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Pool Corp (POOL) Q1 Earnings Miss Estimates, Decline Y/Y

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Pool Corporation (POOL - Free Report) reported drab first-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. Also, the top and the bottom line declined from the prior-year quarter's figure. During the quarter, the company’s operations were affected by lower pool construction activity, economic pressures and weather-related constraints.

Following the announcement, the company’s shares dropped 2% during trading hours on Apr 25.

The company raised its annual earnings guidance range to account for year-to-date tax benefits. It expects sales and gross margin trends to improve with the onset of the swimming pool season, aligning with seasonal buying patterns.

Earnings & Revenues Discussion

During the first quarter, the company reported adjusted earnings per share (EPS) of $1.85, missing the Zacks Consensus Estimate of $1.87. In the prior-year quarter, the company reported an adjusted EPS of $2.46.

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 $1.12 billion missed the consensus mark of $1.13 billion. The top line declined 7% year over year. The downside was caused by lower sales volume from reduced pool construction and discretionary activities.

Operating Highlights & Expenses

During the first quarter, the cost of sales came in at $782.3 million compared with $837 million reported in the prior-year quarter. Our estimate for the cost of sales was $783.7 million.

During the quarter, gross profits (as a percentage of net sales) declined 40 basis points (bps) year over year to 30.2% from 30.6% reported in the year-ago quarter. The metric was in line with our estimate.

During the first quarter, operating income declined 25.4% year over year to $108.7 million. Our estimate for operating income was $102.7 million. The operating margin came in at 9.7%, down 240 bps from the prior-year quarter’s level.

Selling and administrative expenses increased 2.6% year over year to $229.8 million. Our estimate for the metric was $236.8 million.

Net income during the quarter totaled $78.9 million compared with $101.7 million reported in the year-ago quarter. Our estimate for net income was $71.2 million.

Balance Sheet

As of Mar 31, 2024, the company’s cash and cash equivalents amounted to $68 million compared with $66.5 million as of Dec 31, 2023. During the quarter, its net long-term debt amounted to $942.5 million compared with $1.3 billion reported in the year-ago quarter. Goodwill during the quarter came in at $699.4 million compared with $693.2 million reported in the prior-year quarter.

During the quarter, net cash provided by operating activities amounted to $145.4 million compared with $103.2 million reported in the prior-year period.

2024 Guidance Raised

For 2024, Pool Corp expects adjusted EPS in the range of $13.19-$14.19, up from the prior projection of $13-$14. The guidance reflects an increase from an adjusted EPS of $13.18 reported in 2023. The Zacks Consensus Estimate for 2024 earnings is currently pegged at $13.27.

Zacks Rank & Recent Consumer Discretionary Releases

Pool Corp currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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