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Exhibit 99.1
FOR IMMEDIATE RELEASE
POOL CORPORATION REPORTS FISCAL 2008 RESULTS
COVINGTON, LA. (February 19, 2009) – Pool Corporation (the “Company” or “POOL”) (NASDAQ/GSM: POOL) today announced fourth quarter and full year 2008 results.
“In these challenging times, we have focused on business improvement opportunities, maintaining tight control over costs and strengthening our commitment to programs and initiatives that will provide long-term value to customers, suppliers and shareholders. Our 2008 results demonstrate our progress toward achieving these objectives as evidenced by our gross margin expansion and our improved cost structure, which positions our business well for the continuing difficult external environment facing us in 2009,” commented Manuel Perez de la Mesa, President and CEO.
“Building on the progress we have made, our 2009 objectives remain focused on strengthening our market leading positions, improving our gross margin and realizing our cost improvement initiatives. We will also rebalance our inventories following the opportunistic inventory purchases we made in the second half of 2008,” continued Perez de la Mesa.
Net sales for the year ended December 31, 2008 decreased 8% to $1.78 billion, compared to $1.93 billion in 2007. Base business sales declined 9% year over year due to the continued decrease in new pool and irrigation construction activity, some deferred discretionary expenditures by consumers and unfavorable weather. This reduction was partially offset by sales from acquired businesses and an increase in maintenance and repair product sales. For the year, complementary product sales were down approximately 15% compared to a 3% decrease in the same period in 2007.
Gross profit for the year ended December 31, 2008 decreased $15.4 million, or 3%, to $515.2 million from $530.6 million in 2007. Gross profit as a percentage of net sales (gross margin) improved 140 basis points to 28.9% in 2008 from 27.5% in 2007. The increase in 2008 gross margin is attributable to improved pricing management, an increase in the sales of preferred vendor and Pool Corporation private label products and a favorable shift in product mix.
Selling and administrative expenses (operating expenses) for 2008 increased 1% to $399.8 million from $396.9 million in 2007. This increase was due to operating expenses related to acquired businesses. Base business operating expenses decreased 3% year over year, due primarily to the impact of cost control initiatives and lower incentive compensation.
Operating income for 2008 declined $18.3 million, or 14%, to $115.5 million from $133.8 million in 2007. Operating income as a percentage of net sales (operating margin) was 6.4% in 2008 compared to 6.9% in 2007. Base business operating income declined 13% to $117.8 million in 2008 from $134.9 million in 2007. Interest expense in 2008 decreased $3.2 million, or 15%, due primarily to a lower weighted average effective interest rate compared to 2007.
Earnings per share for 2008 was $1.18 per diluted share on net income of $57.0 million, compared to $1.37 per diluted share on net income of $69.4 million in 2007. Included in 2008 earnings per share is the adverse impact of a loss of approximately $0.04 per diluted share from our equity interest investment in Latham Acquisition Corporation (LAC). By comparison, in 2007, this investment contributed income of $0.02 per diluted share. Our first quarter 2008 acquisitions had a dilutive impact of $0.02 per diluted share in 2008.
On the balance sheet, total net receivables at December 31, 2008 were down 18% compared to December 31, 2007 due to lower sales, a decrease in vendor incentive receivables, an increase in the allowance for doubtful accounts and a shift toward more cash sales as a result of tighter credit terms. Our inventory levels increased $26.3 million, or 7%, over 2007 to $405.9 million at December 31, 2008. Excluding approximately $17.1 million of acquired inventories at December 31, 2008, inventories increased 2% year over year due to the slowdown in sales in the fourth quarter of 2008 and to purchases made ahead of vendor price increases.
Cash provided by operations was $93.3 million in 2008, compared to $71.6 million in 2007. The 2008 amount reflects a negative impact of approximately $36.0 million related to the net purchase and payment of inventory purchased ahead of vendor price increases, which was largely offset by the benefit related to the deferral of our $30.0 million third and fourth quarter 2008 estimated federal tax payments. Adjusted EBITDA (as defined in the addendum to this release) was $132.9 million in 2008 compared to $156.5 million in 2007.
In the fourth quarter of 2008, our seasonally slowest period of the year, net sales declined 14% to $259.0 million compared to $300.8 million in the comparable 2007 period. Gross margin increased 270 basis points to 29.1% in the fourth quarter of 2008 from 26.4% for the same period last year. This gross margin improvement includes the benefits of pre-price increase inventory purchases in addition to the favorable impacts described above for the increase in year to date gross margin. The seasonal operating loss for the fourth quarter was $15.3 million compared to an operating loss of $12.8 million in the same period last year. The seasonal base business operating loss increased 2% to $11.4 million in the fourth quarter of 2008 compared to $11.2 million in the same period of 2007.
The loss per share for the fourth quarter of 2008 was $0.31 per diluted share on a net loss of $14.8 million, compared to a loss of $0.24 per diluted share on a net loss of $11.6 million in the fourth quarter of 2007. Included in the fourth quarter loss per share is a loss of approximately $0.06 per diluted share from the increased seasonal equity loss from our equity interest investment in LAC. By comparison, the impact of this investment on fourth quarter 2007 was a loss of less than $0.01 per diluted share. Our first quarter 2008 acquisitions had a dilutive impact of $0.04 per diluted share in the fourth quarter of 2008.
“I am proud of how our team has responded to these extraordinary market conditions. Since December 2006, we have improved our gross margins and reduced our infrastructure costs, including an 8% decrease in headcount excluding acquisitions. We believe we have taken appropriate actions to position our business for the short-term, while improving our competitive position with the expectation of emerging stronger when the market returns to a normalized environment. Given the challenges in the external environment, we will not provide earnings per share guidance for 2009 until we gain more visibility into 2009 activity in our seasonal business,” commented Perez de la Mesa.
Pool Corporation is the largest wholesale distributor of swimming pool and related backyard products. Currently, POOL operates 288 sales centers in North America and Europe, through which it distributes more than 100,000 national brand and private label products to roughly 70,000 wholesale customers. For more information about POOL, please visit www.poolcorp.com.
This news release includes “forward-looking” statements that involve risk and uncertainties that are generally identifiable through the use of words such as “believe,” “expect,” “intend,” “plan,” “estimate,” “project” and similar expressions and include projections of earnings. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date of this release, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Actual results may differ materially due to a variety of factors, including the sensitivity of our business to weather conditions, changes in the economy and the housing market, our ability to maintain favorable relationships with suppliers and manufacturers, competition from other leisure product alternatives and mass merchants and other risks detailed in POOL’s 2007 Annual Report on Form 10-K and 2008 Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.
CONTACT:
Craig K. Hubbard
Investor Relations
985.801.5117
craig.hubbard@poolcorp.com
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POOL CORPORATION
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended | Year Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
Net sales | $ | 258,966 | $ | 300,755 | $ | 1,783,683 | $ | 1,928,367 | |||||
Cost of sales | 183,644 | 221,319 | 1,268,455 | 1,397,721 | |||||||||
Gross profit | 75,322 | 79,436 | 515,228 | 530,646 | |||||||||
Percent | 29.1 | % | 26.4 | % | 28.9 | % | 27.5 | % | |||||
Selling and administrative expenses | 90,650 | 92,232 | 399,752 | 396,872 | |||||||||
Operating income (loss) | (15,328 | ) | (12,796 | ) | 115,476 | 133,774 | |||||||
Percent | (5.9 | )% | (4.3 | )% | 6.4 | % | 6.9 | % | |||||
Interest expense, net | 4,212 | 5,383 | 18,912 | 22,148 | |||||||||
Income (loss) before income taxes and equity earnings (loss) | (19,540 | ) | (18,179 | ) | 96,564 | 111,626 | |||||||
Provision (benefit) for income taxes | (7,486 | ) | (6,964 | ) | 37,911 | 43,154 | |||||||
Equity earnings (loss) in unconsolidated investments, net | (2,741 | ) | (374 | ) | (1,697 | ) | 922 | ||||||
Net income (loss) | $ | (14,795 | ) | $ | (11,589 | ) | $ | 56,956 | $ | 69,394 | |||
Earnings (loss) per share: | |||||||||||||
Basic | $ | (0.31 | ) | $ | (0.24 | ) | $ | 1.19 | $ | 1.42 | |||
Diluted | $ | (0.31 | ) | $ | (0.24 | ) | $ | 1.18 | $ | 1.37 | |||
Weighted average shares outstanding: | |||||||||||||
Basic | 47,947 | 47,448 | 47,758 | 48,887 | |||||||||
Diluted | 47,947 | 47,448 | 48,444 | 50,802 | |||||||||
Cash dividends declared per common share | $ | 0.13 | $ | 0.12 | $ | 0.51 | $ | 0.465 |
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POOL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
December 31, | December 31, | Change | |||||||||||
2008 | 2007 | $ | % | ||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 15,762 | $ | 15,825 | $ | (63 | ) | — | % | ||||
Receivables, net | 16,311 | 45,257 | (28,946 | ) | (64 | ) | |||||||
Receivables pledged under receivables facility | 99,273 | 95,860 | 3,413 | 4 | |||||||||
Product inventories, net | 405,914 | 379,663 | 26,251 | 7 | |||||||||
Prepaid expenses and other current assets | 7,676 | 8,265 | (589 | ) | (7 | ) | |||||||
Deferred income taxes | 11,908 | 9,139 | 2,769 | 30 | |||||||||
Total current assets | 556,844 | 554,009 | 2,835 | 1 | |||||||||
Property and equipment, net | 33,048 | 34,223 | (1,175 | ) | (3 | ) | |||||||
Goodwill | 169,569 | 155,247 | 14,322 | 9 | |||||||||
Other intangible assets, net | 13,339 | 14,504 | (1,165 | ) | (8 | ) | |||||||
Equity interest investments | 31,157 | 33,997 | (2,840 | ) | (8 | ) | |||||||
Other assets, net | 26,949 | 22,874 | 4,075 | 18 | |||||||||
Total assets | $ | 830,906 | $ | 814,854 | $ | 16,052 | 2 | % | |||||
Liabilities and stockholders’ equity | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 173,688 | $ | 194,178 | $ | (20,490 | ) | (11 | )% | ||||
Accrued and other current liabilities | 61,701 | 37,216 | 24,485 | 66 | |||||||||
Short-term financing | 20,792 | 68,327 | (47,535 | ) | (70 | ) | |||||||
Current portion of long-term debt and other long-term liabilities | 6,111 | 3,439 | 2,672 | 78 | |||||||||
Total current liabilities | 262,292 | 303,160 | (40,868 | ) | (13 | ) | |||||||
Deferred income taxes | 20,032 | 17,714 | 2,318 | 13 | |||||||||
Long-term debt | 301,000 | 279,525 | 21,475 | 8 | |||||||||
Other long-term liabilities | 5,848 | 5,664 | 184 | 3 | |||||||||
Total liabilities | 589,172 | 606,063 | (16,891 | ) | (3 | ) | |||||||
Total stockholders’ equity | 241,734 | 208,791 | 32,943 | 16 | |||||||||
Total liabilities and stockholders’ equity | $ | 830,906 | $ | 814,854 | $ | 16,052 | 2 | % |
1. | Total receivables at December 31, 2008 include approximately $3.1 million of acquired receivables, primarily from the acquisition of National Pool Tile (NPT). The allowance for doubtful accounts was $13.7 million at December 31, 2008 and $9.9 million at December 31, 2007. |
2. | Total product inventories at December 31, 2008 include approximately $17.1 million of acquired inventories, primarily from the acquisition of NPT. The inventory reserve was $8.4 million at December 31, 2008 and $5.4 million at December 31, 2007, with $1.2 million of the December 31, 2008 balance related to the acquisition of NPT. |
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POOL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)