Pool Corp (POOL) Beats on Q2 Earnings, Raises '21 Guidance

Pool Corporation POOL reported solid second-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate as well as increasing on a year-over-year basis. While the bottom line beat the consensus estimate for the ninth straight quarter, the top line surpassed the same for the eighth consecutive time.

The company has been benefitting from solid demand coupled with supply-chain management and capacity-creation initiatives. To this end, the company initiated new sales center openings as well as the closing of two blue acquisitions in the second quarter, thereby complimenting its growth initiatives.

Earnings & Revenue Discussion

During second-quarter 2021, the company reported adjusted earnings of $6.37 per share surpassing the Zacks Consensus Estimate of $5.37 by 18.6%. In the prior-year quarter, the company had reported adjusted earnings per share of $3.87.

Pool Corporation Price, Consensus and EPS Surprise

Pool Corporation Price, Consensus and EPS Surprise

Pool Corporation price-consensus-eps-surprise-chart | Pool Corporation Quote

Quarterly net revenues of $1,787.8 million surpassed the consensus mark of $1,660 million and increased 39.6% year over year. The upside can be primarily attributed to solid performance by the Base business and Excluded segments. The company witnessed solid demand for nearly all of its product categories. Also, strong growth in terms of maintenance, replacement, refurbishment and construction activities added to the positives.

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 second quarter, revenues in the Base Business segment increased 31.9% year over year to $1,687.7 million. Operating income rose 59.3% year over year to $327.6 million. Operating margin expanded 330 basis points (bps) from the year-ago quarter’s level to 19.4%.

The Excluded segment reported net revenues of $100.2 million in the second quarter, up from $1.4 million in the prior-year quarter. During the quarter under review, the segment reported operating income of $11 million compared with $140 million in the prior-year quarter. The segment’s operating margin came in at 11% compared with 9.9% reported in the prior-year quarter.

Operating Highlights & Expenses

Cost of sales in the second quarter increased 36.2% from the prior-year quarter. During the quarter, gross profit (as a percentage of net sales) increased 170 bps year over year to 30.9% from 29.2% reported in the year-ago quarter. Selling and administrative expenses climbed 27.1% year over year to $213.1 million.

During the second quarter, operating income soared 64.5% year over year to $338.6 million, while operating margin rose 280 bps to 18.9% from the prior-year quarter’s level.

Net income totaled $259.7 million, up from $157.6 million in the year-ago quarter.

Balance Sheet

As of Jun 30, 2021, Pool Corp’s cash and cash equivalents amounted to $58.5 million compared with $44.2 million as on Jun 30, 2020. As of June end, total net receivables (including pledged receivables) rose 29% year over year. Its net long-term debt amounted to $423.1 million, down 3.6% from the prior-year quarter’s level. Goodwill increased to $283.3 million from $193.8 million in the prior-year quarter.

For the six months ended Jun 30, 2021, net cash provided by operating activities amounted to $187.2 million compared with $221.2 million in the year-ago quarter.

2021 Guidance

For 2021, Pool Corp expects adjusted earnings per share to be $13.75-$14.25, up from the prior estimate of $11.85-$12.60. The Zacks Consensus Estimate for 2021 earnings is currently pegged at $12.28.

Zacks Rank & Key Picks

Pool Corp currently sports a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include Clarus Corporation CLAR, Lazydays Holdings, Inc. LAZY and Smith & Wesson Brands, Inc. SWBI, each sporting a Zacks Rank #1.

2021 earnings for Clarus and Lazydays are expected to rise 81.4% and 46.8%, respectively.

Smith & Wesson has a trailing four-quarter earnings surprise of 58.9%, on average.

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