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Pool Corp (POOL) Q3 Earnings Beat Estimates, Increase Y/Y

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Pool Corporation (POOL - Free Report) reported solid third-quarter 2020 results, wherein earnings and revenues not only surpassed the Zacks Consensus Estimate but also increased on a year-over-year basis. While the bottom line beat the consensus estimate for the sixth straight quarter, the top line surpassed the same for the fifth consecutive time.

Adjusted earnings of $2.71 per share in the quarter topped the Zacks Consensus Estimate of $2.14 and increased 47.3% from the year-ago quarter’s tally. Quarterly net revenues of $1,139.2 million surpassed the consensus mark of $990 million and increased 26.8% year over year.

Notably, the upside can be primarily attributed to solid performance by the Base business segment and Excluded segment. Moreover, the company witnessed solid demand for residential pool products along with product categories, including maintenance, replacement, refurbishment and construction activities.

Pool Corporation Price, Consensus and EPS Surprise

 

Pool Corporation Price, Consensus and EPS Surprise

Pool Corporation price-consensus-eps-surprise-chart | Pool Corporation Quote

Segmental Performance

Pool Corp reports operations under two segments — The Base Business (constituting majority of the business) and the Excluded (sale centers excluded from the Base business).

Revenues at the Base Business segment increased 26.6% year over year to $1,133.6 million. Operating income rose 41% year over year to $147.9 million. Moreover, operating margin expanded 130 basis points (bps) from the year-ago quarter’s number to 13%.

The Excluded segment delivered net revenues of $5.6 million, up from $3 million registered in the prior-year quarter. The segment reported operating income of $0.3 million against the year-ago quarter’s loss of $0.4 million. The segment’s operating margin came in at 5.6% against a negative 11.8% in the prior-year quarter.

Operating Highlights & Expenses

Cost of sales in the third quarter increased 26.5% from the prior-year quarter’s figure. Gross profit, as a percentage of net sales, increased 20 basis points (bps) year over year to 28.9% from 28.7% reported in the year-ago quarter. Selling and administrative expenses rose 18% year over year to $180.5 million.

During the third quarter, operating income increased 42% year over year to $148.2 million, while operating margin rose 140 bps to 13% from the prior-year quarter’s level.

Nonetheless, net income totaled $119.1 million, up from $79.5 million in the year-ago quarter.

Balance Sheet

As of Sep 30, 2020, Pool Corp’s cash and cash equivalents amounted to $74.7 million compared with $36.7 million as on Sep 30, 2019. Total net receivables, including pledged receivables, rose 19% year over year, while inventory levels declined 1% year over year. Its net long-term debt amounted to $328.2 million, down 39% from the prior-year quarter’s level. Goodwill increased to $199.4 million from $188.1 million reported in the prior-year quarter.

During third-quarter 2020, net cash provided by operating activities came in at $167.7 million compared with $145.8 million in the year-ago quarter.

For the nine months ended Sep 30, 2020, the company paid out cash dividends worth $68.6 million compared with $61.8 million in the prior-year quarter.

2020 Guidance

For 2020, Pool Corp expects earnings per share in the range of $8.20-$8.50 compared with the prior guidance of $7.05-$7.45. The Zacks Consensus Estimate for 2020 is currently pegged at $7.25.

Zacks Rank & Other Key Picks

Pool Corp currently sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the leisure space include YETI Holdings, Inc. (YETI - Free Report) , Brunswick Corporation (BC - Free Report) and Clarus Corporation (CLAR - Free Report) . YETI Holdings sports a Zacks Rank #1, while Brunswick and Clarus carry a Zacks Rank #2.

YETI Holdings has a three-five-year earnings per share growth rate of 14.3%.

Brunswick has a trailing four-quarter earnings surprise of 39.9%, on average.

Clarus 2021 earnings are expected to surge 47.2%.

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