Pool Corporation Reports Record First Quarter Sales
COVINGTON, La.--Pool Corporation (the "Company" or "POOL") (Nasdaq/GSM: POOL) today reported record net sales for the first quarter of 2007 and affirmed its projected 2007 diluted earnings per share guidance.
Earnings for the first quarter of 2007 were $0.03 per diluted share on net income of $1.4 million, compared to $0.12 per diluted share on net income of $6.4 million in 2006. The decrease includes the impact of approximately $0.03 per diluted share related to incremental operating expenses for the 17 new sales centers opened in 2006 and the 7 new sales centers opened in the first quarter of 2007.
Net sales for the quarter ended March 31, 2007 increased $25.1 million, or 7%, to $373.7 million, compared to $348.6 million in 2006. Base business sales growth of approximately 4% (on top of 15% growth in the first quarter of 2006) contributed $12.4 million to the increase. The remaining increase in net sales is attributable to acquired sales centers, primarily the Wickham business acquired in August 2006, and new sales centers opened in new markets. During the quarter, there was a 7% decrease in complementary product sales, which is a category that faced a tough sales comparison to last year given the 36% growth achieved in the first quarter of 2006. Complementary product sales were also impacted by a decline in pool construction in some markets and commodity price decreases.
Gross profit for the quarter ended March 31, 2007 increased $5.5 million, or 6%, to $103.5 million from $98.0 million in 2006. Gross profit as a percentage of net sales (gross margin) decreased 40 basis points to 27.7% in the first quarter of 2007 from 28.1% in the first quarter of 2006. Our first quarter 2007 gross margin is comparatively lower primarily due to the impacts of early buy and early pay inventory purchases in the fourth quarter of 2005, which benefited our first quarter 2006 gross margin.
Operating expenses increased $11.9 million, or 14%, to $94.9 million in the first quarter of 2007 from $83.0 million in the first quarter of 2006. Operating expenses as a percentage of net sales increased to 25.4% in 2007 from 23.8% in 2006. This increase includes the impact from our investments in new sales centers and higher expenses related to the significant number of sales center expansions and relocations we have made in the past year.
Operating income was $8.6 million in the first quarter of 2007 compared to $15.0 million in the same period in 2006. Operating income as a percentage of net sales (operating margin) decreased to 2.3% from 4.3% in 2006. EBITDA (as defined in the addendum) was $11.5 million in the first quarter of 2007 compared to $18.6 million in the first quarter of 2006.
The seasonal use of cash in operations decreased $47.4 million to $13.3 million in the first quarter of 2007 compared to $60.7 million in the same period of 2006. The decrease in cash used in operations is primarily due to a difference between periods in the timing of payments related to our year end early buy inventory purchases. During the first quarter of 2007, share repurchases totaled $61.4 million, or approximately 1.7 million shares of our common stock.
"We realized a 4% increase in base business sales despite a tough comparison to the 15% base business sales growth in the first quarter of 2006 and unfavorable weather conditions during the first quarter of 2007. As we move into the heart of the pool season, we are prepared to take advantage of the numerous opportunities in the young swimming pool industry and we expect to deliver another year of solid results. Consistent with our prior guidance, we project that 2007 earnings per share will be in the range of $2.00 to $2.10 per diluted share," commented Manuel Perez de la Mesa, President and CEO.
At March 31, 2007, 260 sales centers were included in the base business calculations, and 22 sales centers were excluded because they were acquired or opened in new markets within the last 15 months.
Pool Corporation is the largest wholesale distributor of swimming pool and related backyard products. Currently, POOL operates 282 sales centers in North America and Europe, through which it distributes more than 100,000 national brand and private label products to roughly 70,000 wholesale customers. For more information about POOL, please visit www.poolcorp.com.
This news release includes "forward-looking" statements that involve risk and uncertainties that are generally identifiable through the use of words such as "believe," "expect," "intend," "plan," "estimate," "project" and similar expressions and include projections of earnings. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date of this release, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Actual results may differ materially due to a variety of factors, including the sensitivity of our business to weather conditions, our ability to maintain favorable relationships with suppliers and manufacturers, competition from other leisure product alternatives and mass merchants, changes in the economy and other risks detailed in POOL's 2006 Form 10-K filed with the Securities and Exchange Commission.
Pool Corporation
Craig Hubbard, Treasurer
985-801-5117
craig.hubbard@poolcorp.com ******See attachment for entire release******
Submited on :4/19/2007
