Pool Corp's (POOL) Q1 Earnings Top, Revenues Lag Estimates

Pool CorporationPOOL 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 BXG , The Madison Square Garden MSG and Marcus Corporation MCS , 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.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Marcus Corporation (The) (MCS): Free Stock Analysis Report

Pool Corporation (POOL): Free Stock Analysis Report

The Madison Square Garden Company (MSG): Free Stock Analysis Report

Bluegreen Vacations Corporation (BXG): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics

Earnings Stocks

Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More