Poolcorp (NASDAQ:POOL) earnings release for the 1st quarter of their 2020 fiscal year
About Poolcorp
POOLCORP is the world's leading wholesale distributor of swimming pool equipment, parts and supplies, and related outdoor living products. The company operates over 360 locations worldwide with more than 4,000 employees through three primary distribution networks: SCP Distributors LLC, Superior Pool Products LLC, and Horizon Distributors Inc. Our Sales Centers each operate with full profit and loss responsibility, giving our organization an entrepreneurial spirit.
With Sales Centers located across North America (US, Canada, and Mexico), Europe (France, UK, Spain, Portugal, Italy, Belgium, Germany, and Croatia), South America (Colombia), and Australia, we distribute a broad range of products to roughly 120,000 customers around the world, serving four principal markets:
POOLCORP’s Sales Center networks distribute non-discretionary pool maintenance products such as chemicals and replacement parts; discretionary products such as packaged pool kits, whole goods, irrigation and landscape products, including a complete line of commercial and residential irrigation products and parts, power equipment for the professional landscape market; specialty products such as outdoor lighting, grills, and outdoor kitchen components; as well as golf irrigation and water management products.
With Sales Centers located across North America (US, Canada, and Mexico), Europe (France, UK, Spain, Portugal, Italy, Belgium, Germany, and Croatia), South America (Colombia), and Australia, we distribute a broad range of products to roughly 120,000 customers around the world, serving four principal markets:
- Remodelers and builders installing new swimming pools and refurbishing existing pools
- Independent specialty retail stores selling outdoor living products to consumers
- Service companies performing pool and hot tub maintenance and repair
- Contractors serving in the irrigation and landscape maintenance markets
POOLCORP’s Sales Center networks distribute non-discretionary pool maintenance products such as chemicals and replacement parts; discretionary products such as packaged pool kits, whole goods, irrigation and landscape products, including a complete line of commercial and residential irrigation products and parts, power equipment for the professional landscape market; specialty products such as outdoor lighting, grills, and outdoor kitchen components; as well as golf irrigation and water management products.
Overview of Poolcorp's 1st quarter 2020 earnings report
The data provided below refers to the latest quarter's data unless specified otherwise
- Net sales: $677.288 million (up from $597.456 million from the same quarter of the previous year)
- Net sales increased by 13.4% over the last 12 months
- Cost of sales: $487.659 million (up from $422.825 million for the same quarter of the previous year)
- Cost of sales increased by 15.3% over the last 12 months
- Net income: $30.912 million (down from $32.637 million for the same quarter of the previous year)
- Diluted earnings per share: $0.75 (down from $0.80 for the same quarter of the previous year)
- PE ratio of Poolcorp: 71
- Diluted weighted-average shares outstanding: 40.955 million (up from 40.696 million for the same quarter of the previous year)
- Cash and cash equivalents: 17.808 million
- Cash and cash equivalents per share: $0.43
- Cash and cash equivalents makes up 0.29% of Poolcorp's market capital
- Cash and cash equivalents makes up 1% of Poolcorp's current assets
- Inventories: $858.190 million
- Inventories makes up 49.1% of Poolcorp's total assets
- Stockholders equity of Poolcorp: $348.398 million
- Stockholders equity per share: $8.51
- So Poolcorp is trading at 25.6 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the firms in the S&P500 trades at an average price to book value of 3.34. Read more about the S&P 500 here.
- Cash generated from operations (for the full fiscal year): $19.728 million
- Cash generated from operations per share (for the full fiscal year): $0.48
Poolcorp's management commentary on their 1st quarter 2020 earnings report
COVINGTON, La., April 23, 2020 (GLOBE NEWSWIRE) -- "As we move from the end of the tumultuous first quarter and into the second, it is an appropriate time to provide an update on how our business has progressed since the start of the year and how we are responding to the challenges brought on by the COVID-19 pandemic," said Peter D. Arvan, Pool Corporation President and CEO. (NASDAQ/GSM:POOL)
"Entering 2020, POOLCORP was well positioned financially to deal with the impacts of the COVID-19 pandemic to our business. Our balance sheet was strong with adequate access to capital. Our leverage ratio, as measured on a trailing twelve-month debt to EBITDA basis, was 1.61 at December 31, 2019, and has improved to 1.49 at March 31, 2020. We also updated and expanded our credit facilities in the fourth quarter of 2019, including adding a 7-year, $185.0 million term facility. At March 31, 2020, we had $552.4 million available for borrowing under our revolving credit facility, which matures in September 2022. We believe this provides us with substantial flexibility and liquidity to deal with uncertain future economic conditions and to take advantage of opportunities during and after a recovery."
"Entering 2020, POOLCORP was well positioned financially to deal with the impacts of the COVID-19 pandemic to our business. Our balance sheet was strong with adequate access to capital. Our leverage ratio, as measured on a trailing twelve-month debt to EBITDA basis, was 1.61 at December 31, 2019, and has improved to 1.49 at March 31, 2020. We also updated and expanded our credit facilities in the fourth quarter of 2019, including adding a 7-year, $185.0 million term facility. At March 31, 2020, we had $552.4 million available for borrowing under our revolving credit facility, which matures in September 2022. We believe this provides us with substantial flexibility and liquidity to deal with uncertain future economic conditions and to take advantage of opportunities during and after a recovery."
"At POOLCORP, the majority of our North American operations are and have been continuously open for business as we are designated 'essential' in almost all of our markets. In Europe, our operations closed for a short period in France, Spain and Italy, in order to comply with local authorities' orders. Very early on, we organized an internal task force to collaboratively guide our efforts to ensure business continuity and employee and customer well-being. We are working hard to care for our employees, so they are safe as they serve our customers. We have provided our employees with enhanced personal protective equipment (PPE), augmented our employee benefits and altered our standard operating procedures to minimize contact while serving our customers. For customers, we are helping them navigate this unprecedented period by providing them with numerous options to interact and transact with us remotely in a safe and efficient manner, including through our Pool360 and Horizon 24/7 platforms and our BlueStreak mobile kiosks. But, most of all, we are proud of our people as they continue to show extraordinary dedication and creativity in working through new challenges and uncertainties in order to serve our customers. Thanks to them, we believe POOLCORP is weathering the COVID-19 pandemic well."
"As evidenced by our first quarter results, we started the year with robust growth as underlying demand for our products has been strong. Beginning in the middle of March when stay-at-home orders were being issued, sales growth began to level off. Our products and services are used to maintain and protect outdoor commercial, residential and municipal environments, including chemically-balanced, virus and bacteria-free swimming pool water and in the prevention of runoff, flood, fire and other natural disasters, and are 'essential' to the health and safety of the general public. As a result, our supply chain remains relatively intact, and with some exceptions, our customers are continuing to meet end-user needs."
"Stay-at-home orders of varying degrees are now in place in almost all jurisdictions in which we operate, resulting in year-over-year sales declines for the month of April to date of five to ten percent as these orders impact our business unevenly throughout our network. It is unclear how long these conditions will last and what the continuing social and economic impact will be on our business after these restrictions are lifted. We have taken steps to preserve capital and reduce costs where warranted, while retaining options for further business adjustments as conditions evolve and we gain more clarity. We are working closely with our suppliers to maintain the flow of essential products to provide customers with the materials they need to serve their communities. Given the seasonality of our business, our warehouses were already stocked with inventory in preparation for the upcoming peak season prior to the implementation of most stay-at-home orders. As a result, the limited vendor supply interruptions experienced to date have had a minimal impact on our business, although that could change depending on the duration and severity of social distancing conditions."
"During the first quarter of 2020, we benefited from earlier pool openings, as mild weather combined with school closures have driven greater early-season residential pool usage. The majority of our business is driven by recurring revenue streams from the installed base of pools. Based on customer feedback and results at locations that have had minimal business disruption, underlying demand for most discretionary products, including those serving the renovation and construction markets, remains strong. As a result, we believe we can still deliver solid business results in 2020. At the same time, the impact of extended stay-at-home and social distancing orders, as well as unfavorable economic conditions resulting from the pandemic, could have a more severe adverse impact on our business including an easing of demand for products dependent on discretionary spending. Given this uncertainty, we are updating our annual earnings guidance to encompass a wide range of outcomes and expect 2020 diluted EPS of $5.30 to $5.90, including the impact of first quarter tax benefits of $0.19 and the $0.15 impact of non-cash impairments recorded in the first quarter of 2020," commented Arvan. "Excluding the impact of non-cash impairments, we expect 2020 adjusted diluted EPS of $5.45 to $6.05. Our previous 2020 earnings guidance range disclosed earlier in the year was $6.47 to $6.77 per diluted share, including an estimated $0.06 tax benefit."
"As evidenced by our first quarter results, we started the year with robust growth as underlying demand for our products has been strong. Beginning in the middle of March when stay-at-home orders were being issued, sales growth began to level off. Our products and services are used to maintain and protect outdoor commercial, residential and municipal environments, including chemically-balanced, virus and bacteria-free swimming pool water and in the prevention of runoff, flood, fire and other natural disasters, and are 'essential' to the health and safety of the general public. As a result, our supply chain remains relatively intact, and with some exceptions, our customers are continuing to meet end-user needs."
"Stay-at-home orders of varying degrees are now in place in almost all jurisdictions in which we operate, resulting in year-over-year sales declines for the month of April to date of five to ten percent as these orders impact our business unevenly throughout our network. It is unclear how long these conditions will last and what the continuing social and economic impact will be on our business after these restrictions are lifted. We have taken steps to preserve capital and reduce costs where warranted, while retaining options for further business adjustments as conditions evolve and we gain more clarity. We are working closely with our suppliers to maintain the flow of essential products to provide customers with the materials they need to serve their communities. Given the seasonality of our business, our warehouses were already stocked with inventory in preparation for the upcoming peak season prior to the implementation of most stay-at-home orders. As a result, the limited vendor supply interruptions experienced to date have had a minimal impact on our business, although that could change depending on the duration and severity of social distancing conditions."
"During the first quarter of 2020, we benefited from earlier pool openings, as mild weather combined with school closures have driven greater early-season residential pool usage. The majority of our business is driven by recurring revenue streams from the installed base of pools. Based on customer feedback and results at locations that have had minimal business disruption, underlying demand for most discretionary products, including those serving the renovation and construction markets, remains strong. As a result, we believe we can still deliver solid business results in 2020. At the same time, the impact of extended stay-at-home and social distancing orders, as well as unfavorable economic conditions resulting from the pandemic, could have a more severe adverse impact on our business including an easing of demand for products dependent on discretionary spending. Given this uncertainty, we are updating our annual earnings guidance to encompass a wide range of outcomes and expect 2020 diluted EPS of $5.30 to $5.90, including the impact of first quarter tax benefits of $0.19 and the $0.15 impact of non-cash impairments recorded in the first quarter of 2020," commented Arvan. "Excluding the impact of non-cash impairments, we expect 2020 adjusted diluted EPS of $5.45 to $6.05. Our previous 2020 earnings guidance range disclosed earlier in the year was $6.47 to $6.77 per diluted share, including an estimated $0.06 tax benefit."
Poolcorp (NASDAQ:POOL) stock price history
The image below, obtained from Google, shows the stock price history of Great Southern Bank (Nasdaq: POOL) for the last 5 years. And it's been an exceptional time for Poolcorp stockholders. 5 years ago Poolcorp stock was trading at around $65.90 and its currently trading at $213.50 a stock. That is a very strong return of 223.9% provided by Poolcorp's stock price over the last 5 years.
The stock of Poolcorp is trading at very close to its 52 week high of $238.23 and far away from its 52 week low of $160.35 which is a clear indication that the short term sentiment and momentum of Poolcorp's stock is very positive.
The stock of Poolcorp is trading at very close to its 52 week high of $238.23 and far away from its 52 week low of $160.35 which is a clear indication that the short term sentiment and momentum of Poolcorp's stock is very positive.
Google Trends for Poolcorp stock price
The graphic below shows the trend in the search results for POOL stock price over the last 12 months. And searches for POOL stock price spiked in the week towards the end of March 2020.
Recent coverage of Poolcorp
The extract below discusses Poolcorp in more detail as obtained from Yahoo Finance
Pool Corporation POOL reported first-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. While the bottom line beat the consensus estimate for the fourth straight quarter, the top line surpassed the same for the third consecutive time. Following the results, the company’s shares gained 7.3% during trading hours on Apr 23.
Adjusted earnings of 71 cents per share in the quarter topped the Zacks Consensus Estimate of 65 cents and increased 20.3% from the year-ago quarter’s tally. Quarterly net revenues totaled $677.3 million, which surpassed the consensus mark of $636.5 million and increased 13.4% year over year. Revenue growth can be primarily attributed to robust performance of the company’s Base business, primarily driven by strong demand for discretionary products and higher sales growth for construction materials and products used in the remodel and replacement of in-ground pools. Additionally, an extra selling day in the first quarter and early purchases from customers of the second quarter added to the upside.
Read the full article here
Pool Corporation POOL reported first-quarter 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. While the bottom line beat the consensus estimate for the fourth straight quarter, the top line surpassed the same for the third consecutive time. Following the results, the company’s shares gained 7.3% during trading hours on Apr 23.
Adjusted earnings of 71 cents per share in the quarter topped the Zacks Consensus Estimate of 65 cents and increased 20.3% from the year-ago quarter’s tally. Quarterly net revenues totaled $677.3 million, which surpassed the consensus mark of $636.5 million and increased 13.4% year over year. Revenue growth can be primarily attributed to robust performance of the company’s Base business, primarily driven by strong demand for discretionary products and higher sales growth for construction materials and products used in the remodel and replacement of in-ground pools. Additionally, an extra selling day in the first quarter and early purchases from customers of the second quarter added to the upside.
Read the full article here
Poolcorp (NASDAQ: POOL) latest stock valuation
So based on the 4th quarter 2019 earnings report and fiscal guidance of Poolcorp what do we value Poolcorp's stock at? Based on the earnings report released by the group and the fiscal guidance provided our valuation model provides a target (full value) price for Poolcorp at $182.70 a stock (up slightly from our 3rd quarter 2019 earnings report valuation of Poolcorp). We therefore believe the stock of Poolcorp is overvalued.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target (full value) price of $182.70. Therefore we believe a good entry point into Poolcorp is at $164.40 or below. We expect the stock of Poolcorp to pull back to levels closer to our target (full value) price in coming weeks and months as we cannot see it holding on to its current stock price levels for long, based on their latest earnings release.
We suggest long term fundamental and value investors look to enter the stock at least 10% below our current target (full value) price of $182.70. Therefore we believe a good entry point into Poolcorp is at $164.40 or below. We expect the stock of Poolcorp to pull back to levels closer to our target (full value) price in coming weeks and months as we cannot see it holding on to its current stock price levels for long, based on their latest earnings release.
Next earnings release of Poolcorp
It is expected that Poolcorp will release their 2nd quarter 2020 earnings in July 2020