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Pool Corp (POOL) Q1 Earnings Beat Estimates, Raises '21 View

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Pool Corporation (POOL - Free Report) reported solid first-quarter 2021 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 eighth straight quarter, the top line surpassed the same for the seventh consecutive time. Following the results, the company’s shares gained 6.4% on Apr 22.

Peter D. Arvan, president and CEO said “We achieved over $1.0 billion in net sales in the first quarter of 2021, a milestone in our company's history and a reflection of our focus on providing extraordinary customer service. Looking ahead at the remainder of the year, we expect to achieve strong growth tempered by tougher comps in the back half of the year. We are well-positioned to accomplish our strategic initiatives and have the right team in place to continue to build on our legacy of success.

Earnings & Revenue Discussion

Adjusted earnings of $2.42 per share in the quarter outpaced the Zacks Consensus Estimate of $1.20. In the prior-year quarter, the company had reported adjusted earnings per share of 90 cents. Quarterly net revenues of $1,060.7 million surpassed the consensus mark of $821 million and increased 57% year over year.

Notably, the upside can be primarily attributed to solid performance by the Base business segment and Excluded segment. Markedly, the company witnessed solid demand for residential pool products on the back of stay-at-home trends.

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).

During the first quarter, revenues in the Base Business segment increased 51% year over year to $1,015.6 million. Operating income rose 264% year over year to $129.1 million. Moreover, operating margin expanded 740 basis points (bps) from the year-ago quarter to 12.7%.

The Excluded segment reported net revenues of $45.1 million, up from $3.2 million in the prior-year quarter. During the quarter under review, the segment reported operating loss of $0.09 million against the prior-year quarter’s earnings of $111 million. The segment’s operating margin came in at (0.2%) compared with 3.5% reported in the prior-year quarter.

Operating Highlights & Expenses

Cost of sales in the first quarter increased 55.8% from the prior-year quarter. Gross profit, as a percentage of net sales, increased 40 basis points (bps) year over year to 28.4% from 28% reported in the year-ago quarter. Selling and administrative expenses climbed 17% year over year to $172.1 million.

During the first quarter, operating income soared 262.6% year over year to $129 million, while operating margin rose 690 bps to 12.2% from the prior-year quarter’s level.

Moreover, net income totaled $98.7 million, up from $30.9 million in the year-ago quarter.

Balance Sheet

As of Mar 31, 2021, Pool Corp’s cash and cash equivalents amounted to $27.1 million compared with $17.8 million as on Mar 31, 2020. As of March end, total net receivables (including pledged receivables) rose 41% year over year. Its net long-term debt amounted to $433.2 million, down 35.3% from the prior-year quarter’s level. Goodwill increased to $267.9 million from $193.4 million in the prior-year quarter.

During the first quarter, net cash provided by operating activities amounted to $77.1 million compared with $19.7 million in the year-ago quarter.

2021 Guidance

For 2021, Pool Corp expects adjusted EPS to be $11.85-$12.60, up from the prior estimate of $9.12-$9.62. The Zacks Consensus Estimate for 2021 earnings is currently pegged at $9.41.

Zacks Rank & Other Key Picks

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

Some other top-ranked stocks that warrant a look in the same space include American Outdoor Brands, Inc. (AOUT - Free Report) , Brunswick Corporation (BC - Free Report) and Clarus Corporation (CLAR - Free Report) . American Outdoor Brands sports a Zacks Rank #1, while Brunswick and Clarus carry a Zacks Rank #2.

American Outdoor Brands has reported better-than-expected earnings in each of the trailing three quarters.

Brunswick 2021 earnings are expected to witness growth of 26%.

Clarus 2021 earnings are expected to surge 41.4%.

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