Pool Corporation Reports Year End and Fourth Quarter 2023 Results; Provides 2024 Earnings Guidance
- Annual net sales of $5.5 billion, the second highest in company history
- Operating income of $746.6 million with an operating margin of 13.5%
- Record net cash provided by operations of $888.2 million in 2023
- 2023 diluted EPS of $13.35, more than double 2019 diluted EPS
- 2024 diluted EPS guidance range of $13.10 - $14.10, including an estimated $0.10 tax benefit
- Strategic investments in organic growth with 14 greenfield and 5 acquired locations added in 2023
- Record operating cash flows of $888.2 million and $473.8 million returned to shareholders in dividends and share repurchases
- Net income declined by 30% to $523.2 million in 2023 compared to 2022
- Adjusted EBITDA decreased by 25% to $806.9 million in 2023 compared to 2022
- Gross margin declined by 130 basis points to 30.0% in 2023 compared to 31.3% in 2022
- Operating income decreased by 27% to $746.6 million in 2023 compared to $1.0 billion in 2022
- Net sales decreased by 10% in 2023 compared to 2022
- Gross profit decreased by 14% to $1.7 billion in 2023
- Operating margin decreased by 310 basis points to 13.5% in 2023
- Interest and other non-operating expenses increased in 2023
- Net income and earnings per share decreased significantly in 2023
- Adjusted EBITDA decreased by 25% in 2023
- Operating expenses increased as a percentage of net sales in 2023
- Earnings per diluted share decreased by 29% to $13.35 in 2023 compared to 2022
Insights
The reported annual net sales of $5.5 billion, while being the second highest in the company's history, indicate a 10% decrease compared to the previous year. This decline, alongside a 14% decrease in gross profit, suggests a contraction in the company's revenue streams. The operating margin contraction to 13.5% from 16.6% further reflects cost pressures and possibly less efficient operations. Investors should note the company's ability to manage its operating cash flow, which increased significantly, leading to debt reduction and shareholder returns through dividends and share repurchases. The provided EPS guidance for 2024 suggests cautious optimism, with a slight potential decrease to a moderate increase, factoring in a $0.10 tax benefit.
The pool industry is affected by macroeconomic factors such as weather conditions and interest rates, as evidenced by the reported slowdown in pool openings and construction. The company's strategic focus on organic growth through greenfield and acquired locations, despite these challenges, indicates a long-term vision to expand customer reach. The consistent gross margin outlook aligns with industry norms, but the decline in net income and adjusted EBITDA raises questions about market demand and operational efficiency. The mention of technological advancements and product upgrades as growth drivers highlights the importance of innovation in maintaining industry leadership.
The impact of inflationary pressures is evident in the company's results, with product cost increases contributing to net sales. The increase in operating expenses as a percentage of net sales indicates that inflation has affected wage, rent and insurance costs. The reduction in debt and inventory levels aligns with sound financial management practices in a period of economic uncertainty. The company's performance should be viewed in the context of broader economic trends, such as interest rate fluctuations and consumer spending patterns, which will likely continue to influence the pool industry's trajectory.
Highlights include:
- Annual net sales of
$5.5 billion , our second highest in company history - Operating income of
$746.6 million and operating margin of13.5% , a 280 bps improvement from 2019 - Record net cash provided by operations of
$888.2 million in 2023 - 2023 diluted EPS of
$13.35 , more than double 2019 diluted EPS of$6.40 , or$13.18 without tax benefits - 2024 diluted EPS guidance range of
$13.10 -$14.10 , including an estimated $0.10 tax benefit
COVINGTON, La., Feb. 22, 2024 (GLOBE NEWSWIRE) -- Pool Corporation (Nasdaq/GSM:POOL) today announced full year and fourth quarter 2023 results.
“After a challenging start, we achieved our second highest annual sales in company history of
Year ended December 31, 2023 compared to the year ended December 31, 2022
Following a period of significant growth over the prior three years, net sales decreased
Gross profit was
Selling and administrative expenses (operating expenses) increased
Operating income for the year decreased
Interest and other non-operating expenses, net for the year increased
We recorded a
Net income declined
Adjusted EBITDA decreased
Balance Sheet and Liquidity
On the balance sheet at December 31, 2023, we ended the year with days sales outstanding ratio of 26.8, as calculated on a trailing four quarters basis, consistent with 26.9 days at December 31, 2022. Inventory levels decreased
Net cash provided by operations was a record
Fourth quarter ended December 31, 2023 compared to the fourth quarter ended December 31, 2022
Net sales decreased
Gross profit decreased
Operating expenses increased
Operating income in the fourth quarter of 2023 decreased
Interest and other non-operating expenses in the fourth quarter of 2023 decreased
We recorded an
2024 Outlook
“We have the privilege of serving a unique industry that grows intrinsically; as new pools are built and added to the installed base, including an estimated 75,000 pools built in 2023, demand for products to maintain and enhance these pools grows too. These consistent additions to the installed base of swimming pools and related upkeep, technological advancements and product upgrade trends continue to be growth drivers for the outdoor living industry. We are well-positioned and confident in our ability to capitalize on these opportunities and continue our long-term trends of consistent growth and exceptional shareholder returns. We expect earnings for 2024 will be in the range of
| (Unaudited) | 2024 Earnings Guidance Range | |||||||||||||
| 2023 | Floor | % Change | Ceiling | % Change | ||||||||||
| Diluted EPS | $ | 13.35 | $ | 13.10 | (2 | )% | $ | 14.10 | 6 | % | ||||
| Less: ASU 2016-09 tax benefit | 0.17 | 0.10 | 0.10 | |||||||||||
| Adjusted Diluted EPS | $ | 13.18 | $ | 13.00 | (1 | )% | $ | 14.00 | 6 | % | ||||
We estimate that we have approximately
Non-GAAP Financial Measures
This press release contains certain non-GAAP measures (adjusted EBITDA, adjusted diluted EPS and projected adjusted diluted EPS). See the addendum to this release for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures.
About Pool Corporation
POOLCORP is the world’s largest wholesale distributor of swimming pool and related backyard products. As of December 31, 2023, POOLCORP operated 439 sales centers in North America, Europe and Australia, through which it distributes more than 200,000 products to roughly 125,000 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,” “will,” “may,” 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 the sensitivity of our business to weather conditions; changes in economic conditions, consumer discretionary spending, the housing market, inflation or interest rates; our ability to maintain favorable relationships with suppliers and manufacturers; the extent to which home-centric trends will moderate or reverse; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; changes in the regulatory environment; new or additional taxes, duties or tariffs; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in POOLCORP’s 2022 Annual Report on Form 10-K, 2023 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.
Curtis J. Scheel
Director of Investor Relations
985.801.5341
| POOL CORPORATION Consolidated Statements of Income (Unaudited) (In thousands, except per share data) | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2023 | 2022 | 2023 | 2022 (1) | ||||||||||
| Net sales | $ | 1,003,050 | $ | 1,095,920 | $ | 5,541,595 | $ | 6,179,727 | |||||
| Cost of sales | 709,275 | 780,189 | 3,881,551 | 4,246,315 | |||||||||
| Gross profit | 293,775 | 315,731 | 1,660,044 | 1,933,412 | |||||||||
| Percent | 29.3 | % | 28.8 | % | 30.0 | % | 31.3 | % | |||||
| Selling and administrative expenses | 214,431 | 208,436 | 913,477 | 907,629 | |||||||||
| Operating income | 79,344 | 107,295 | 746,567 | 1,025,783 | |||||||||
| Percent | 7.9 | % | 9.8 | % | 13.5 | % | 16.6 | % | |||||
| Interest and other non-operating expenses, net | 12,104 | 15,482 | 58,431 | 40,911 | |||||||||
| Income before income taxes and equity in earnings | 67,240 | 91,813 | 688,136 | 984,872 | |||||||||
| Provision for income taxes | 15,745 | 20,076 | 165,084 | 236,763 | |||||||||
| Equity in earnings (loss) of unconsolidated investments, net | (58 | ) | 126 | 177 | 353 | ||||||||
| Net income | $ | 51,437 | $ | 71,863 | $ | 523,229 | $ | 748,462 | |||||
| Earnings per share attributable to common stockholders: (2) | |||||||||||||
| Basic | $ | 1.33 | $ | 1.84 | $ | 13.45 | $ | 18.89 | |||||
| Diluted | $ | 1.32 | $ | 1.82 | $ | 13.35 | $ | 18.70 | |||||
| Weighted average common shares outstanding: | |||||||||||||
| Basic | 38,372 | 38,843 | 38,704 | 39,409 | |||||||||
| Diluted | 38,648 | 39,168 | 38,997 | 39,806 | |||||||||
| Cash dividends declared per common share | $ | 1.10 | $ | 1.00 | $ | 4.30 | $ | 3.80 | |||||
(1) Derived from audited financial statements.
(2) 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) | |||||||||||||
| December 31, | December 31, | Change | |||||||||||
| 2023 | 2022 (1) | $ | % | ||||||||||
| Assets | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 66,540 | $ | 45,591 | $ | 20,949 | 46 | % | |||||
| Receivables, net (2) | 145,723 | 128,247 | 17,476 | 14 | |||||||||
| Receivables pledged under receivables facility | 197,187 | 223,201 | (26,014 | ) | (12 | ) | |||||||
| Product inventories, net (3) | 1,365,466 | 1,591,060 | (225,594 | ) | (14 | ) | |||||||
| Prepaid expenses and other current assets | 40,444 | 30,892 | 9,552 | 31 | |||||||||
| Total current assets | 1,815,360 | 2,018,991 | (203,631 | ) | (10 | ) | |||||||
| Property and equipment, net | 223,929 | 193,709 | 30,220 | 16 | |||||||||
| Goodwill | 700,078 | 691,993 | 8,085 | 1 | |||||||||
| Other intangible assets, net | 298,282 | 305,450 | (7,168 | ) | (2 | ) | |||||||
| Equity interest investments | 1,305 | 1,248 | 57 | 5 | |||||||||
| Operating lease assets | 305,688 | 269,608 | 36,080 | 13 | |||||||||
| Other assets | 83,426 | 84,438 | (1,012 | ) | (1 | ) | |||||||
| Total assets | $ | 3,428,068 | $ | 3,565,437 | $ | (137,369 | ) | (4 | )% | ||||
| Liabilities and stockholders’ equity | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 508,672 | $ | 406,667 | $ | 102,005 | 25 | % | |||||
| Accrued expenses and other current liabilities | 134,676 | 168,521 | (33,845 | ) | (20 | ) | |||||||
| Short-term borrowings and current portion of long-term debt | 38,203 | 25,042 | 13,161 | 53 | |||||||||
| Current operating lease liabilities | 89,215 | 75,484 | 13,731 | 18 | |||||||||
| Total current liabilities | 770,766 | 675,714 | 95,052 | 14 | |||||||||
| Deferred income taxes | 67,421 | 58,759 | 8,662 | 15 | |||||||||
| Long-term debt, net | 1,015,117 | 1,361,761 | (346,644 | ) | (25 | ) | |||||||
| Other long-term liabilities | 40,028 | 35,471 | 4,557 | 13 | |||||||||
| Non-current operating lease liabilities | 221,949 | 198,538 | 23,411 | 12 | |||||||||
| Total liabilities | 2,115,281 | 2,330,243 | (214,962 | ) | (9 | ) | |||||||
| Total stockholders’ equity | 1,312,787 | 1,235,194 | 77,593 | 6 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,428,068 | $ | 3,565,437 | $ | (137,369 | ) | (4 | )% | ||||
(1) Derived from audited financial statements.
(2) The allowance for doubtful accounts was
(3) The inventory reserve was
| POOL CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | ||||||||||||
| December 31, | ||||||||||||
| 2023 | 2022 (1) | Change | ||||||||||
| Operating activities | ||||||||||||
| Net income | $ | 523,229 | $ | 748,462 | $ | (225,233 | ) | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation | 31,585 | 30,381 | 1,204 | |||||||||
| Amortization | 8,555 | 8,644 | (89 | ) | ||||||||
| Share-based compensation | 19,582 | 14,879 | 4,703 | |||||||||
| Equity in earnings of unconsolidated investments, net | (177 | ) | (353 | ) | 176 | |||||||
| Net (gain) loss on foreign currency transactions | (813 | ) | 48 | (861 | ) | |||||||
| Goodwill impairment | 550 | 605 | (55 | ) | ||||||||
| Other | 14,369 | 24,563 | (10,194 | ) | ||||||||
| Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||
| Receivables | 10,108 | 19,685 | (9,577 | ) | ||||||||
| Product inventories | 231,240 | (263,567 | ) | 494,807 | ||||||||
| Prepaid expenses and other assets | 57,840 | (52,815 | ) | 110,655 | ||||||||
| Accounts payable | 96,128 | 7,597 | 88,531 | |||||||||
| Accrued expenses and other liabilities | (103,967 | ) | (53,275 | ) | (50,692 | ) | ||||||
| Net cash provided by operating activities | 888,229 | 484,854 | 403,375 | |||||||||
| Investing activities | ||||||||||||
| Acquisition of businesses, net of cash acquired | (11,533 | ) | (9,264 | ) | (2,269 | ) | ||||||
| Purchase of property and equipment, net of sale proceeds | (60,096 | ) | (43,619 | ) | (16,477 | ) | ||||||
| Other investments, net | 32 | 2,013 | (1,981 | ) | ||||||||
| Net cash used in investing activities | (71,597 | ) | (50,870 | ) | (20,727 | ) | ||||||
| Financing activities | ||||||||||||
| Proceeds from revolving line of credit | 1,548,618 | 1,917,173 | (368,555 | ) | ||||||||
| Payments on revolving line of credit | (1,815,829 | ) | (1,970,388 | ) | 154,559 | |||||||
| Proceeds from term loan under credit facility | — | 250,000 | (250,000 | ) | ||||||||
| Payments on term loan under credit facility | (12,500 | ) | — | (12,500 | ) | |||||||
| Proceeds from asset-backed financing | 552,500 | 220,000 | 332,500 | |||||||||
| Payments on asset-backed financing | (560,300 | ) | (205,500 | ) | (354,800 | ) | ||||||
| Payments on term facility | (47,313 | ) | (9,250 | ) | (38,063 | ) | ||||||
| Proceeds from short-term borrowings and current portion of long-term debt | 19,998 | 28,445 | (8,447 | ) | ||||||||
| Payments on short-term borrowings and current portion of long-term debt | (19,338 | ) | (27,675 | ) | 8,337 | |||||||
| Payments of deferred acquisition consideration | (551 | ) | (1,374 | ) | 823 | |||||||
| Payments of deferred financing costs | (52 | ) | (170 | ) | 118 | |||||||
| Proceeds from stock issued under share-based compensation plans | 10,455 | 8,934 | 1,521 | |||||||||
| Payments of cash dividends | (167,461 | ) | (150,624 | ) | (16,837 | ) | ||||||
| Repurchases of common stock | (306,359 | ) | (471,229 | ) | 164,870 | |||||||
| Net cash used in financing activities | (798,132 | ) | (411,658 | ) | (386,474 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 2,449 | (1,056 | ) | 3,505 | ||||||||
| Change in cash and cash equivalents | 20,949 | 21,270 | (321 | ) | ||||||||
| Cash and cash equivalents at beginning of period | 45,591 | 24,321 | 21,270 | |||||||||
| Cash and cash equivalents at end of period | $ | 66,540 | $ | 45,591 | $ | 20,949 | ||||||
(1) Derived from audited financial statements.
ADDENDUM
Base Business
When calculating our base business results, we exclude sales centers that are acquired, opened in new markets or closed 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, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.
We have not provided separate base business income statements within this press release as our base business results for the quarter and year ended December 31, 2023 closely approximated our consolidated reported results for the same periods, and acquisitions and sales centers excluded from base business contributed less than
The table below summarizes the changes in our sales centers during 2023.
| December 31, 2022 | 420 |
| Acquired locations | 5 |
| New locations | 14 |
| December 31, 2023 | 439 |
Reconciliation of Non-GAAP Financial Measures
The non-GAAP measures described below should be considered in the context of all of our other disclosures in this press release.
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 and equity in earnings or loss of 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 management uses it to monitor our performance, and 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) | Year Ended December 31, | |||||||
| (in thousands) | 2023 | 2022 | ||||||
| Net income | $ | 523,229 | $ | 748,462 | ||||
| Add: | ||||||||
| Interest and other non-operating expenses (1) | 59,244 | 40,863 | ||||||
| Provision for income taxes | 165,084 | 236,763 | ||||||
| Share-based compensation | 19,582 | 14,879 | ||||||
| Equity in earnings of unconsolidated investments, net | (177 | ) | (353 | ) | ||||
| Goodwill impairment | 550 | 605 | ||||||
| Depreciation | 31,585 | 30,381 | ||||||
| Amortization (2) | 7,824 | 7,826 | ||||||
| Adjusted EBITDA | $ | 806,921 | $ | 1,079,426 | ||||
(1) Shown net of (gains) losses 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 management, investors and others in assessing our period-over-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.
| Three Months Ended | Year Ended | ||||||||||
| (Unaudited) | December 31, | December 31, | |||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||
| Diluted EPS | $ | 1.32 | $ | 1.82 | $ | 13.35 | $ | 18.70 | |||
| Less: ASU 2016-09 tax benefit | 0.02 | 0.03 | 0.17 | 0.27 | |||||||
| Adjusted diluted EPS | $ | 1.30 | $ | 1.79 | $ | 13.18 | $ | 18.43 | |||
Adjusted 2024 Diluted EPS Guidance
Please see page 3 for a reconciliation of projected 2024 diluted EPS to adjusted projected 2024 diluted EPS. We have included adjusted projected 2024 diluted EPS, which is a non-GAAP financial measure, in this press release as a supplemental disclosure to demonstrate the impact of projected tax benefits from ASU 2016-09 on our projected 2024 diluted EPS and to provide investors and others with additional information about our potential future operating performance. We believe adjusted projected 2024 diluted EPS should be considered in addition to, not as a substitute for, projected 2024 diluted EPS presented in accordance with GAAP and in the context of our other forward-looking and cautionary statements in this press release.
FAQ
What was Pool Corporation's annual net sales for 2023?
What was the operating income for Pool Corporation in 2023?
What was the diluted EPS for Pool Corporation in 2023?
What was the net income for Pool Corporation in 2023?
What is Pool Corporation's 2024 diluted EPS guidance range?
How did Pool Corporation's gross profit change in 2023?
