Pool Corporation Reports First Quarter Results

Covington, Louisiana, UNITED STATES


COVINGTON, La., April 23, 2009 (GLOBE NEWSWIRE) -- Pool Corporation (the "Company" or "POOL") (Nasdaq:POOL) today reported its results for the first quarter of 2009.

"In a very difficult external environment, we continue to focus on the aspects of our business that are directly within our control. We have improved our pricing and purchasing discipline to increase gross margins, adjusted expenses commensurate with sales expectations and rebalanced inventories while ensuring excellent customer service," commented Manuel Perez de la Mesa, President and CEO.

Net sales for the seasonally slow first quarter decreased 18% to $276.6 million, compared to $338.2 million in the first quarter of 2008. Base business sales declined 21% reflecting continued soft demand for pool and irrigation construction products, lower customer early buy purchases and deferred discretionary replacement product sales.

Gross profit for the quarter ended March 31, 2009 decreased $14.2 million, or 15%, to $81.2 million from $95.4 million in the first quarter of 2008. Gross profit as a percentage of net sales (gross margin) improved 120 basis points to 29.4% in the first quarter of 2009 from 28.2% in the first quarter of 2008. The increase in gross margin is primarily attributable to improved pricing management, the benefit resulting from pre-price increase inventory purchases in the second half of 2008 and favorable sales mix changes.

Selling and administrative expenses (operating expenses) decreased 9% to $84.8 million in the first quarter of 2009 from $93.2 million in the first quarter of 2008. Base business operating expenses decreased 11% compared to the first quarter of 2008 due primarily to the impact of cost control initiatives on payroll related and variable expenses.

Operating loss was $3.6 million in the first quarter of 2009 compared to operating income of $2.2 million in the same period in 2008. Interest expense decreased 34% compared to the first quarter of 2008 due to a lower weighted average effective interest rate between periods. Loss per share for the first quarter of 2009 was $0.13 per diluted share on a net loss of $6.2 million, compared to a loss of $0.07 per diluted share on a net loss of $3.2 million in the same period in 2008. Adjusted EBITDA (as defined in the addendum) was a loss of $3.0 million in the first quarter of 2009 compared to earnings of $5.4 million in the first quarter of 2008.

On the balance sheet, total net receivables decreased 22% compared to March 31, 2008 due primarily to lower first quarter 2009 sales and a shift toward more cash sales resulting from tighter credit terms. Inventory levels decreased 17% to $397.9 million at March 31, 2009, reflecting the success of our inventory rebalancing process.

The seasonal use of cash in operations increased to $46.0 million in the first quarter of 2009 compared to $15.4 million in the same period of 2008. The 2009 amount was negatively impacted by a $30.0 million tax payment made in January 2009 for estimated third and fourth quarter 2008 federal income taxes, which were deferred by the IRS as allowed for taxpayers in areas affected by Hurricane Gustav.

"The declines in the housing market, consumer credit and general economic conditions combine to make 2009 an extremely challenging year. Since maintenance and repair product sales are more seasonally weighted to our most important second and third quarters, we expect this impact will partially mitigate much lower new construction and deferred replacement product sales. We believe that Street earnings consensus of $0.95 per diluted share for fiscal 2009 is reasonable. In addition, we believe that cash flow provided by operations will exceed net income for 2009," continued Perez de la Mesa.

Pool Corporation is the largest wholesale distributor of swimming pool and related backyard products. Currently, POOL operates 288 sales centers in North America and Europe, through which it distributes more than 100,000 national brand and private label products to roughly 70,000 wholesale customers. For more information about POOL, please visit www.poolcorp.com.

The Pool Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4853

This news release includes "forward-looking" statements that involve risk and uncertainties that are generally identifiable through the use of words such as "believe," "expect," "intend," "plan," "estimate," "project" 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 the economy and the housing market, our ability to maintain favorable relationships with suppliers and manufacturers, competition from other leisure product alternatives and mass merchants and other risks detailed in POOL's 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission.



                           POOL CORPORATION
               Consolidated Statements of Income (Loss)
                              (Unaudited)
                 (In thousands, except per share data)

                                                  Three Months Ended
                                                       March 31,
                                                 --------------------
                                                   2009        2008
                                                 --------    --------

 Net sales                                       $276,626    $338,215
 Cost of sales                                    195,433     242,861
                                                 --------    --------
   Gross profit                                    81,193      95,354
   Percent                                           29.4%       28.2%
 Selling and administrative expenses               84,839      93,157
                                                 --------    --------
   Operating income (loss)                         (3,646)      2,197
   Percent                                           (1.3)%       0.6%
 Interest expense, net                              3,327       5,024
                                                 --------    --------
 Loss before income tax benefit and equity loss    (6,973)     (2,827)
 Income tax benefit                                (2,740)     (1,089)
 Equity loss in unconsolidated investments, net    (2,003)     (1,446)
                                                 --------    --------
 Net loss                                        $ (6,236)   $ (3,184)
                                                 ========    ========
 Loss per share:
   Basic                                         $  (0.13)   $  (0.07)
                                                 ========    ========
   Diluted                                       $  (0.13)   $  (0.07)
                                                 ========    ========
 Weighted average shares outstanding:
   Basic                                           48,218      47,538
                                                 ========    ========
   Diluted                                         48,218      47,538
                                                 ========    ========
 Cash dividends declared per common share        $   0.13    $   0.12



                           POOL CORPORATION
                 Condensed Consolidated Balance Sheets
                              (Unaudited)
                            (In thousands)

                           March 31,  March 31,        Change
                             2009       2008         $         %
 --------------------------------------------------------------------

 Assets
 Current assets:
   Cash and cash
    equivalents            $  13,103  $   6,476  $   6,627    > 100%
   Receivables, net           20,373     42,266    (21,893)     (52)
   Receivables pledged
    under receivables
    facility                 139,945    163,921    (23,976)     (15)
   Product inventories, net  397,863    476,758    (78,895)     (17)
   Prepaid expenses and
    other current assets       7,973     10,241     (2,268)     (22)
   Deferred income taxes      11,908      9,139      2,769       30
 ---------------------------------------------------------
 Total current assets        591,165    708,801   (117,636)     (17)

 Property and equipment,
  net                         34,677     34,957       (280)      (1)
 Goodwill                    169,936    167,398      2,538        2
 Other intangible assets,
  net                         13,035     15,465     (2,430)     (16)
 Equity interest
  investments                 27,804     31,551     (3,747)     (12)
 Other assets, net            27,158     24,774      2,384       10
 ---------------------------------------------------------
 Total assets              $ 863,775  $ 982,946  $(119,171)     (12)%
 ---------------------------------------------------------

 Liabilities and
  stockholders' equity
 Current liabilities:
   Accounts payable        $ 201,300  $ 333,104  $(131,804)     (40)%
   Accrued and other
    current liabilities       24,911     30,704     (5,793)     (19)
   Short-term financing        8,000     66,812    (58,812)     (88)
   Current portion of
    long-term debt and
    other long-term
    liabilities               16,613      3,152     13,461    > 100
 ---------------------------------------------------------
 Total current liabilities   250,824    433,772   (182,948)     (42)

 Deferred income taxes        19,014     15,305      3,709       24
 Long-term debt              356,721    326,298     30,423        9
 Other long-term liabilities   5,736      6,221       (485)      (8)
 ---------------------------------------------------------
 Total liabilities           632,295    781,596   (149,301)     (19)
 ---------------------------------------------------------
 Total stockholders' equity  231,480    201,350     30,130       15
 ---------------------------------------------------------
 Total liabilities and
  stockholders' equity     $ 863,775  $ 982,946  $(119,171)     (12)%
 ---------------------------------------------------------

 ------------------
 1. The allowance for doubtful accounts was $13.4 million at
    March 31, 2009 and $9.4 million at March 31, 2008.

 2. The inventory reserve was $7.6 million at March 31, 2009 and
    $6.9 million at March 31, 2008.



                           POOL CORPORATION
            Condensed Consolidated Statements of Cash Flows
                              (Unaudited)
                            (In thousands)

                                       Three Months Ended
                                            March 31,
                                        2009       2008      Change
 --------------------------------------------------------------------
 Operating activities
 Net loss                             $  (6,236) $  (3,184) $  (3,052)
 Adjustments to reconcile net loss
  to net cash used in operating
  activities:
   Depreciation                           2,209      2,387       (178)
   Amortization                             662      1,064       (402)
   Share-based compensation               1,321      2,270       (949)
   Excess tax benefits from
    share-based compensation               (275)    (1,540)     1,265
   Equity loss in unconsolidated
    investments                           3,353      2,446        907
   Other                                 (2,458)    (2,612)       154
 Changes in operating assets and
  liabilities, net of effects of
  acquisitions:
   Receivables                          (44,221)   (60,100)    15,879
   Product inventories                    7,510    (80,964)    88,474
   Accounts payable                      27,600    136,197   (108,597)
   Other current assets and
    liabilities                         (35,432)   (11,404)   (24,028)
 --------------------------------------------------------------------
 Net cash used in operating activities  (45,967)   (15,440)   (30,527)

 Investing activities
 Acquisition of businesses, net of
  cash acquired                              --    (32,742)    32,742
 Purchase of property and equipment,
  net of sale proceeds                   (3,881)    (1,835)    (2,046)
 --------------------------------------------------------------------
 Net cash used in investing activities   (3,881)   (34,577)    30,696

 Financing activities
 Proceeds from revolving line of
  credit                                 87,121     74,948     12,173
 Payments on revolving line of credit   (19,400)   (27,425)     8,025
 Proceeds from asset-backed financing    13,000     12,655        345
 Payments on asset-backed financing     (25,792)   (14,170)   (11,622)
 Proceeds from long-term debt                --         --         --
 Payments on long-term debt and other
  long-term liabilities                  (1,536)      (785)      (751)
 Payments of capital lease obligations       --       (251)       251
 Payments of deferred financing costs      (188)       (22)      (166)
 Excess tax benefits from share-based
  compensation                              275      1,540     (1,265)
 Proceeds from issuance of common
  stock under share-based
  compensation plans                      1,000      1,861       (861)
 Payments of cash dividends              (6,279)    (5,734)      (545)
 Purchases of treasury stock                (59)    (1,263)     1,204
 --------------------------------------------------------------------
 Net cash provided by financing
  activities                             48,142     41,354      6,788
 Effect of exchange rate changes
  on cash                                  (953)      (686)      (267)
 --------------------------------------------------------------------
 Change in cash and cash equivalents     (2,659)    (9,349)     6,690
 Cash and cash equivalents at
  beginning of period                    15,762     15,825        (63)
 --------------------------------------------------------------------
 Cash and cash equivalents at end
  of period                           $  13,103  $   6,476  $   6,627
 --------------------------------------------------------------------



 Addendum
 --------------------------------------------------------------------
 (Unaudited)
 (In thousands)

              Base Business         Excluded             Total
              Three Months        Three Months        Three Months
                 Ended               Ended               Ended
                March 31,           March 31,           March 31,
             2009      2008      2009      2008      2009      2008
 --------------------------------------------------------------------
 Net
  sales    $253,928  $321,281  $ 22,698  $ 16,934  $276,626  $338,215

 Gross
  profit     74,909    90,483     6,284     4,871    81,193    95,354
 Gross
  margin       29.5%     28.2%     27.7%     28.8%     29.4%     28.2%

 Operating
  expenses   77,847    87,475     6,992     5,682    84,839    93,157
 Expenses
  as a %
  of net
  sales        30.7%     27.2%     30.8%     33.6%     30.7%     27.5%

 Operating
  income
  (loss)     (2,938)    3,008      (708)     (811)   (3,646)    2,197
 Operating
  margin       (1.2)%     0.9%     (3.1)%    (4.8)%    (1.3)%     0.6%
 --------------------------------------------------------------------

We exclude the following sales centers from our base business results for a period of 15 months (parenthetical numbers for each category indicate the number of sales centers excluded as of March 31, 2009):



 * acquired sales centers (10, net of consolidations - see table
   below);
 * existing sales centers consolidated with acquired sales centers
   (7);
 * closed sales centers (4);
 * consolidated sales centers in cases where we do not expect to
   maintain the majority of the existing business (1); and
 * sales centers opened in new markets (0).

We generally allocate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales. After 15 months of operations, we include acquired and new market sales centers in the base business calculation including the comparative prior year period.

Since we divested our pool liner manufacturing operation in France in April 2008, we have excluded these operations from base business for the comparative three month period ended March 31, 2008.

We have excluded the following acquisitions from base business for the periods identified:



                                    Net
                                   Sales
                   Acquisition    Centers            Period
 Acquired             Date        Acquired           Excluded
 ---------------   -------------  ---------  -------------------------
 Proplas
  Plasticos, S.L.  November 2008      0      January 2009 - March 2009
 National Pool
  Tile (NPT)       March 2008         9      January 2009 - March 2009
                                              and March 2008
 Canswim Pools     March 2008         1      January 2009 - March 2009
                                              and March 2008

The number of total sales centers did not change during the quarter ended March 31, 2009.

We define Adjusted EBITDA as net income or net loss plus interest expense, income taxes, depreciation, amortization, share-based compensation and goodwill impairment. Adjusted EBITDA is not a measure of cash flow or liquidity as determined by generally accepted accounting principles (GAAP). We have included Adjusted EBITDA as a supplemental disclosure because we believe that it is widely used by our investors, industry analysts and others as a useful supplemental liquidity measure in conjunction with cash flows provided by or used in operating activities to help investors understand our ability to provide cash flows to fund growth, service debt and pay dividends as well as compare our cash flow generating capacity from year to year.

We believe Adjusted EBITDA should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP. Other companies may calculate Adjusted EBITDA differently than we do, which may limit its usefulness as a comparative measure.

The table below presents a reconciliation of net loss to Adjusted EBITDA.



 --------------------------------------------------------------------
 (Unaudited)                                   Three Months Ended
 (In thousands)                                     March 31,
                                              2009             2008
 --------------------------------------------------------------------
 Net loss                                   $ (6,236)        $ (3,184)
   Add:
     Interest expense, net                     3,327            5,024
     Income tax benefit                       (2,740)          (1,089)
     Income tax benefit on equity loss        (1,350)          (1,002)
     Share-based compensation                  1,321            2,270
     Depreciation                              2,209            2,387
     Amortization (1)                            453              953
 --------------------------------------------------------------------
 Adjusted EBITDA                            $ (3,016)        $  5,359
 --------------------------------------------------------------------

 (1)  Excludes amortization included in interest expense, net

The table below presents a reconciliation of Adjusted EBITDA to cash used in operating activities. Please see page 5 for our Condensed Consolidated Statements of Cash Flows.



 --------------------------------------------------------------------
 (Unaudited)                                   Three Months Ended
 (In thousands)                                     March 31,
                                              2009             2008
 --------------------------------------------------------------------
 Adjusted EBITDA                            $ (3,016)        $  5,359
   Add:
     Interest expense, net (1)                (3,118)          (4,913)
     Income tax benefit                        2,740            1,089
     Income tax benefit on equity loss         1,350            1,002
     Excess tax benefits on share-based
      compensation                              (275)          (1,540)
     Equity loss in unconsolidated
      investments                              3,353            2,446
     Other                                    (2,458)          (2,612)
     Change in operating assets and
      liabilities                            (44,543)         (16,271)
 --------------------------------------------------------------------
 Net cash used in operating activities      $(45,967)        $(15,440)
 --------------------------------------------------------------------

 (1) Excludes amortization of deferred financing costs of $209 for
     2009 and $110 for 2008. This non-cash expense is included in
     interest expense, net on the Consolidated Statements of Income
     (Loss).


        

Contact Data