Document and Entity Information
Document and Entity Information - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jul. 27, 2017 | Jun. 30, 2016 | |
Entity [Abstract] | |||
Entity Registrant Name | POOL CORP | ||
Entity Central Index Key | 945,841 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 3,780,739,528 | ||
Entity Common Stock, Shares Outstanding | 41,233,390 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | Q2 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Jun. 30, 2017 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net sales | $ 988,163 | $ 918,889 | $ 1,534,603 | $ 1,434,139 |
Cost of sales | 698,499 | 648,153 | 1,091,318 | 1,020,380 |
Gross profit | 289,664 | 270,736 | 443,285 | 413,759 |
Selling and administrative expenses | 135,478 | 128,316 | 258,101 | 241,809 |
Operating income | 154,186 | 142,420 | 185,184 | 171,950 |
Interest and other non-operating expenses, net | 3,952 | 4,001 | 7,599 | 6,965 |
Income before income taxes and equity earnings | 150,234 | 138,419 | 177,585 | 164,985 |
Provision for income taxes | 55,654 | 53,209 | 60,772 | 63,437 |
Equity earnings in unconsolidated investments, net | 40 | 37 | 78 | 62 |
Net income | 94,620 | 85,247 | 116,891 | 101,610 |
Net loss attributable to redeemable noncontrolling interest | 283 | 188 | 294 | 196 |
Net income attributable to Pool Corporation | $ 94,903 | $ 85,435 | $ 117,185 | $ 101,806 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 2.30 | $ 2.03 | $ 2.84 | $ 2.42 |
Diluted (in dollars per share) | $ 2.21 | $ 1.98 | $ 2.73 | $ 2.35 |
Weighted average shares outstanding: [Abstract] | ||||
Basic (in shares) | 41,349 | 42,030 | 41,271 | 42,128 |
Diluted (in shares) | 42,985 | 43,152 | 42,937 | 43,230 |
Cash dividends declared per common share | $ 0.37 | $ 0.31 | $ 0.68 | $ 0.57 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net income | $ 94,620 | $ 85,247 | $ 116,891 | $ 101,610 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 3,194 | (1,182) | 4,590 | 1,271 |
Change in unrealized gains and losses on interest rate swaps, net of changes in taxes | 106 | (576) | 392 | (2,004) |
Total other comprehensive income (loss) | 3,300 | (1,758) | 4,982 | (733) |
Comprehensive income | 97,920 | 83,489 | 121,873 | 100,877 |
Comprehensive loss attributable to noncontrolling interest | 211 | 258 | 74 | 154 |
Comprehensive income attributable to Pool Corporation | $ 98,131 | $ 83,747 | $ 121,947 | $ 101,031 |
Consolidated Statements of Com4
Consolidated Statements of Comprehensive Income (Parenthetical) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Other comprehensive income (loss): | ||||
Tax effect of change in unrealized gains and losses on interest rate swaps | $ (69) | $ 369 | $ (251) | $ 1,282 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Current assets: | |||
Cash and cash equivalents | $ 26,666 | $ 21,956 | $ 30,551 |
Receivables, net | 112,802 | 61,437 | 119,113 |
Receivables pledged under receivables facility | 257,483 | 104,714 | 231,899 |
Product inventories, net | 542,805 | 486,116 | 493,254 |
Prepaid expenses and other current assets | 15,514 | 15,318 | 13,044 |
Deferred income tax assets, net | 0 | ||
Deferred income taxes | 6,016 | 5,533 | |
Total current assets | 955,270 | 695,557 | 893,394 |
Property and equipment, net | 106,787 | 83,290 | 85,387 |
Goodwill | 186,124 | 184,795 | 186,092 |
Other intangible assets, net | 13,430 | 13,326 | 14,058 |
Equity interest investments | 1,158 | 1,172 | 1,119 |
Other assets | 16,367 | 15,955 | 15,613 |
Total assets | 1,279,136 | 994,095 | 1,195,663 |
Current liabilities: | |||
Accounts payable | 273,309 | 230,728 | 265,349 |
Accrued expenses and other current liabilities | 98,225 | 64,387 | 114,993 |
Short-term borrowings and current portion of long-term debt and other long-term liabilities | 14,901 | 1,105 | 6,823 |
Total current liabilities | 386,435 | 296,220 | 387,165 |
Deferred income tax liabilities, net | 28,445 | ||
Deferred income taxes | 34,475 | 28,239 | |
Long-term debt, net | 538,579 | 436,937 | 493,783 |
Other long-term liabilities | 22,418 | 18,966 | 17,875 |
Total liabilities | 975,877 | 786,598 | 927,062 |
Redeemable noncontrolling interest | 0 | 2,287 | 2,511 |
Stockholders' equity: | |||
Common stock | 41 | 41 | 42 |
Additional paid-in capital | 416,603 | 403,162 | 387,890 |
Retained deficit | (103,511) | (183,915) | (107,337) |
Accumulated other comprehensive loss | (9,874) | (14,078) | (14,505) |
Total stockholders' equity | 303,259 | 205,210 | 266,090 |
Total liabilities, redeemable noncontrolling interest and stockholders' equity | $ 1,279,136 | $ 994,095 | $ 1,195,663 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 41,340,281 | 41,089,720 | 41,942,593 |
Common stock, outstanding (in shares) | 41,340,281 | 41,089,720 | 41,942,593 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating activities | ||
Net income | $ 116,891 | $ 101,610 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation | 11,617 | 9,743 |
Amortization | 743 | 735 |
Share-based compensation | 6,299 | 4,850 |
Excess tax benefits from share-based compensation | 0 | (3,203) |
Equity earnings in unconsolidated investments, net | (78) | (62) |
Other | 2,122 | 2,270 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Receivables | (199,055) | (187,526) |
Product inventories | (53,546) | (14,481) |
Prepaid expenses and other assets | (2,389) | (1,729) |
Accounts payable | 38,673 | 15,041 |
Accrued expenses and other current liabilities | 37,378 | 58,995 |
Net cash used in operating activities | (41,345) | (13,757) |
Investing activities | ||
Acquisition of businesses, net of cash acquired | (3,296) | (19,211) |
Purchase of property and equipment, net of sale proceeds | (34,495) | (25,779) |
Payments to fund credit agreement | 0 | (2,232) |
Collections from credit agreement | 0 | 2,475 |
Other investments, net | 3 | 17 |
Net cash used in investing activities | (37,788) | (44,730) |
Financing activities | ||
Proceeds from revolving line of credit | 606,623 | 629,351 |
Payments on revolving line of credit | (641,752) | (604,470) |
Proceeds from asset-backed financing | 156,600 | 145,000 |
Payments on asset-backed financing | (20,100) | (2,800) |
Proceeds from short-term borrowings, long-term debt and other long-term liabilities | 22,609 | 12,110 |
Payments on short-term borrowings, long-term debt and other long term liabilities | (8,813) | (6,987) |
Payments of deferred and contingent acquisition consideration | (199) | 0 |
Purchase of redeemable noncontrolling interest | (2,573) | 0 |
Excess tax benefits from share-based compensation | 0 | 3,203 |
Proceeds from stock issued under share-based compensation plans | 7,502 | 5,699 |
Payments of cash dividends | (28,108) | (23,957) |
Purchases of treasury stock | (8,672) | (80,478) |
Net cash provided by financing activities | 83,117 | 76,671 |
Effect of exchange rate changes on cash and cash equivalents | 726 | (870) |
Change in cash and cash equivalents | 4,710 | 17,314 |
Cash and cash equivalents at beginning of period | 21,956 | 13,237 |
Cash and cash equivalents at end of period | $ 26,666 | $ 30,551 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 1 – Summary of Significant Accounting Policies Pool Corporation (the Company , which may be referred to as we, us or our ) prepared the unaudited interim Consolidated Financial Statements following U.S. generally accepted accounting principles (GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim financial information. As permitted under those rules, we have condensed or omitted certain footnotes and other financial information required for complete financial statements. Through June 29, 2017, we owned a 60% interest in Pool Systems Pty. Ltd. (PSL), an Australian company. Our ownership percentage constituted a controlling interest in the acquired company, which required us to consolidate PSL’s financial position and results of operations from the date of acquisition. On June 29, 2017, we purchased the remaining 40% interest in PSL. Thus, we will continue to consolidate PSL, but there will no longer be a separate noncontrolling interest reported on our Consolidated Statements of Income, nor Redeemable noncontrolling interest reported on our Consolidated Balance Sheets. Please see Note 6 - Redeemable Noncontrolling Interest for additional information regarding this transaction. The Consolidated Financial Statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. All significant intercompany accounts and intercompany transactions have been eliminated. A description of our significant accounting policies is included in our 2016 Annual Report on Form 10-K. You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our Annual Report. The results for our three and six month periods ended June 30, 2017 are not necessarily indicative of the expected results for our fiscal year ending December 31, 2017 . Variable Interest Entity In February 2015, we entered into a five-year credit agreement with a swimming pool retailer. Under this agreement and the related revolving note, we are the primary lender of operating funds for this entity. The total lending commitment under the credit agreement is $8.5 million , which is fully funded. As of June 30, 2017 , the estimated realizable amount under the credit agreement is recorded within Other assets on our Consolidated Balance Sheets and is collateralized by essentially all of the assets of the business. We have a variable interest in this entity; however, we have no decision-making authority over its activities through voting or other rights. Additionally, we have no obligation to absorb any of its losses, nor do we have the right to receive any residual returns, should either occur. We are not considered the primary beneficiary of this variable interest entity, and therefore we are not required to consolidate this entity’s financial statements. Retained Deficit We account for the retirement of treasury shares as a reduction of retained earnings (deficit). As of June 30, 2017 , the Retained deficit on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $1,102.0 million and cumulative dividends of $395.9 million . Newly Adopted Accounting Pronouncements Effective January 1, 2017, we adopted Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, on a prospective basis and as such, our prior year presentation has not changed . The provisions of this update simplify many key aspects of the accounting for and cash flow presentation of employee share-based compensation transactions, including accounting for income taxes, forfeitures, and statutory withholding requirements. In accordance with the new guidance, we now record all excess tax benefits or tax deficiencies as a component of our Provision for income taxes on our Consolidated Statements of Income. As a result of the adoption, we recognized $7.4 million of excess tax benefits in the first half of 2017, which reduced our Provision for income taxes and positively impacted our Net income. Historically, these amounts were recorded as Additional paid in capital in stockholders’ equity on our Consolidated Balance Sheets. Additionally, we now present excess tax benefits or deficiencies as operating cash flows versus reclassifying the amount out of operating cash flows and presenting it in financing activities on the Condensed Consolidated Statements of Cash Flows. Additional amendments from this guidance related to forfeitures and minimum statutory withholding tax requirements had no impact to our financial position, results of operations or cash flows. As permitted, we continue to estimate forfeitures to determine the amount of compensation cost to be recognized each period rather than electing to account for forfeitures as they occur, and we continue to present the value of shares withheld for minimum statutory tax withholding requirements on the Condensed Consolidated Statements of Cash Flows as a financing activity. Another impact of the adoption is that the calculation of the effect of dilutive securities now excludes any derived excess tax benefits or deficiencies from assumed future proceeds, resulting in an increase in diluted weighted average shares outstanding of approximately 550,000 shares for the three and six month periods ended June 30, 2017 . Effective January 1, 2017, we adopted ASU 2015-17, Balance Sheet Classification of Deferred Taxes , which requires we classify all deferred tax assets and liabilities as noncurrent on the balance sheet rather than separately presenting net deferred tax assets or liabilities as current or noncurrent. Additionally, we no longer allocate valuation allowances between current and noncurrent deferred tax assets because those allowances are also now classified as noncurrent. As permitted, we elected to adopt this guidance on a prospective basis and as such, our prior year presentation has not changed. The adoption of ASU 2015-17 did not have a material impact on our financial position, results of operations and related disclosures. In January 2017, we adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which requires that we measure inventory at the lower of cost or net realizable value rather than at the lower of cost or market. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. The adoption of ASU 2015-11 did not have a material impact on our financial position, results of operations and related disclosures. In January 2017, we adopted ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments , which eliminates the requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The adoption of ASU 2015-16 did not have a material impact on our financial position, results of operations and related disclosures. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 2 – Earnings Per Share We calculate basic earnings per share (EPS) by dividing Net income attributable to Pool Corporation by the weighted average number of common shares outstanding. We include outstanding unvested restricted stock awards of our common stock in the basic weighted average share calculation. Diluted EPS reflects the dilutive effects of potentially dilutive securities, which include in-the-money outstanding stock options and shares to be purchased under our employee stock purchase plan. Using the treasury stock method, the effect of dilutive securities includes these additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued. As discussed in Note 1, as a result of the adoption of ASU 2016-09, the calculation of the effect of dilutive securities now excludes any derived excess tax benefits or deficiencies from assumed future proceeds, resulting in an increase in diluted weighted average shares outstanding for the three and six months ended June 30, 2017 . Stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive. The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net income $ 94,620 $ 85,247 $ 116,891 $ 101,610 Net loss attributable to noncontrolling interest 283 188 294 196 Net income attributable to Pool Corporation $ 94,903 $ 85,435 $ 117,185 $ 101,806 Weighted average shares outstanding: Basic 41,349 42,030 41,271 42,128 Effect of dilutive securities: Stock options and employee stock purchase plan 1,636 1,122 1,666 1,102 Diluted 42,985 43,152 42,937 43,230 Earnings per share: Basic $ 2.30 $ 2.03 $ 2.84 $ 2.42 Diluted $ 2.21 $ 1.98 $ 2.73 $ 2.35 Anti-dilutive stock options excluded from diluted earnings per share computations — — 108 1 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3 – Acquisitions On April 28, 2017, we acquired the distribution assets of Lincoln Equipment, Inc. (Lincoln Aquatics), a national distributor of equipment and supplies to commercial and institutional swimming pool customers, with two locations in California. We have completed our acquisition accounting for this acquisition, subject to adjustments for standard holdback provisions per the terms of the purchase agreement, which are not material. This acquisition did not have a material impact on our financial position or results of operations. On April 1, 2016, we acquired the distribution assets of Metro Irrigation Supply Company Ltd., an irrigation and landscape supply company with eight locations in Texas. We have completed our acquisition accounting for this acquisition. This acquisition did not have a material impact on our financial position or results of operations. Subsequent to the end of the second quarter, on July 3, 2017, we acquired Bundalo Pty Ltd (operating as Newline Pool Products), a wholesale swimming pool supply distributor with one location in Queensland, Australia. |
Fair Value Measurements and Int
Fair Value Measurements and Interest Rate Swaps | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Interest Rate Swaps | Note 4 – Fair Value Measurements and Interest Rate Swaps Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts and contingent consideration related to recent acquisitions. The three levels of the fair value hierarchy under the accounting guidance are described below: Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 Inputs to the valuation methodology include: • quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets or liabilities in inactive markets; • inputs other than quoted prices that are observable for the asset or liability; or • inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The table below presents the estimated fair values of our interest rate swap contracts, our forward-starting interest rate swap contracts and our contingent consideration liabilities (in thousands): Fair Value at June 30, 2017 2016 Level 2 Unrealized gains on interest rate swaps $ 1,217 $ — Unrealized losses on interest rate swaps 2,212 7,169 Level 3 Contingent consideration liabilities $ 1,493 $ 1,581 Interest Rate Swaps We utilize interest rate swap contracts and forward-starting interest rate swap contracts to reduce our exposure to fluctuations in variable interest rates for future interest payments on our unsecured syndicated senior credit facility (the Credit Facility). For determining the fair value of our interest rate swap contracts, we use significant other observable market data or assumptions (Level 2 inputs) that we believe market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. Our fair value estimates reflect an income approach based on the terms of the interest rate swap contracts and inputs corroborated by observable market data including interest rate curves. We include unrealized gains in Prepaid expenses and other current assets and unrealized losses in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. We recognize any differences between the variable interest rate payments and the fixed interest rate settlements from our swap counterparties as an adjustment to interest expense over the life of the swaps. We designated these swaps as cash flow hedges, and to the extent effective we record the changes in the estimated fair value of the swaps to Accumulated other comprehensive loss on our Consolidated Balance Sheets. To the extent our interest rate swaps are determined to be ineffective, we recognize the changes in the estimated fair value of our swaps in earnings. We currently have three interest rate swap contracts in place, which became effective on October 19, 2016. These swaps were previously forward-starting contracts that were amended in October 2015 to bring the fixed rates per our forward-starting contracts in line with current market rates and extend the hedged period for future interest payments on our Credit Facility. As amended, these swap contracts terminate on November 20, 2019. In the second quarter of 2017, we recognized a benefit of $0.1 million as a result of our determination of ineffectiveness for the period. These amounts were recorded in Interest and other non-operating expenses, net on our Consolidated Statements of Income. The following table provides additional details related to each of these amended swap contracts: Derivative Amendment Date Notional Amount (in millions) Fixed Interest Rate Interest rate swap 1 October 1, 2015 $75.0 2.273% Interest rate swap 2 October 1, 2015 $25.0 2.111% Interest rate swap 3 October 1, 2015 $50.0 2.111% Upon amendment of the original hedge agreements, we were required to freeze the amounts related to the changes in the fair values of these swaps, which are recorded in Accumulated other comprehensive loss. At June 30, 2017 , the remaining balance of the unrealized losses was $2.3 million and is being amortized over the effective period of the original forward-starting interest rate swap contracts from October 2016 to September 2018. In the second quarter of 2017, we recorded expense of $0.5 million as amortization of the unrealized loss in Interest and other non-operating expenses, net. For the three interest rate swap contracts in effect at June 30, 2017 , a portion of the change in the estimated fair value between periods relates to future interest expense. Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive loss to Interest and other non-operating expenses, net on the Consolidated Statements of Income. These amounts were not material in the three and six month periods ended June 30, 2017 nor June 30, 2016 . In July 2016 we entered into an additional forward-starting interest rate swap contract to extend the hedged period for future interest payments on our Credit Facility to its maturity date. This swap contract will convert the variable interest rate to a fixed interest rate on borrowings under the Credit Facility. This contract becomes effective on November 20, 2019 and terminates on November 20, 2020 . The following table provides additional details related to this new swap contract: Derivative Inception Date Notional Fixed Forward-starting interest rate swap 1 July 6, 2016 $150.0 1.1425% Failure of our swap counterparties would result in the loss of any potential benefit to us under our swap agreements. In this case, we would still be obligated to pay the variable interest payments underlying our debt agreements. Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we continue to be in a net pay position. Our interest rate swap and forward-starting interest rate swap contracts are subject to master netting arrangements. According to our accounting policy, we do not offset the fair values of assets with the fair values of liabilities related to these contracts. Contingent Consideration Liabilities As of June 30, 2017 , our Consolidated Balance Sheets reflected $0.3 million in Accrued expenses and other current liabilities and $1.2 million in Other long-term liabilities for contingent consideration related to future payouts for our acquisitions of The Melton Corporation and Metro Irrigation Supply Company Ltd. In determining our original estimates for contingent consideration, which are based on a percentage of gross profit for certain products for The Melton Corporation and a multiple of gross profit for Metro Irrigation Supply Company Ltd., we applied a linear model using our best estimate of gross profit projections for fiscal years 2016 to 2020 (Level 3 inputs as defined in the accounting guidance). The maximum total payout for Metro Irrigation Supply Company Ltd. over this time period is $1.0 million. In the first six months of 2017 , we paid approximately $0.2 million in contingent consideration to The Melton Corporation based on 2016 results. Since the acquisition dates, we have recorded minimal adjustments to our original estimates based on the calculated 2017 payouts related to the fiscal year ended December 31, 2016. Adjustments to the fair value of contingent consideration are recognized in earnings in the period in which we determine that the fair value changed. As of June 30, 2017 , we have determined that the contingent consideration liability was in a range of acceptable estimates for all applicable fiscal periods. Other The carrying values of cash, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments (Level 1 inputs). For the note receivable with our variable interest entity, our determination of the estimated fair value reflects a discounted cash flow model using our estimates, including assumptions related to collectibility (Level 3 inputs). The carrying value of this note receivable, including adjustments, approximates fair value. The carrying value of long-term debt approximates fair value. Our determination of the estimated fair value reflects a discounted cash flow model using our estimates, including assumptions related to borrowing rates (Level 3 inputs). |
Debt
Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | Note 5 – Debt The table below presents the components of our debt as of June 30, 2017 and June 30, 2016 (in thousands): June 30, 2017 2016 Variable rate debt Short-term borrowings $ 8,445 $ 6,823 Current portion of long-term debt: Australian Credit Facility 6,456 — Short-term borrowings and current portion of long-term debt and other long-term liabilities 14,901 6,823 Long-term portion: Revolving Credit Facility 319,419 297,896 Receivables Securitization Facility 220,000 197,200 Less: financing costs, net 840 1,313 Long-term debt, net 538,579 493,783 Total debt $ 553,480 $ 500,606 Certain of our foreign subsidiaries entered into a cash pooling arrangement with a financial institution for cash management purposes. This arrangement allows the participating subsidiaries to withdraw cash from the financial institution to the extent that aggregate cash deposits held by these subsidiaries are available at the financial institution. To the extent the participating subsidiaries are in an overdraft position, such overdrafts are recorded as short-term borrowings under a committed cash overdraft facility. These borrowings bear interest at a variable rate based on 3-month Euro Interbank Offered Rate (EURIBOR), plus a fixed margin. The facility has a seasonal maximum borrowing capacity of €12.0 million . We are required to pay a commitment fee, which is based on the borrowing capacity schedule. We pay this fee annually, in advance. In the second quarter of 2017, PSL entered into a new credit facility, which provides a borrowing capacity of AU$ 20.0 million , to fund expansion and supplement working capital needs. The facility balance at June 30, 2017 includes borrowings to fund an acquisition and the purchase of the noncontrolling interest. The Receivables Securitization Facility (the Receivables Facility) provides for the sale of certain of our receivables to a wholly owned subsidiary (the Securitization Subsidiary). The Securitization Subsidiary transfers variable undivided percentage interests in the receivables and related rights to certain third party financial institutions in exchange for cash proceeds, limited to the applicable funding capacities. Upon payment of the receivables by customers, rather than remitting to the financial institutions the amounts collected, we retain such collections as proceeds for the sale of new receivables until payments become due to the third party financial institutions. We account for the sale of the receivable interests as a secured borrowing on our Consolidated Balance Sheets. The receivables subject to the agreement collateralize the cash proceeds received from the third party financial institutions. We classify the entire outstanding balance as Long-term debt, net on our Consolidated Balance Sheets as we intend to refinance the obligations on a long-term basis. We present the receivables that collateralize the cash proceeds separately as Receivables pledged under receivables facility on our Consolidated Balance Sheets. |
Redeemable Noncontrolling Inter
Redeemable Noncontrolling Interest | 6 Months Ended |
Jun. 30, 2017 | |
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | |
Noncontrolling Interest Disclosure [Text Block] | Note 6 – Redeemable Noncontrolling Interest As discussed in Note 1 - Summary of Significant Accounting Policies, in July 2014, we purchased a controlling interest in PSL. Included in the transaction documents was a put/call option deed that granted us an option to purchase the shares held by the noncontrolling interest, and granted the holder of the noncontrolling interest an option to require us to purchase its shares in one or two transactions. The put/call option deed in this transaction was considered an equity contract and therefore a financial instrument under the accounting guidance. In applying the guidance for this transaction, we determined that the financial instrument was embedded in the noncontrolling interest. As a public company, we were required to classify the noncontrolling interest and the embedded financial instrument as redeemable noncontrolling interest in a separate section of our Consolidated Balance Sheets, between liabilities and equity. On June 29, 2017, we purchased the remaining 40% interest in PSL. The actual redemption value exceeded the carrying amount, and we recorded an adjustment to Additional paid in capital as there were no retained earnings attributable to the noncontrolling interest. The table below presents the changes in Redeemable noncontrolling interest (in thousands): June 30, 2017 2016 Redeemable noncontrolling interest, beginning of period $ 2,287 $ 2,665 Redemption value adjustment of noncontrolling interest 360 — Net loss attributable to noncontrolling interest (294 ) (196 ) Other comprehensive income attributable to noncontrolling interest 220 42 Less: purchase of redeemable noncontrolling interest 2,573 — Redeemable noncontrolling interest, end of period $ — $ 2,511 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Computation of earnings per share and reconciliation of basic and diluted weighted average common shares outstanding | The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net income $ 94,620 $ 85,247 $ 116,891 $ 101,610 Net loss attributable to noncontrolling interest 283 188 294 196 Net income attributable to Pool Corporation $ 94,903 $ 85,435 $ 117,185 $ 101,806 Weighted average shares outstanding: Basic 41,349 42,030 41,271 42,128 Effect of dilutive securities: Stock options and employee stock purchase plan 1,636 1,122 1,666 1,102 Diluted 42,985 43,152 42,937 43,230 Earnings per share: Basic $ 2.30 $ 2.03 $ 2.84 $ 2.42 Diluted $ 2.21 $ 1.98 $ 2.73 $ 2.35 Anti-dilutive stock options excluded from diluted earnings per share computations — — 108 1 |
Fair Value Measurements and I15
Fair Value Measurements and Interest Rate Swaps (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Derivative [Line Items] | |
Estimated fair value of swap contracts | The table below presents the estimated fair values of our interest rate swap contracts, our forward-starting interest rate swap contracts and our contingent consideration liabilities (in thousands): Fair Value at June 30, 2017 2016 Level 2 Unrealized gains on interest rate swaps $ 1,217 $ — Unrealized losses on interest rate swaps 2,212 7,169 Level 3 Contingent consideration liabilities $ 1,493 $ 1,581 |
Interest Rate Swap Agreements[Member] | |
Derivative [Line Items] | |
Schedule of Interest Rate Derivatives | The following table provides additional details related to each of these amended swap contracts: Derivative Amendment Date Notional Amount (in millions) Fixed Interest Rate Interest rate swap 1 October 1, 2015 $75.0 2.273% Interest rate swap 2 October 1, 2015 $25.0 2.111% Interest rate swap 3 October 1, 2015 $50.0 2.111% |
Forward-Starting Interest Rate Swap Agreements[Member] | |
Derivative [Line Items] | |
Schedule of Interest Rate Derivatives | The following table provides additional details related to this new swap contract: Derivative Inception Date Notional Fixed Forward-starting interest rate swap 1 July 6, 2016 $150.0 1.1425% |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | The table below presents the components of our debt as of June 30, 2017 and June 30, 2016 (in thousands): June 30, 2017 2016 Variable rate debt Short-term borrowings $ 8,445 $ 6,823 Current portion of long-term debt: Australian Credit Facility 6,456 — Short-term borrowings and current portion of long-term debt and other long-term liabilities 14,901 6,823 Long-term portion: Revolving Credit Facility 319,419 297,896 Receivables Securitization Facility 220,000 197,200 Less: financing costs, net 840 1,313 Long-term debt, net 538,579 493,783 Total debt $ 553,480 $ 500,606 |
Redeemable Noncontrolling Int17
Redeemable Noncontrolling Interest (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | |
Redeemable Noncontrolling Interest [Table Text Block] | The table below presents the changes in Redeemable noncontrolling interest (in thousands): June 30, 2017 2016 Redeemable noncontrolling interest, beginning of period $ 2,287 $ 2,665 Redemption value adjustment of noncontrolling interest 360 — Net loss attributable to noncontrolling interest (294 ) (196 ) Other comprehensive income attributable to noncontrolling interest 220 42 Less: purchase of redeemable noncontrolling interest 2,573 — Redeemable noncontrolling interest, end of period $ — $ 2,511 |
Summary of Significant Accoun18
Summary of Significant Accounting Policies Controlling Interest Percentage (Details) | Jun. 30, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Controlling interest percentage by parent | 60.00% |
Summary of Significant Accoun19
Summary of Significant Accounting Policies Variable Interest Entity (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Variable Interest Entity [Line Items] | |
Variable Interest Entity, Nonconsolidated, Credit Agreement Capacity | $ 8.5 |
Summary of Significant Accoun20
Summary of Significant Accounting Policies Retained Deficit (Details) $ in Millions | Jun. 30, 2017USD ($) |
Retained Earnings (Accumulated Deficit) [Abstract] | |
Cumulative share repurchases | $ 1,102 |
Cumulative dividends declared | $ 395.9 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies Newly Adopted Accounting Pronouncements (Details) - Adjustments for New Accounting Pronouncement [Member] $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($)shares | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Tax benefit realized from new accounting pronouncement | $ | $ 7.4 |
Share impact on dilutive securities from new accounting pronouncement | shares | 550,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net income | $ 94,620 | $ 85,247 | $ 116,891 | $ 101,610 |
Net loss attributable to redeemable noncontrolling interest | 283 | 188 | 294 | 196 |
Net income attributable to Pool Corporation | $ 94,903 | $ 85,435 | $ 117,185 | $ 101,806 |
Weighted average shares outstanding: [Abstract] | ||||
Basic (in shares) | 41,349 | 42,030 | 41,271 | 42,128 |
Effect of dilutive securities: [Abstract] | ||||
Stock options and employee stock purchase plan (in shares) | 1,636 | 1,122 | 1,666 | 1,102 |
Diluted (in shares) | 42,985 | 43,152 | 42,937 | 43,230 |
Basic (in dollars per share) | $ 2.30 | $ 2.03 | $ 2.84 | $ 2.42 |
Diluted (in dollars per share) | $ 2.21 | $ 1.98 | $ 2.73 | $ 2.35 |
Anti-dilutive stock options excluded from diluted earnings per share computations (in shares) | 0 | 0 | 108 | 1 |
Acquisitions (Details)
Acquisitions (Details) | Jun. 30, 2017 |
Metro Irrigation Supply Company Ltd [Member] | |
Business Acquisition [Line Items] | |
Number of sales centers | 8 |
Lincoln Equipment Inc (Lincoln Aquatics) [Member] | |
Business Acquisition [Line Items] | |
Number of sales centers | 2 |
Bundalo Pty Ltd (Newline Pool Products) [Member] | |
Business Acquisition [Line Items] | |
Number of sales centers | 1 |
Interest Rate Swaps (Details)
Interest Rate Swaps (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Derivative [Line Items] | |
Cumulative Fair Value of De-designated Cash Flow Hedges, Gross | $ (2.3) |
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 0.5 |
Gain on Cash Flow Hedge Ineffectiveness | 0.1 |
Interest Rate Swap 1 [Member] | |
Derivative [Line Items] | |
Interest rate swap agreement, notional amount | $ 75 |
Interest rate swap agreement, fixed interest rate | 2.273% |
Interest rate swap agreement, amendment date | Oct. 1, 2015 |
Interest rate swap agreement, termination date | Nov. 20, 2019 |
Interest rate swap agreement, effective date | Oct. 19, 2016 |
Interest Rate Swap 2 [Member] | |
Derivative [Line Items] | |
Interest rate swap agreement, notional amount | $ 25 |
Interest rate swap agreement, fixed interest rate | 2.111% |
Interest rate swap agreement, amendment date | Oct. 1, 2015 |
Interest rate swap agreement, termination date | Nov. 20, 2019 |
Interest rate swap agreement, effective date | Oct. 19, 2016 |
Interest Rate Swap 3 [Member] | |
Derivative [Line Items] | |
Interest rate swap agreement, notional amount | $ 50 |
Interest rate swap agreement, fixed interest rate | 2.111% |
Interest rate swap agreement, amendment date | Oct. 1, 2015 |
Interest rate swap agreement, termination date | Nov. 20, 2019 |
Interest rate swap agreement, effective date | Oct. 19, 2016 |
Interest Rate Swaps (Details 2)
Interest Rate Swaps (Details 2) - Forward-starting Interest Rate Swap 1 [Member] $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Derivative [Line Items] | |
Forward-starting interest rate swap agreement, inception date | Jul. 6, 2016 |
Forward-starting interest rate swap agreement, effective date | Nov. 20, 2019 |
Forward-starting interest rate swap agreement, notional amount | $ 150 |
Forward-starting interest rate swap agreement, fixed interest rate | 1.1425% |
Forward-starting interest rate swap agreement, termination date | Nov. 20, 2020 |
Fair Value Measurements (Detail
Fair Value Measurements (Details 3) - USD ($) $ in Thousands | Jun. 30, 2017 | Jun. 30, 2016 |
Derivatives, Fair Value [Line Items] | ||
Unrealized gains on interest rate swaps | $ 1,217 | $ 0 |
Unrealized losses on interest rate swaps | 2,212 | 7,169 |
Contingent consideration liabilities | $ 1,493 | $ 1,581 |
Fair Value Measurements (Deta27
Fair Value Measurements (Details 4) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Contingent consideration liability, current | $ 0.3 |
Contingent consideration liability, noncurrent | 1.2 |
The Melton Corporation [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Contingent consideration settled, transferred out of fair value (Level 3) | $ 0.2 |
Debt (Details)
Debt (Details) $ in Thousands, € in Millions, AUD in Millions | Jun. 30, 2017EUR (€) | Jun. 30, 2017USD ($) | Jun. 30, 2017AUD | Jun. 30, 2016USD ($) |
Debt Instrument [Line Items] | ||||
Borrowing Capacity, Bank Overdraft Facility (in Euros) | € | € 12 | |||
Short-term borrowings | $ 8,445 | $ 6,823 | ||
Long-term debt [Abstract] | ||||
Financing costs, net (noncurrent) | 840 | 1,313 | ||
Total debt | 553,480 | 500,606 | ||
Receivables Securitization Facility [Member] | ||||
Long-term debt [Abstract] | ||||
Receivables Securitization Facility | 220,000 | 197,200 | ||
Australian Credit Facility [Member] | ||||
Long-term debt [Abstract] | ||||
Australian Credit Facility | 6,456 | 0 | ||
Australian Credit Facility Borrowing Capacity | AUD | AUD 20 | |||
Unsecured Syndicated Senior Credit Facility [Member] | ||||
Long-term debt [Abstract] | ||||
Revolving Credit Facility | $ 319,419 | $ 297,896 |
Redeemable Noncontrolling Int29
Redeemable Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Redeemable noncontrolling Interest [Line Items] | ||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 40.00% | 40.00% | ||
Redeemable Noncontrolling Interest [Roll Forward] | ||||
Redeemable noncontrolling interest, beginning of period | $ 2,287 | $ 2,665 | ||
Redemption value adjustment of noncontrolling interest | 360 | 0 | ||
Net loss attributable to redeemable noncontrolling interest | $ (283) | $ (188) | (294) | (196) |
Other comprehensive income attributable to redeemable noncontrolling interest | 220 | 42 | ||
Less: purchase of redeemable noncontrolling interest | 2,573 | 0 | ||
Redeemable noncontrolling interest, end of period | $ 0 | $ 2,511 | $ 0 | $ 2,511 |