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Pool Corp's (POOL) Q1 Earnings Top, Revenues Lag Estimates
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Pool Corporation (POOL - Free Report) reported mixed results in the first quarter of 2018. Earnings of 75 cents per share in the quarter surpassed the Zacks Consensus Estimate of 70 cents by 7.1%. The bottom line increased 44.2% from the year-ago quarter on the back of improved net income. Adjusted earnings excluding tax benefits came in at 53 cents per share compared with 40 cents in the prior-year quarter.
Quarterly net sales of $585.9 million missed the consensus estimate of $586.9 million by a mere 0.2% but grew 7.2% year over year. The revenue growth was primarily attributable to growth in the company’s base business.
Despite earnings growth, unchanged EPS guidance for 2018 without tax benefits and lower-than-expected top line might have hurt investors’ sentiments. Hence, following the earnings release on Apr 19, shares were down 1.5% in the trading session.
However, shares of Pool Corp have rallied 19.6% in the last six months, outperforming the industry’s gain of 10.5%.
Let’s delve deeper into the numbers.
Segmental Performance
Pool Corp reports operations under two segments, the Base Business segment (constituting a majority portion of the business) and Excluded segment (sale centers excluded from base business).
The Base business segment witnessed sales growth of 5% to $575.1 million year over year. Operating income in the segment increased 11%. Operating margin as a result improved 40 basis points (bps) in the quarter compared with the year-ago quarter.
The Excluded segment saw net sales of $10.8 million, up from nearly $1 million in the prior-year quarter. The segment witnessed operating loss of $1.3 million, wider than the prior-year quarter’s loss of $0.3 million.
Operating Highlights & Expenses
Cost of sales in the quarter increased 6.9% from the prior-year quarter. Gross profit, as a percentage of net sales, also increased 20 bps from the year-ago level.
Operating income increased 8.2% year over year to $33.5 million. Operating margin remained flat from the prior-year quarter. Selling and administrative expenses increased 8.1% year over year. Net income was $31.3 million, up from $22.3 million in the year-ago quarter.
Adjusted EBITDA increased to $43.4 million in the quarter from $39.8 million in the first quarter of 2017.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2018 were $8.8 million, compared with $13.4 million as of Mar 31, 2017. Total net receivables, including pledged receivables, increased 8% while inventory levels grew 9% in the same time frame compared with March 31, 2017. Long-term debt was $547.3 million, up 14% from the prior-year quarter. Goodwill increased 3% year over year.
Cash used in operations was $44.1 million in the quarter, compared with $32.4 million in the first three months of 2017. The increase in cash usage was due to earlier payment of a few inventory purchases.
2018 EPS Expectation
For 2018, the company continues to expect EPS in the range of $5.36-$5.61. However, incorporating the additional tax benefits realized so far, Pool Corp projects EPS within $5.45-$5.70.
Bluegreen Vacations, Madison Square and Marcus’ earnings for 2018 are expected to increase 19.3%, 160.4% and 11%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Pool Corp's (POOL) Q1 Earnings Top, Revenues Lag Estimates
Pool Corporation (POOL - Free Report) reported mixed results in the first quarter of 2018. Earnings of 75 cents per share in the quarter surpassed the Zacks Consensus Estimate of 70 cents by 7.1%. The bottom line increased 44.2% from the year-ago quarter on the back of improved net income. Adjusted earnings excluding tax benefits came in at 53 cents per share compared with 40 cents in the prior-year quarter.
Quarterly net sales of $585.9 million missed the consensus estimate of $586.9 million by a mere 0.2% but grew 7.2% year over year. The revenue growth was primarily attributable to growth in the company’s base business.
Price, Consensus and EPS Surprise
Price, Consensus and EPS Surprise | Quote
Despite earnings growth, unchanged EPS guidance for 2018 without tax benefits and lower-than-expected top line might have hurt investors’ sentiments. Hence, following the earnings release on Apr 19, shares were down 1.5% in the trading session.
However, shares of Pool Corp have rallied 19.6% in the last six months, outperforming the industry’s gain of 10.5%.
Let’s delve deeper into the numbers.
Segmental Performance
Pool Corp reports operations under two segments, the Base Business segment (constituting a majority portion of the business) and Excluded segment (sale centers excluded from base business).
The Base business segment witnessed sales growth of 5% to $575.1 million year over year. Operating income in the segment increased 11%. Operating margin as a result improved 40 basis points (bps) in the quarter compared with the year-ago quarter.
The Excluded segment saw net sales of $10.8 million, up from nearly $1 million in the prior-year quarter. The segment witnessed operating loss of $1.3 million, wider than the prior-year quarter’s loss of $0.3 million.
Operating Highlights & Expenses
Cost of sales in the quarter increased 6.9% from the prior-year quarter. Gross profit, as a percentage of net sales, also increased 20 bps from the year-ago level.
Operating income increased 8.2% year over year to $33.5 million. Operating margin remained flat from the prior-year quarter. Selling and administrative expenses increased 8.1% year over year. Net income was $31.3 million, up from $22.3 million in the year-ago quarter.
Adjusted EBITDA increased to $43.4 million in the quarter from $39.8 million in the first quarter of 2017.
Balance Sheet
Cash and cash equivalents as of Mar 31, 2018 were $8.8 million, compared with $13.4 million as of Mar 31, 2017. Total net receivables, including pledged receivables, increased 8% while inventory levels grew 9% in the same time frame compared with March 31, 2017. Long-term debt was $547.3 million, up 14% from the prior-year quarter. Goodwill increased 3% year over year.
Cash used in operations was $44.1 million in the quarter, compared with $32.4 million in the first three months of 2017. The increase in cash usage was due to earlier payment of a few inventory purchases.
2018 EPS Expectation
For 2018, the company continues to expect EPS in the range of $5.36-$5.61. However, incorporating the additional tax benefits realized so far, Pool Corp projects EPS within $5.45-$5.70.
Zacks Rank & Other Stocks to Consider
Pool Corp carries a Zacks Rank #2 (Buy).
Other top-ranked stocks in the Consumer Discretionary sector include Bluegreen Vacations , The Madison Square Garden and Marcus Corporation (MCS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bluegreen Vacations, Madison Square and Marcus’ earnings for 2018 are expected to increase 19.3%, 160.4% and 11%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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