pool-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-26640


POOL CORPORATION
(Exact name of registrant as specified in its charter)

Delaware		36-3943363
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

109 Northpark Boulevard,
Covington,	Louisiana	70433-5001
(Address of principal executive offices)		(Zip Code)

(985) 892-5521

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	POOL	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 23, 2023, there were 38,679,169 shares of common stock outstanding.

POOL CORPORATION

Form 10-Q

For the Quarter Ended September 30, 2023

TABLE OF CONTENTS



			Page
PART I. FINANCIAL INFORMATION

	Item 1. Financial Statements (Unaudited)

		Consolidated Statements of Income	1
		Consolidated Statements of Comprehensive Income	2
		Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Cash Flows	4
		Consolidated Statements of Changes in Stockholders’ Equity	5
		Notes to Consolidated Financial Statements	7

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		12

	Item 3. Quantitative and Qualitative Disclosures about Market Risk		27

	Item 4. Controls and Procedures		27

PART II. OTHER INFORMATION

	Item 1. Legal Proceedings		28

	Item 1A. Risk Factors		28

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		28

	Item 6. Exhibits		29

SIGNATURE			30

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

POOL CORPORATION

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net sales	$	1,474,407	$	1,615,339	$	4,538,545	$	5,083,807
Cost of sales	1,045,676		1,111,652		3,172,276		3,466,126
Gross profit	428,731		503,687		1,366,269		1,617,681
Selling and administrative expenses	234,288		239,810		699,046		699,192

Operating income	194,443		263,877		667,223		918,489
Interest and other non-operating expenses, net	13,599		11,707		46,327		25,428
Income before income taxes and equity in earnings	180,844		252,170		620,896		893,061
Provision for income taxes	43,079		62,205		149,339		216,687
Equity in earnings of unconsolidated investments, net	78		90		235		226


Net income	$	137,843	$	190,055	$	471,792	$	676,600


Earnings per share attributable to common stockholders:
Basic	$	3.54	$	4.82	$	12.09	$	16.99
Diluted	$	3.51	$	4.78	$	12.00	$	16.82
Weighted average common shares outstanding:
Basic	38,735		39,214		38,816		39,599
Diluted	39,023		39,580		39,112		40,012

Cash dividends declared per common share	$	1.10	$	1.00	$	3.20	$	2.80

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net income	$	137,843	$	190,055	$	471,792	$	676,600
Other comprehensive (loss) income:
Foreign currency translation (loss) gain	(5,025)		(11,152)		245		(18,491)
Unrealized gains on interest rate swaps, net of the change in taxes of $(305), $(2,925), $(202), and $(8,422)	916		8,776		604		25,267
Total other comprehensive (loss) income	(4,109)		(2,376)		849		6,776
Comprehensive income	$	133,734	$	187,679	$	472,641	$	683,376

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Consolidated Balance Sheets

(In thousands, except share data)


	September 30,		September 30,		December 31,
	2023		2022		2022
	(Unaudited)		(Unaudited)		(Audited)
Assets
Current assets:
Cash and cash equivalents	$	85,220	$	49,079	$	45,591
Receivables, net	140,997		189,173		128,247
Receivables pledged under receivables facility	320,585		360,623		223,201
Product inventories, net	1,259,308		1,539,572		1,591,060
Prepaid expenses and other current assets	26,414		61,032		30,892
Total current assets	1,832,524		2,199,479		2,018,991

Property and equipment, net	213,732		184,387		193,709
Goodwill	699,270		691,786		691,993
Other intangible assets, net	300,237		307,389		305,450
Equity interest investments	1,383		1,190		1,248
Operating lease assets	293,673		255,611		269,608
Other assets	89,915		48,213		84,438
Total assets	$	3,430,734	$	3,688,055	$	3,565,437

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	429,436	$	442,226	$	406,667
Accrued expenses and other current liabilities	157,172		210,448		168,521
Short-term borrowings and current portion of long-term debt	37,788		12,208		25,042
Current operating lease liabilities	84,724		72,378		75,484
Total current liabilities	709,120		737,260		675,714

Deferred income taxes	55,226		45,247		58,759
Long-term debt, net	996,109		1,500,337		1,361,761
Other long-term liabilities	37,885		26,744		35,471
Non-current operating lease liabilities	214,168		187,589		198,538
Total liabilities	2,012,508		2,497,177		2,330,243



Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 38,676,960, 39,054,302 and 39,069,419 shares issued and outstanding at September 30, 2023, September 30, 2022 and December 31, 2022, respectively	39		39		39
Additional paid-in capital	600,009		570,855		575,776
Retained earnings	811,434		620,692		653,484
Accumulated other comprehensive income (loss)	6,744		(708)		5,895
Total stockholders’ equity	1,418,226		1,190,878		1,235,194
Total liabilities and stockholders’ equity	$	3,430,734	$	3,688,055	$	3,565,437

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended
	September 30,
	2023		2022
Operating activities
Net income	$	471,792	$	676,600
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	23,355		23,172
Amortization	6,425		6,523
Share-based compensation	14,592		11,691

Equity in earnings of unconsolidated investments, net	(235)		(226)
Goodwill impairment	550		—
Other	1,157		12,644
Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables	(110,078)		(181,775)
Product inventories	330,850		(223,268)
Prepaid expenses and other assets	(23,431)		(31,171)
Accounts payable	20,667		46,564
Accrued expenses and other liabilities	14,374		(33,284)
Net cash provided by operating activities	750,018		307,470

Investing activities
Acquisition of businesses, net of cash acquired	(11,500)		(8,309)
Purchases of property and equipment, net of sale proceeds	(42,958)		(27,965)


Other investments, net	(48)		1,760
Net cash used in investing activities	(54,506)		(34,514)

Financing activities
Proceeds from revolving line of credit	1,154,601		1,629,740
Payments on revolving line of credit	(1,497,501)		(1,629,688)
Proceeds from term loan under credit facility	—		250,000
Payments on term loan under credit facility	(6,250)		—
Proceeds from asset-backed financing	465,500		215,000
Payments on asset-backed financing	(422,700)		(130,000)
Payments on term facility	(47,313)		(6,937)
Proceeds from short-term borrowings and current portion of long-term debt	19,428		27,396
Payments on short-term borrowings and current portion of long-term debt	(19,182)		(26,960)
Payments of deferred financing costs	(52)		—
Payments of deferred and contingent acquisition consideration	(551)		(1,374)


Proceeds from stock issued under share-based compensation plans	9,278		7,201
Payments of cash dividends	(124,983)		(111,572)
Repurchases of common stock	(187,110)		(471,210)
Net cash used in financing activities	(656,835)		(248,404)
Effect of exchange rate changes on cash and cash equivalents	952		206
Change in cash and cash equivalents	39,629		24,758
Cash and cash equivalents at beginning of period	45,591		24,321
Cash and cash equivalents at end of period	$	85,220	$	49,079

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands)


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Earnings		Income		Total
Balance at December 31, 2022	39,069	$	39	$	575,776	$	653,484	$	5,895	$	1,235,194
Net income	—	—		—		101,699		—		101,699
Foreign currency translation	—	—		—		—		2,469		2,469
Interest rate swaps, net of the change in taxes of $1,269	—	—		—		—		(3,809)		(3,809)
Repurchases of common stock, net of retirements	(144)	—		—		(50,549)		—		(50,549)
Share-based compensation	—	—		4,923		—		—		4,923
Issuance of stock under share-based compensation plans	108	—		5,896		—		—		5,896
Declaration of cash dividends	—	—		—		(39,073)		—		(39,073)
Balance at March 31, 2023	39,033	$	39	$	586,595	$	665,561	$	4,555	$	1,256,750
Net income	—	—		—		232,250		—		232,250
Foreign currency translation	—	—		—		—		2,801		2,801
Interest rate swaps, net of the change in taxes of $(1,166)	—	—		—		—		3,497		3,497
Repurchases of common stock, net of retirements	—	—		—		—		—		—
Share-based compensation	—	—		5,073		—		—		5,073
Issuance of stock under share-based compensation plans	16	—		1,413		—		—		1,413
Declaration of cash dividends	—	—		—		(42,945)		—		(42,945)
Other	—	—		—		(307)		—		(307)
Balance at June 30, 2023	39,049	$	39	$	593,081	$	854,559	$	10,853	$	1,458,532
Net income	—	—		—		137,843		—		137,843
Foreign currency translation	—	—		—		—		(5,025)		(5,025)
Interest rate swaps, net of the change in taxes of $(305)	—	—		—		—		916		916
Repurchases of common stock, net of retirements	(385)	—		—		(138,003)		—		(138,003)
Share-based compensation	—	—		4,596		—		—		4,596
Issuance of stock under share-based compensation plans	13	—		2,332		—		—		2,332
Declaration of cash dividends	—	—		—		(42,965)		—		(42,965)

Balance at September 30, 2023	38,677	$	39	$	600,009	$	811,434	$	6,744	$	1,418,226


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Earnings		(Loss) Income		Total
Balance at December 31, 2021	40,193	$	40	$	551,963	$	526,874	$	(7,484)	$	1,071,393
Net income	—	—		—		179,261		—		179,261
Foreign currency translation	—	—		—		—		(214)		(214)
Interest rate swaps, net of the change in taxes of $(3,866)	—	—		—		—		11,598		11,598
Repurchases of common stock, net of retirements	(138)	—		—		(62,420)		—		(62,420)
Share-based compensation	—	—		3,657		—		—		3,657

Issuance of stock under share-based compensation plans	55	—		3,135		—		—		3,135
Declaration of cash dividends	—	—		—		(32,132)		—		(32,132)
Balance at March 31, 2022	40,110	$	40	$	558,755	$	611,583	$	3,900	$	1,174,278
Net income	—	—		—		307,283		—		307,283
Foreign currency translation

SEC Form 10-Q filed by Pool Corporation