Pool Corporation Reports Third Quarter Results
Highlights
Resilient recurring maintenance revenues contributed to Q3 2024 net sales of $1.4 billion
Seasonal gross margin of 29.1%
Operating income of $176.4 million and operating margin of 12.3%
Q3 2024 diluted EPS of $3.27 or $3.26 without tax benefits
Maintains annual earnings guidance range of $11.06 - $11.46 per diluted share
______________________
COVINGTON, La., Oct. 24, 2024 (GLOBE NEWSWIRE) -- Pool Corporation (Nasdaq/GSM:POOL) today reported results for the third quarter of 2024.
"We generated third quarter net sales of $1.4 billion, down 3% from the third quarter of 2023, supported by steady demand for maintenance products while the discretionary portions of our business continued to see pressure. During the quarter, we made additional progress on our Pool360 technology rollouts and digital marketing expansion, seeing strong private-label chemical sales growth, higher Pool360 usage and sustained gross margins. Our dedicated team remains focused on delivering a best-in-class customer experience and positioning ourselves for future growth by leveraging our connected software solutions and the power of our nationwide, integrated distribution network, with an efficient capital structure and strong cash flow generation," commented Peter D. Arvan, president and CEO.
Third quarter ended September 30, 2024 compared to the third quarter ended September 30, 2023
Net sales decreased 3% in the third quarter of 2024 to $1.4 billion compared to $1.5 billion in the third quarter of 2023. Base business results approximated consolidated results for the period. Following similar trends from the first half of the year, our third quarter results were anchored by strong sales of non-discretionary maintenance products, while sales of pool construction and discretionary products remained soft compared to the third quarter of 2023. Net sales benefited approximately 2% from one more selling day in third quarter of 2024 versus the same period in 2023.
Gross profit decreased 3% to $416.4 million in the third quarter of 2024 from $428.7 million in the same period of 2023. Gross margin remained consistent at 29.1% for each of the third quarters of 2024 and 2023.
Increases in our selling and administrative expenses (operating expenses) moderated during the third quarter of 2024, growing 2% to $240.1 million compared to $234.3 million in the third quarter of 2023. Expense increases in the quarter primarily related to inflationary impacts, the expansion of our network and our technology initiatives and were partially offset by lower variable costs and a timing shift of certain expenses from the third quarter of 2024 to the fourth quarter of 2024. As a percentage of net sales, operating expenses increased to 16.8% in the third quarter of 2024 compared to 15.9% in the same period of 2023.
Operating income in the third quarter of 2024 decreased 9% to $176.4 million from $194.4 million in 2023. Operating margin was 12.3% in the third quarter of 2024 compared to 13.2% in the third quarter of 2023.
Interest and other non-operating expenses, net for the third quarter of 2024 decreased $1.2 million compared to the third quarter of 2023, primarily due to a decrease in average debt between periods.
We recorded a $0.5 million tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in the quarter ended September 30, 2024, compared to a tax benefit of $0.4 million realized in the same period of 2023. This resulted in a $0.01 per diluted share tax benefit in the third quarter of 2024 consistent with the $0.01 per diluted share tax benefit realized in the same period of 2023.
Net income decreased 9% to $125.7 million in the third quarter of 2024 compared to $137.8 million in the third quarter of 2023. Earnings per diluted share decreased 7% to $3.27 in the third quarter of 2024 compared to $3.51 in the same period of 2023. Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 7% to $3.26 compared to $3.50 in the third quarter of 2023.
Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023
Net sales for the nine months ended September 30, 2024 declined 5% to $4.3 billion from $4.5 billion in the nine months ended September 30, 2023. Base business results approximated consolidated results for the period. Gross margin declined 40 basis points to 29.7% from 30.1% in the same period last year.
Operating expenses for the nine months ended September 30, 2024 increased 4% to $728.6 million compared to $699.0 million for the same period in 2023. Operating income for the nine months ended September 30, 2024 decreased 17% to $556.6 million compared to $667.2 million in the same period last year. Operating margin for the nine months ended September 30, 2024 was 12.9% compared to 14.7% for the nine months ended September 30, 2023.
Interest and other non-operating expenses, net for the first nine months of 2024 decreased $6.5 million compared to the same period last year, primarily due to a decrease in average debt between periods.
Net income for the nine months ended September 30, 2024 decreased 16% to $397.0 million compared to $471.8 million for the nine months ended September 30, 2023. We recorded an $8.3 million, or $0.21 per diluted share, tax benefit from ASU 2016-09 in the nine months ended September 30, 2024 compared to a $5.9 million, or $0.15 per diluted share, tax benefit in the same period of 2023.
Earnings per diluted share decreased 14% to $10.30 in the first nine months of 2024 compared to $12.00 in the same period of 2023. Without the impact from ASU 2016-09 in both periods, earnings per diluted share was $10.09 in the first nine months of 2024 compared to $11.85 in the same period of 2023.
Balance Sheet and Liquidity
Total net receivables, including pledged receivables, decreased 8% at September 30, 2024 compared to September 30, 2023, primarily due to our lower sales in 2024. Our inventory management efforts contributed to an inventory balance of $1.2 billion, down $78.8 million, or 6%, from September 30, 2023. Total debt outstanding was $923.8 million at September 30, 2024, down $110.1 million from September 30, 2023. As previously announced, during the third quarter of 2024, we amended our credit facility to, among other items, extend the term three years and increase our borrowing capacity.
Net cash provided by operations decreased to $488.6 million in the first nine months of 2024 compared to $750.0 million in the first nine months of 2023, impacted by our prior year inventory reduction efforts of $330.9 million during the first nine months of 2023 and lower net income in 2024. Adjusted EBITDA decreased 15% to $603.3 million for the nine months ended September 30, 2024 compared to $712.3 million last year.
Outlook
"With the 2024 swimming pool season behind us, we are maintaining our 2024 full year earnings guidance of $11.06 to $11.46 per diluted share, including the $0.21 tax benefit realized this year. I would like to thank our many team members who continue to deliver on areas of opportunity in this environment. As the leading distributor to the swimming pool and outdoor living products industry, we are committed to investing in continuous improvements to enhance each customer's experience, expanding our marketing and technological tools, providing the broadest product assortment through our long-standing partnerships with vendors, optimizing our vertical integration capabilities, and building out our digital ecosystem. We believe these organic growth drivers will accelerate our abilities well into the future," said Arvan.
Non-GAAP Financial Measures
This press release contains certain non-GAAP measures (adjusted EBITDA and 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. POOLCORP operates 447 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 continue to 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 2023 Annual Report on Form 10-K, 2024 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.
Investor Relations Contacts:
Kristin S.
Curtis J.
POOL CORPORATIONConsolidated Statements of Income(Unaudited)(In thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net sales
$
1,432,879
$
1,474,407
$
4,323,474
$
4,538,545
Cost of sales
1,016,476
1,045,676
3,038,370
3,172,276
Gross profit
416,403
428,731
1,285,104
1,366,269
Percent
29.1
%
29.1
%
29.7
%
30.1
%
Selling and administrative expenses
240,050
234,288
728,550
699,046
Operating income
176,353
194,443
556,554
667,223
Percent
12.3
%
13.2
%
12.9
%
14.7
%
Interest and other non-operating expenses, net
12,355
13,599
39,818
46,327
Income before income taxes and equity in earnings
163,998
180,844
516,736
620,896
Provision for income taxes
38,361
43,079
119,891
149,339
Equity in earnings of unconsolidated investments, net
64
78
180
235
Net income
$
125,701
$
137,843
$
397,025
$
471,792
Earnings per share attributable to common stockholders: (1)
Basic
$
3.29
$
3.54
$
10.37
$
12.09
Diluted
$
3.27
$
3.51
$
10.30
$
12.00
Weighted average common shares outstanding:
Basic
37,983
38,735
38,104
38,816
Diluted
38,187
39,023
38,330
39,112
Cash dividends declared per common share
$
1.20
$
1.10
$
3.50
$
3.20
(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 $125.0 million and $137.1 million for the three months ended September 30, 2024 and September 30, 2023, respectively, and $395.0 million and $469.3 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. Participating securities excluded from weighted average common shares outstanding were 206,000 and 205,000 for the three months ended September 30, 2024 and September 30, 2023, respectively, and 206,000 and 207,000 for the nine months ended September 30, 2024 and September 30, 2023, respectively.
POOL CORPORATIONCondensed Consolidated Balance Sheets(Unaudited)(In thousands)
September 30,
September 30,
Change
2024
2023
$
%
Assets
