On July 25, 2024, Pool Corp (POOL, Financial) released its 8-K filing reporting its second-quarter earnings for 2024. Pool Corp, a leading distributor of swimming pool supplies and related products, faced a challenging quarter with a decline in both revenue and earnings.
Company Overview
Pool Corp distributes swimming pool supplies and related products. It sells national-brand and private-label products to approximately 120,000 customers. The products include non-discretionary pool-maintenance products, like chemicals and replacement parts, as well as pool equipment, like packaged pools (kits to build swimming pools), cleaners, filters, heaters, pumps, and lights. Customers include pool builders and remodelers, independent retail stores, and pool repair and service companies.
Performance and Challenges
Pool Corp reported net sales of $1.8 billion for Q2 2024, a 5% decrease from $1.9 billion in Q2 2023. This decline reflects lower consumer spending on high-dollar discretionary items, impacting sales of remodeling and new pool construction products. Despite this, the demand for maintenance products remained strong, contributing positively to the quarter's performance.
Gross profit decreased by 7% to $530.1 million, with a gross margin of 30.0%, down from 30.6% in the same period last year. The decrease in gross margin was attributed to lower sales of higher-margin building materials and the impact of product mix changes.
Financial Achievements
Despite the challenges, Pool Corp maintained a solid operating income of $271.5 million, although this was a 17% decrease from $327.0 million in Q2 2023. The operating margin also declined to 15.3% from 17.6% in the previous year. The company confirmed its annual earnings guidance range of $11.05 to $11.45 per diluted share.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $1.8 billion | $1.9 billion |
| Gross Profit | $530.1 million | $567.8 million |
| Operating Income | $271.5 million | $327.0 million |
| Net Income | $192.4 million | $232.3 million |
| Diluted EPS | $4.99 | $5.91 |
Balance Sheet and Cash Flow
Pool Corp's balance sheet showed a reduction in total debt to $1.1 billion, down $68.0 million from June 30, 2023. Inventory levels were also reduced by $97.3 million to $1.3 billion. However, net cash provided by operations decreased significantly to $172.1 million in the first six months of 2024, compared to $376.8 million in the same period of 2023.
Commentary and Outlook
"The demand for maintenance products supported a solid quarter given the trend for lower consumer spending on high dollar discretionary items. Our second quarter net sales of $1.8 billion, down 5% from the second quarter of 2023, showed an improving trend from the decrease of 7% that we saw in the first quarter of 2024," commented Peter D. Arvan, president and CEO.
Looking ahead, Pool Corp remains focused on strategic growth investments, capacity creation efforts, and innovation. The company is confident in the long-term growth opportunities of the outdoor living industry and expects to provide exceptional returns to shareholders over the long term.
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Explore the complete 8-K earnings release (here) from Pool Corp for further details.
