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 $ %
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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
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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%
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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.
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(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.
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(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).