COVINGTON, LA. (April 22, 2010) – Pool Corporation (the "Company" or "POOL") (NASDAQ/GSM: POOL) today reported its results for the first quarter of 2010.
Net sales for the seasonally slow first quarter decreased approximately 3% to $269.8 million, compared to $276.6 million in the first quarter of 2009. Base business sales declined 5% due to higher sales in the first quarter of 2009 for new drains and related safety products driven by regulatory changes, unfavorable weather conditions during the first two months of 2010 and continued weakness in irrigation construction markets, which generally lag trends in the pool construction markets by up to a year.
Gross profit for the quarter ended March 31, 2010 decreased 6% to $76.3 million from $81.2 million in the first quarter of 2009. Gross profit as a percentage of net sales (gross margin) declined 110 basis points to 28.3% in the first quarter of 2010 due to the competitive pricing environment and the favorable impact to gross margin in the first quarter of 2009 that resulted from our volume of inventory purchases ahead of vendor price increases in the second half of 2008.
"March marked the official start of the pool season and we see positive signs that the first quarter of 2010 will likely mark the end of a three year downturn in our industry. We continue to see moderating sales declines as evidenced by a 5% decrease in base business sales for the quarter versus double digit base business sales declines for each quarter in 2009. More significantly, we realized flat base business sales in March, excluding the benefit of one extra selling day compared to March 2009, and sales through the first three weeks of April are trending up compared to the same period last year. While we have increasing confidence in realizing positive sales comparisons in the second quarter and balance of 2010, we expect continued pressure on gross margins," commented Manuel Perez de la Mesa, President and CEO.
Selling and administrative expenses (operating expenses) decreased 1% to $84.2 million in the first quarter of 2010 compared to the same period in 2009. Base business operating expenses decreased 3% compared to the first quarter of 2009 due primarily to the benefit of cost measures implemented during 2009.
Operating loss was $7.9 million in the first quarter of 2010 compared to an operating loss of $3.6 million in the same period in 2009. Interest expense decreased 29% compared to the first quarter of 2009 due to a $99.5 million decrease in average debt levels. The Company no longer has an equity interest in Latham Acquisition Corporation (LAC) and did not recognize any impact related to LAC's first quarter 2010 results. In the first quarter of 2009, equity loss in unconsolidated investments, net included $2.1 million related to LAC.
Loss per share for the first quarter of 2010 was $0.12 per diluted share on a net loss of $6.1 million, compared to a loss of $0.13 per diluted share on a net loss of $6.2 million in the same period in 2009. Adjusted EBITDA (as defined in the addendum) was a loss of $3.3 million in the first quarter of 2010 compared to earnings of $0.3 million in the first quarter of 2009.
On the balance sheet, total net receivables decreased 2% compared to March 31, 2009 due primarily to lower first quarter 2010 sales. Inventory levels decreased 4% to $382.4 million at March 31, 2010, or decreased approximately 6% excluding inventory related to the October 2009 acquisition of General Pool and Spa Supply.
The seasonal use of cash in operations decreased to $25.3 million in the first quarter of 2010 compared to $46.0 million in the same period of 2009. The 2009 amount was negatively impacted by a $30.0 million tax payment made in January 2009 for estimated third and fourth quarter 2008 federal income taxes, which were deferred as allowed by the IRS for taxpayers in areas affected by Hurricane Gustav.
"We believe our 2010 earnings guidance of $1.00 to $1.15 per diluted share continues to be reasonable. We are confident that our combination of customer service, marketing and technology tools and business development resources, in conjunction with the dedication and commitment of our team, positively distinguish us from our competition and favorably position us to capitalize on the recovery in our industry," continued Perez de la Mesa.
Pool Corporation is the largest wholesale distributor of swimming pool and related backyard products. Currently, POOL operates 288 sales centers in North America and Europe, through which it distributes more than 100,000 national brand and private label products to roughly 70,000 wholesale customers. For more information about POOL, please visit www.poolcorp.com.
This news release includes "forward-looking" statements that involve risk and uncertainties that are generally identifiable through the use of words such as "believe," "expect," "intend," "plan," "estimate," "project" and similar expressions and include projections of earnings. The forward‑looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date of this release, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Actual results may differ materially due to a variety of factors, including the sensitivity of our business to weather conditions, changes in the economy and the housing market, our ability to maintain favorable relationships with suppliers and manufacturers, competition from other leisure product alternatives and mass merchants and other risks detailed in POOL's 2009 Annual Report on Form 10-K/A filed with the Securities and Exchange Commission.
CONTACT:
Craig K. Hubbard
985.801.5117
craig.hubbard@poolcorp.com
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Submited on :4/22/2010
