred financing costs of
Adjusted Diluted EPS
We have included adjusted diluted EPS, a non-GAAP financial measure, in this press release as a supplemental disclosure, because we believe this measure is useful to investors and others in assessing our period-to-period operating performance.
Adjusted diluted EPS is a key measure used by management to demonstrate the impact of tax benefits from ASU 2016-09 on our diluted EPS and to provide investors and others with additional information about our potential future operating performance to supplement GAAP measures.
We believe this measure should be considered in addition to, not as a substitute for, diluted EPS presented in accordance with GAAP, and in the context of our other disclosures in this press release. Other companies may calculate this non-GAAP financial measure differently than we do, which may limit its usefulness as a comparative measure.
The table below presents a reconciliation of diluted EPS to adjusted diluted EPS.
(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Diluted EPS | $ | 7.63 | $ | 6.37 | $ | 12.03 | $ | 8.78 | ||||||||
ASU 2016-09 tax benefit | (0.04 | ) | (0.19 | ) | (0.22 | ) | (0.29 | ) | ||||||||
Adjusted diluted EPS | $ | 7.59 | $ | 6.18 | $ | 11.81 | $ | 8.49 |
FAQ
What were Pool Corporation's Q2 2022 earnings results?
How has Pool Corporation's annual earnings guidance changed?
What are the challenges Pool Corporation faced in Q2 2022?
What drove the sales growth for Pool Corporation in Q2 2022?