Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Apr. 25, 2019 | Jun. 30, 2018 | |
Entity [Abstract] | |||
Entity Registrant Name | POOL CORP | ||
Entity Central Index Key | 0000945841 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 5,916,556,013 | ||
Entity Common Stock, Shares Outstanding | 40,263,296 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | Q1 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Mar. 31, 2019 | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 597,456 | $ 585,900 |
Cost of sales | 422,825 | 419,827 |
Gross profit | 174,631 | 166,073 |
Selling and administrative expenses | 136,245 | 132,532 |
Operating income | 38,386 | 33,541 |
Interest and other non-operating expenses, net | 6,616 | 3,527 |
Income before income taxes and equity earnings | 31,770 | 30,014 |
Income tax benefit | (802) | (1,279) |
Equity earnings in unconsolidated investments, net | 65 | 46 |
Net income | $ 32,637 | $ 31,339 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.83 | $ 0.78 |
Diluted (in dollars per share) | $ 0.80 | $ 0.75 |
Weighted average shares outstanding: [Abstract] | ||
Basic (in shares) | 39,479 | 40,370 |
Diluted (in shares) | 40,696 | 41,862 |
Cash dividends declared per common share | $ 0.45 | $ 0.37 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 32,637 | $ 31,339 |
Other comprehensive income (loss): | ||
Foreign currency translation | 214 | 976 |
Change in unrealized (losses) gains on interest rate swaps, net of change in taxes of $90 and $(275) | (269) | 824 |
Total other comprehensive (loss) income | (55) | 1,800 |
Comprehensive income attributable to Pool Corporation | $ 32,582 | $ 33,139 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Tax effect of change in unrealized gains and losses on interest rate swaps | $ 90 | $ (275) |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 28,581 | $ 16,358 | $ 8,803 |
Receivables, net | 72,352 | 69,493 | 75,889 |
Receivables pledged under receivables facility | 240,775 | 138,308 | 238,707 |
Product inventories, net | 815,742 | 672,579 | 703,793 |
Prepaid expenses and other current assets | 16,116 | 18,506 | 23,714 |
Total current assets | 1,173,566 | 915,244 | 1,050,906 |
Property and equipment, net | 107,690 | 106,964 | 109,310 |
Goodwill | 188,478 | 188,472 | 189,759 |
Other intangible assets, net | 11,744 | 12,004 | 12,926 |
Equity interest investments | 1,200 | 1,213 | 1,150 |
Operating lease assets | 177,293 | ||
Other assets | 18,379 | 16,974 | 15,615 |
Total assets | 1,678,350 | 1,240,871 | 1,379,666 |
Current liabilities: | |||
Accounts payable | 472,487 | 237,835 | 467,795 |
Accrued expenses and other current liabilities | 47,658 | 58,607 | 45,504 |
Short-term borrowings and current portion of long-term debt | 21,734 | 9,168 | 20,786 |
Current operating lease liabilities | 55,744 | ||
Total current liabilities | 597,623 | 305,610 | 534,085 |
Deferred income taxes | 29,368 | 29,399 | 24,947 |
Long-term debt, net | 677,243 | 657,593 | 547,324 |
Other long-term liabilities | 26,469 | 24,679 | 23,525 |
Non-current operating lease liabilities | 122,770 | ||
Total liabilities | 1,453,473 | 1,017,281 | 1,129,881 |
Stockholders' equity: | |||
Common stock | 40 | 40 | 41 |
Additional paid-in capital | 463,522 | 453,193 | 437,878 |
Retained deficit | (227,633) | (218,646) | (182,580) |
Accumulated other comprehensive loss | (11,052) | (10,997) | (5,554) |
Total stockholders’ equity | 224,877 | 223,590 | 249,785 |
Total liabilities and stockholders' equity | $ 1,678,350 | $ 1,240,871 | $ 1,379,666 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
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) | 39,679,157 | 39,506,067 | 40,568,775 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities | ||
Net income | $ 32,637 | $ 31,339 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 6,649 | 6,299 |
Amortization | 375 | 470 |
Share-based compensation | 3,259 | 3,321 |
Equity earnings in unconsolidated investments, net | (65) | (46) |
Other | 512 | 681 |
Changes in operating assets and liabilities, net of effects of acquisitions: | ||
Receivables | (103,122) | (117,377) |
Product inventories | (128,206) | (168,518) |
Prepaid expenses and other assets | (1,427) | (3,843) |
Accounts payable | 230,030 | 222,285 |
Accrued expenses and other current liabilities | (11,838) | (18,760) |
Net cash provided by (used in) operating activities | 28,804 | (44,149) |
Investing activities | ||
Acquisition of businesses, net of cash acquired | (9,370) | (578) |
Purchases of property and equipment, net of sale proceeds | (6,739) | (14,639) |
Net cash used in investing activities | (16,109) | (15,217) |
Financing activities | ||
Proceeds from revolving line of credit | 206,190 | 148,335 |
Payments on revolving line of credit | (253,249) | (170,012) |
Proceeds from asset-backed financing | 80,100 | 80,000 |
Payments on asset-backed financing | (13,500) | (20,000) |
Proceeds from short-term borrowings and current portion of long-term debt | 13,713 | 10,798 |
Payments on short-term borrowings and current portion of long-term debt | (1,148) | (848) |
Payments of deferred and contingent acquisition consideration | (311) | (265) |
Payments of deferred financing costs | 0 | (8) |
Proceeds from stock issued under share-based compensation plans | 7,071 | 7,808 |
Payments of cash dividends | (17,819) | (15,011) |
Purchases of treasury stock | (23,097) | (2,592) |
Net cash (used in) provided by financing activities | (2,050) | 38,205 |
Effect of exchange rate changes on cash and cash equivalents | 1,578 | 24 |
Change in cash and cash equivalents | 12,223 | (21,137) |
Cash and cash equivalents at beginning of period | 16,358 | 29,940 |
Cash and cash equivalents at end of period | $ 28,581 | $ 8,803 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Statement - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance (in shares) at Dec. 31, 2017 | 40,212,000 | ||||
Balance at Dec. 31, 2017 | $ 223,146 | $ 40 | $ 426,750 | $ (196,316) | $ (7,328) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 31,339 | 0 | 0 | 31,339 | 0 |
Foreign currency translation | 976 | 0 | 0 | 0 | 976 |
Interest rate swaps, net of the change in taxes | 824 | $ 0 | 0 | 0 | 824 |
Repurchases of common stock, net of retirements (shares) | (18,000) | ||||
Repurchases of common stock, net of retirements | (2,592) | $ 0 | 0 | (2,592) | 0 |
Share-based compensation | 3,321 | $ 0 | 3,321 | 0 | 0 |
Issuance of shares under share-based compensation plans (shares) | 375,000 | ||||
Issuance of shares under share-based compensation plans | 7,808 | $ 1 | 7,807 | 0 | 0 |
Declaration of cash dividends | (15,011) | 0 | 0 | (15,011) | 0 |
Other | (26) | 0 | 0 | 0 | (26) |
Balance at Mar. 31, 2018 | $ 249,785 | $ 41 | 437,878 | (182,580) | (5,554) |
Balance (in shares) at Mar. 31, 2018 | 40,568,775 | 40,569,000 | |||
Balance (in shares) at Dec. 31, 2018 | 39,506,067 | 39,506,000 | |||
Balance at Dec. 31, 2018 | $ 223,590 | $ 40 | 453,193 | (218,646) | (10,997) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 32,637 | 0 | 0 | 32,637 | 0 |
Foreign currency translation | 214 | 0 | 0 | 0 | 214 |
Interest rate swaps, net of the change in taxes | (269) | $ 0 | 0 | 0 | (269) |
Repurchases of common stock, net of retirements (shares) | (155,000) | ||||
Repurchases of common stock, net of retirements | (23,097) | $ (1) | 0 | (23,096) | 0 |
Share-based compensation | 3,259 | $ 0 | 3,259 | 0 | 0 |
Issuance of shares under share-based compensation plans (shares) | 328,000 | ||||
Issuance of shares under share-based compensation plans | 7,071 | $ 1 | 7,070 | 0 | 0 |
Declaration of cash dividends | (17,819) | 0 | 0 | (17,819) | 0 |
Balance at Mar. 31, 2019 | $ 224,877 | $ 40 | $ 463,522 | $ (227,633) | $ (11,052) |
Balance (in shares) at Mar. 31, 2019 | 39,679,157 | 39,679,000 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax | $ 90 | $ (275) |
Treasury Stock, Shares, Acquired | 155 | 18 |
Treasury Stock, Shares, Retired | (155) | (18) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
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. 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 2018 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 2018 Annual Report on Form 10-K. The results for our three month period ended March 31, 2019 are not necessarily indicative of the expected results for our fiscal year ending December 31, 2019 . Newly Adopted Accounting Pronouncements On January 1, 2019 , we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) and all the related amendments, which are codified into Accounting Standards Codification (ASC) 842. The adoption of ASU 2016-02 significantly increased assets and liabilities on our Consolidated Balance Sheets as we recorded a right-of-use asset and corresponding liability for each of our existing operating leases. We adopted this guidance using the modified retrospective approach by recognizing a cumulative adjustment to retained earnings on the adoption date, which was not material. Additionally, we elected to apply the practical expedient that allows us to exclude comparative presentation; thus, we did not restate our prior period balance sheets to reflect the new guidance. We recorded operating lease assets and operating lease liabilities of approximately $175.7 million and $181.6 million , respectively, as of January 1, 2019 . The difference between the operating lease assets and operating lease liabilities primarily represents our straight-line rent liability of $5.1 million recorded under previous accounting guidance. Under ASU 2016-02, this liability is considered a reduction of the operating lease asset. We recorded the remaining difference between our operating lease assets and operating lease liabilities, net of the deferred tax impact, as an adjustment to retained earnings. Additionally, we reclassified prepaid rent of $4.9 million as of January 1, 2019 to our operating lease asset resulting in a balance of $180.6 million as of the adoption date. The adoption of this guidance did not materially impact our results of operations or cash flows. See Commitments and Contingencies within this note below for additional information regarding our adoption of this new guidance. On January 1, 2019 , we adopted ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. This new standard expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The adoption of this guidance did not impact our results of operations, statement of financial position or cash flows. Commitments and Contingencies We lease facilities for our corporate and administrative offices, sales centers and centralized shipping locations under operating leases that expire in various years through 2032 . Most of our leases contain five-year terms with renewal options that allow us to extend the lease term beyond the initial period, subject to terms agreed upon at lease inception. Based on our leasing practices and contract negotiations, we determined that we are not reasonably certain to exercise the renewal options and, as such, we have not included optional renewal periods in our measurement of operating lease assets, liabilities and expected lease terms. We elected to apply the package of practical expedients available within ASU 2016-02, which is intended to provide some relief to issuers. Electing this option allowed us to retain our existing assessment of whether an arrangement is or contains a lease, is classified as an operating or financing lease and contains initial direct costs. We also elected the practical expedients that allow us to exclude short-term leases from our Consolidated Balance Sheets and to combine lease and non-lease components. For leases with step rent provisions whereby the rental payments increase incrementally over the life of the lease, we recognize expense on a straight-line basis determined by the total lease payments over the lease term. To the extent we determine that future obligations related to real estate taxes, insurance and other lease components are variable, we exclude them from the measurement of our operating lease assets and liabilities. Some of our real estate agreements include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The table below presents expense associated with facility and vehicle operating leases (in thousands): Three Months Ended March 31, Lease Cost Classification 2019 2018 Operating lease cost (1) Selling and administrative expenses $ 15,070 $ 14,553 Variable lease cost Selling and administrative expenses 3,259 3,021 (1) Includes short-term lease cost, which is not material Based on our lease portfolio as of March 31, 2019 , the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands): 2019 $ 38,389 2020 50,443 2021 39,184 2022 29,883 2023 18,089 Thereafter 17,554 Total lease payments 193,542 Less: interest 15,028 Present value of lease liabilities 178,514 To calculate the present value of our lease liabilities, we determined our incremental borrowing rate based on the effective interest rate on our unsecured syndicated senior credit facility (the Credit Facility) adjusted for a collateral feature similar to that of our leased properties. The table below presents the weighted-average remaining lease term (years) of our operating leases and the weighted-average discount rate used in the above calculation: March 31, Lease Term and Discount Rate 2019 Weighted-average remaining lease term (years) Operating leases 5.21 Weighted-average discount rate Operating leases 3.5 % The table below presents the amount of cash paid for amounts included in the measurement of lease liabilities (in thousands): Three Months Ended March 31, 2019 Operating cash flows for lease liabilities $ 14,080 We lease corporate and administrative offices from Northpark Corporate Center, LLC (NCC), an entity in which we have held a 50% ownership interest since May 2005 . NCC owns and operates an office building in Covington, Louisiana. As of March 31, 2019 , we occupy approximately 60,293 square feet of office space and we pay rent of $97,976 per month. Our lease term ends in May 2025 . We recorded rent expense of $0.3 million for each of the three month periods ended March 31, 2019 and March 31, 2018 . Income Taxes We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards. To the extent realized tax deductions exceed the amount of previously recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit. We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on awards lapse. We recorded excess tax benefits of $8.8 million in the first three months of 2019 compared to $9.0 million in the same period of 2018 . Retained Deficit We account for the retirement of treasury shares as a reduction of retained earnings (deficit). As of March 31, 2019 , 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 $1,449.9 million and cumulative dividends of $512.9 million . Accumulated Other Comprehensive Loss The table below presents the components of our Accumulated other comprehensive loss balance (in thousands): March 31, December 31, 2019 2018 2018 Foreign currency translation adjustments $ (12,208 ) $ (6,528 ) $ (12,422 ) Unrealized gains on interest rate swaps, net of tax (1) 1,156 974 1,425 Accumulated other comprehensive loss $ (11,052 ) $ (5,554 ) $ (10,997 ) (1) In February 2018, the Financial Accounting Standards Board (FASB) issued guidance that allows entities the option to reclassify the tax effects related to items in accumulated other comprehensive income (loss) to retained earnings (deficit) if deemed to be stranded in accumulated other comprehensive income (loss) due to U.S. tax reform. We do not have any material amounts stranded in Accumulated other comprehensive loss as a result of U.S. tax reform. Recent Accounting Pronouncements Pending Adoption The following table summarizes the recent accounting pronouncements that we plan to adopt in future periods: Standard Description Effective Date Effect on Financial Statements and Other Significant Matters ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied using a cumulative-effect transition method. Annual periods beginning after December 15, 2019 We are currently evaluating the effect this will have on our financial position, results of operations and related disclosures. ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (commonly referred to as Step 2 under the current guidance). Rather, the measurement of a goodwill impairment charge will be based on the excess of a reporting unit’s carrying value over its fair value (Step 1 under the current guidance). This guidance should be applied prospectively. Annual and interim impairment tests performed in periods beginning after December 15, 2019 We are currently evaluating the effect this will have on our financial position, results of operations and related disclosures. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 2 – Earnings Per Share We calculate basic earnings per share (EPS) by dividing Net income 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. 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 March 31, 2019 2018 Net income $ 32,637 $ 31,339 Weighted average shares outstanding: Basic 39,479 40,370 Effect of dilutive securities: Stock options and employee stock purchase plan 1,217 1,492 Diluted 40,696 41,862 Earnings per share: Basic $ 0.83 $ 0.78 Diluted $ 0.80 $ 0.75 Anti-dilutive stock options excluded from diluted earnings per share computations 65 85 |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3 – Acquisitions In January 2019, we acquired the distribution assets of W.W. Adcock, Inc., a wholesale distributor of swimming pool products, equipment, parts and supplies adding two locations in Pennsylvania, one location in North Carolina and one location in Virginia. In November 2018, we acquired the distribution assets of Turf & Garden, Inc., a wholesale distributor of irrigation products and landscape maintenance equipment, parts and supplies with three locations in Virginia and one location in North Carolina. We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material. In January 2018, we acquired the distribution assets of Tore Pty. Ltd. (doing business as Pool Power), a wholesale distributor of pool and spa equipment in South Australia, with one distribution center in Adelaide, Australia. We have completed our acquisition accounting for this acquisition. These acquisitions did not have a material impact on our financial position or results of operations, either individually or in the aggregate. |
Fair Value Measurements and Int
Fair Value Measurements and Interest Rate Swaps | 3 Months Ended |
Mar. 31, 2019 | |
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 contract and our contingent consideration liabilities (in thousands): Fair Value at March 31, 2019 2018 Level 2 Unrealized gains on interest rate swaps $ 1,785 $ 2,451 Level 3 Contingent consideration liabilities $ 833 $ 1,617 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 and forward-starting 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. If determined to be effective cash flow hedges, 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 Interest and other non-operating expenses, net on our Consolidated Statements of Income. 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 at that time 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 first three months of 2019 , we recognized a loss of $0.2 million as a result of ineffectiveness. 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% For the three interest rate swap contracts in effect at March 31, 2019 , 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 on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income. These amounts were not material in the three month periods ended March 31, 2019 and March 31, 2018 . 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 at that time. 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 swap contract: Derivative Inception Date Notional Fixed Forward-starting interest rate swap 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. 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). The carrying value of long-term debt approximates fair value (Level 3 inputs). 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 | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Note 5 – Debt The table below presents the components of our debt (in thousands): March 31, 2019 2018 Variable rate debt Short-term borrowings $ 13,714 $ 12,263 Current portion of long-term debt: Australian credit facility 8,020 8,523 Short-term borrowings and current portion of long-term debt 21,734 20,786 Long-term portion: Revolving credit facility 503,073 388,762 Receivables securitization facility 175,100 160,000 Less: financing costs, net 930 1,438 Long-term debt, net 677,243 547,324 Total debt $ 698,977 $ 568,110 Our accounts receivable 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. 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 on our Consolidated Balance Sheets as we intend and have the ability 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Lessee, Operating Lease, Maturity | Based on our lease portfolio as of March 31, 2019 , the table below sets forth the approximate future lease payments related to operating leases with initial terms of one year or more (in thousands): 2019 $ 38,389 2020 50,443 2021 39,184 2022 29,883 2023 18,089 Thereafter 17,554 Total lease payments 193,542 Less: interest 15,028 Present value of lease liabilities 178,514 |
Lease Cost | The table below presents the weighted-average remaining lease term (years) of our operating leases and the weighted-average discount rate used in the above calculation: March 31, Lease Term and Discount Rate 2019 Weighted-average remaining lease term (years) Operating leases 5.21 Weighted-average discount rate Operating leases 3.5 % The table below presents expense associated with facility and vehicle operating leases (in thousands): Three Months Ended March 31, Lease Cost Classification 2019 2018 Operating lease cost (1) Selling and administrative expenses $ 15,070 $ 14,553 Variable lease cost Selling and administrative expenses 3,259 3,021 (1) Includes short-term lease cost, which is not material The table below presents the amount of cash paid for amounts included in the measurement of lease liabilities (in thousands): Three Months Ended March 31, 2019 Operating cash flows for lease liabilities $ 14,080 |
Schedule of Accumulated Other Comprehensive Loss | The table below presents the components of our Accumulated other comprehensive loss balance (in thousands): March 31, December 31, 2019 2018 2018 Foreign currency translation adjustments $ (12,208 ) $ (6,528 ) $ (12,422 ) Unrealized gains on interest rate swaps, net of tax (1) 1,156 974 1,425 Accumulated other comprehensive loss $ (11,052 ) $ (5,554 ) $ (10,997 ) (1) In February 2018, the Financial Accounting Standards Board (FASB) issued guidance that allows entities the option to reclassify the tax effects related to items in accumulated other comprehensive income (loss) to retained earnings (deficit) if deemed to be stranded in accumulated other comprehensive income (loss) due to U.S. tax reform. We do not have any material amounts stranded in Accumulated other comprehensive loss as a result of U.S. tax reform. |
Schedule of Recent Accounting Pronouncements | The following table summarizes the recent accounting pronouncements that we plan to adopt in future periods: Standard Description Effective Date Effect on Financial Statements and Other Significant Matters ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied using a cumulative-effect transition method. Annual periods beginning after December 15, 2019 We are currently evaluating the effect this will have on our financial position, results of operations and related disclosures. ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (commonly referred to as Step 2 under the current guidance). Rather, the measurement of a goodwill impairment charge will be based on the excess of a reporting unit’s carrying value over its fair value (Step 1 under the current guidance). This guidance should be applied prospectively. Annual and interim impairment tests performed in periods beginning after December 15, 2019 We are currently evaluating the effect this will have on our financial position, results of operations and related disclosures. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 2018 Net income $ 32,637 $ 31,339 Weighted average shares outstanding: Basic 39,479 40,370 Effect of dilutive securities: Stock options and employee stock purchase plan 1,217 1,492 Diluted 40,696 41,862 Earnings per share: Basic $ 0.83 $ 0.78 Diluted $ 0.80 $ 0.75 Anti-dilutive stock options excluded from diluted earnings per share computations 65 85 |
Fair Value Measurements and I_2
Fair Value Measurements and Interest Rate Swaps (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative [Line Items] | |
Estimated fair value of contracts | The table below presents the estimated fair values of our interest rate swap contracts, our forward-starting interest rate swap contract and our contingent consideration liabilities (in thousands): Fair Value at March 31, 2019 2018 Level 2 Unrealized gains on interest rate swaps $ 1,785 $ 2,451 Level 3 Contingent consideration liabilities $ 833 $ 1,617 |
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 swap contract: Derivative Inception Date Notional Fixed Forward-starting interest rate swap July 6, 2016 $150.0 1.1425% |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The table below presents the components of our debt (in thousands): March 31, 2019 2018 Variable rate debt Short-term borrowings $ 13,714 $ 12,263 Current portion of long-term debt: Australian credit facility 8,020 8,523 Short-term borrowings and current portion of long-term debt 21,734 20,786 Long-term portion: Revolving credit facility 503,073 388,762 Receivables securitization facility 175,100 160,000 Less: financing costs, net 930 1,438 Long-term debt, net 677,243 547,324 Total debt $ 698,977 $ 568,110 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Newly Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Jan. 01, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease assets | $ 177,293 | $ 180,600 |
Present value of lease liabilities | 178,514 | |
Straight-line rent liability | $ 5,100 | |
Prepaid rent | 4,900 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease assets | 175,700 | |
Present value of lease liabilities | $ 181,600 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Retained Deficit (Details) $ in Millions | Mar. 31, 2019USD ($) |
Retained Earnings (Accumulated Deficit) [Abstract] | |
Cumulative share repurchases | $ 1,449.9 |
Cumulative dividends | $ 512.9 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounting Policies [Abstract] | ||
Excess tax benefit | $ 8.8 | $ 9 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss | $ (11,052) | $ (10,997) | $ (5,554) |
AOCI Attributable to Parent | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss | (11,052) | (10,997) | (5,554) |
Foreign currency translation adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss | (12,208) | (12,422) | (6,528) |
Unrealized gains (losses) on interest rate swaps, net of tax | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Accumulated other comprehensive loss | $ 1,156 | $ 1,425 | $ 974 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Commitments and Contingencies (Details) | 3 Months Ended | |
Mar. 31, 2019USD ($)ft² | Mar. 31, 2018USD ($) | |
Accounting Policies [Abstract] | ||
Operating cash flows for lease liabilities | $ 14,080,000 | |
Square feet of office space | ft² | 60,293 | |
Monthly rent payments | $ 97,976 | |
Rent expense | 300,000 | |
Lease, Cost [Abstract] | ||
Operating lease cost | 15,070,000 | $ 14,553,000 |
Variable lease cost | $ 3,259,000 | $ 3,021,000 |
Weighted-average remaining lease term (years) | 5 years 2 months 16 days | |
Weighted-average discount rate | 3.50% | |
Operating Lease Liabilities, Payments Due [Abstract] | ||
2019 | $ 38,389,000 | |
2020 | 50,443,000 | |
2021 | 39,184,000 | |
2022 | 29,883,000 | |
2023 | 18,089,000 | |
Thereafter | 17,554,000 | |
Total lease payments | 193,542,000 | |
Less: interest | 15,028,000 | |
Present value of lease liabilities | $ 178,514,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Net income | $ 32,637 | $ 31,339 |
Weighted average shares outstanding: [Abstract] | ||
Basic (in shares) | 39,479 | 40,370 |
Effect of dilutive securities: [Abstract] | ||
Stock options and employee stock purchase plan (in shares) | 1,217 | 1,492 |
Diluted (in shares) | 40,696 | 41,862 |
Basic (in dollars per share) | $ 0.83 | $ 0.78 |
Diluted (in dollars per share) | $ 0.80 | $ 0.75 |
Anti-dilutive stock options excluded from diluted earnings per share computations (in shares) | 65 | 85 |
Acquisitions (Details)
Acquisitions (Details) | 1 Months Ended | ||
Jan. 31, 2019locations | Nov. 30, 2018locations | Jan. 31, 2018distribution_center | |
Turf & Garden, Inc., Virginia [Member] | |||
Business Acquisition [Line Items] | |||
Number of locations added | 3 | ||
Turf & Garden, Inc., North Carolina [Member] | |||
Business Acquisition [Line Items] | |||
Number of locations added | 1 | ||
Tore Pty. Ltd. (Pool Power) [Member] | |||
Business Acquisition [Line Items] | |||
Number of distribution centers | distribution_center | 1 | ||
PENNSYLVANIA | W.W. Adcock, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Number of locations added | 2 | ||
NORTH CAROLINA | W.W. Adcock, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Number of locations added | 1 | ||
VIRGINIA | W.W. Adcock, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Number of locations added | 1 |
Interest Rate Swaps (Details)
Interest Rate Swaps (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Derivative [Line Items] | |
Loss on Cash Flow Hedge Ineffectiveness | $ 0.2 |
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 | 3 Months Ended |
Mar. 31, 2019USD ($) | |
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 | Mar. 31, 2019 | Mar. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Unrealized gains on interest rate swaps | $ 1,785 | $ 2,451 |
Contingent consideration liabilities | $ 833 | $ 1,617 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 |
Debt Instrument [Line Items] | |||
Short-term borrowings | $ 13,714 | $ 12,263 | |
Australian credit facility | 8,020 | 8,523 | |
Short-term borrowings and current portion of long-term debt | 21,734 | $ 9,168 | 20,786 |
Long-term portion: | |||
Less: financing costs, net | 930 | 1,438 | |
Long-term debt, net | 677,243 | 547,324 | |
Total debt | 698,977 | 568,110 | |
Revolving Credit Facility | |||
Long-term portion: | |||
Long-term debt, gross | 503,073 | 388,762 | |
Receivables Securitization Facility | |||
Long-term portion: | |||
Long-term debt, gross | $ 175,100 | $ 160,000 |
Uncategorized Items - pool-2019
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (709,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (709,000) |