pool-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


POOL CORPORATION
(Exact name of registrant as specified in its charter)

Delaware		0-26640	36-3943363
(State or other jurisdiction		(Commission File Number)	(I.R.S. Employer
of incorporation)			Identification No.)

109 Northpark Boulevard,
Covington,	Louisiana		70433-5001
(Address of principal executive			(Zip Code)
offices)

(985) 892-5521

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	POOL	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of July 25, 2024, there were 38,257,928 shares of common stock outstanding.

POOL CORPORATION

Form 10-Q

For the Quarter Ended June 30, 2024

TABLE OF CONTENTS



			Page
PART I. FINANCIAL INFORMATION

	Item 1. Financial Statements (Unaudited)

		Consolidated Statements of Income	1
		Consolidated Statements of Comprehensive Income	2
		Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Cash Flows	4
		Consolidated Statements of Changes in Stockholders’ Equity	5
		Notes to Consolidated Financial Statements	7

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		14

	Item 3. Quantitative and Qualitative Disclosures about Market Risk		28

	Item 4. Controls and Procedures		28

PART II. OTHER INFORMATION

	Item 1. Legal Proceedings		29

	Item 1A. Risk Factors		29

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29

	Item 5. Other Information		29

	Item 6. Exhibits		30

SIGNATURE			31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

POOL CORPORATION

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net sales	$	1,769,784	$	1,857,363	$	2,890,594	$	3,064,138
Cost of sales	1,239,643		1,289,580		2,021,894		2,126,599
Gross profit	530,141		567,783		868,700		937,539
Selling and administrative expenses	258,660		240,774		488,499		464,758

Operating income	271,481		327,009		380,201		472,781
Interest and other non-operating expenses, net	14,044		16,892		27,463		32,728
Income before income taxes and equity in earnings	257,437		310,117		352,738		440,053
Provision for income taxes	65,058		77,987		81,531		106,260
Equity in earnings of unconsolidated investments, net	60		120		117		156


Net income	$	192,439	$	232,250	$	271,324	$	333,949


Earnings per share attributable to common stockholders:
Basic	$	5.02	$	5.95	$	7.07	$	8.55
Diluted	$	4.99	$	5.91	$	7.03	$	8.48
Weighted average common shares outstanding:
Basic	38,124		38,837		38,164		38,857
Diluted	38,325		39,115		38,399		39,155

Cash dividends declared per common share	$	1.20	$	1.10	$	2.30	$	2.10

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income	$	192,439	$	232,250	$	271,324	$	333,949
Other comprehensive (loss) income:
Foreign currency translation (loss) gain	(4,684)		2,801		(8,352)		5,271
Unrealized (loss) gain on interest rate swaps, net of the change in taxes of $459, $(1,166), $(284) and $104	(1,376)		3,497		850		(313)
Total other comprehensive (loss) income	(6,060)		6,298		(7,502)		4,958
Comprehensive income	$	186,379	$	238,548	$	263,822	$	338,907

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Consolidated Balance Sheets

(In thousands, except share data)


	June 30,		June 30,		December 31,
	2024		2023		2023
	(Unaudited)		(Unaudited)		(Audited)
Assets
Current assets:
Cash and cash equivalents	$	96,894	$	53,225	$	66,540
Receivables, net	169,849		203,459		145,723
Receivables pledged under receivables facility	407,680		427,491		197,187
Product inventories, net	1,295,600		1,392,886		1,365,466
Prepaid expenses and other current assets	35,789		19,994		40,444
Total current assets	2,005,812		2,097,055		1,815,360

Property and equipment, net	241,871		209,541		223,929
Goodwill	699,686		699,918		700,078
Other intangible assets, net	294,684		302,444		298,282
Equity interest investments	1,399		1,278		1,305
Operating lease assets	313,840		279,468		305,688
Other assets	83,622		90,875		83,426
Total assets	$	3,640,914	$	3,680,579	$	3,428,068

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	515,645	$	485,100	$	508,672
Accrued expenses and other current liabilities	152,978		170,658		134,676
Short-term borrowings and current portion of long-term debt	44,726		36,219		38,203
Current operating lease liabilities	94,024		79,763		89,215
Total current liabilities	807,373		771,740		770,766

Deferred income taxes	67,595		58,151		67,421
Long-term debt, net	1,071,827		1,148,367		1,015,117
Other long-term liabilities	44,135		39,236		40,028
Non-current operating lease liabilities	226,315		204,553		221,949
Total liabilities	2,217,245		2,222,047		2,115,281



Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 38,289,105, 39,048,604 and 38,354,829 shares issued and outstanding at June 30, 2024, June 30, 2023 and December 31, 2023, respectively	38		39		38
Additional paid-in capital	626,347		593,081		606,177
Retained earnings	798,204		854,559		699,990
Accumulated other comprehensive (loss) income	(920)		10,853		6,582
Total stockholders’ equity	1,423,669		1,458,532		1,312,787
Total liabilities and stockholders’ equity	$	3,640,914	$	3,680,579	$	3,428,068

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six Months Ended
	June 30,
	2024		2023
Operating activities
Net income	$	271,324	$	333,949
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	17,591		15,292
Amortization	4,201		4,237
Share-based compensation	10,344		9,996

Equity in earnings of unconsolidated investments, net	(117)		(156)

Other	(1,246)		3,563
Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables	(232,647)		(276,945)
Product inventories	66,975		201,380
Prepaid expenses and other assets	38,231		(4,423)
Accounts payable	6,166		76,140
Accrued expenses and other liabilities	(8,720)		13,744
Net cash provided by operating activities	172,102		376,777

Investing activities
Acquisition of businesses, net of cash acquired	(4,435)		(11,500)
Purchases of property and equipment, net of sale proceeds	(34,928)		(30,191)


Other investments, net	1,018		(169)
Net cash used in investing activities	(38,345)		(41,860)

Financing activities
Proceeds from revolving line of credit	756,300		698,795
Payments on revolving line of credit	(830,400)		(1,001,399)


Proceeds from asset-backed financing	467,000		388,900
Payments on asset-backed financing	(324,000)		(240,200)
Payments on term facility	(12,500)		(47,313)
Proceeds from short-term borrowings and current portion of long-term debt	8,085		17,859
Payments on short-term borrowings and current portion of long-term debt	(1,562)		(19,182)

Payments of deferred and contingent acquisition consideration	—		(551)


Proceeds from stock issued under share-based compensation plans	9,826		7,309
Payments of cash dividends	(88,287)		(82,018)
Repurchases of common stock	(84,496)		(50,742)
Net cash used in financing activities	(100,034)		(328,542)
Effect of exchange rate changes on cash and cash equivalents	(3,369)		1,259
Change in cash and cash equivalents	30,354		7,634
Cash and cash equivalents at beginning of period	66,540		45,591
Cash and cash equivalents at end of period	$	96,894	$	53,225

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands)


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Earnings		(Loss) Income		Total
Balance at December 31, 2023	38,355	$	38	$	606,177	$	699,990	$	6,582	$	1,312,787
Net income	—	—		—		78,885		—		78,885
Foreign currency translation	—	—		—		—		(3,668)		(3,668)
Interest rate swaps, net of the change in taxes of $(742)	—	—		—		—		2,226		2,226
Repurchases of common stock, net of retirements	(41)	—		—		(16,304)		—		(16,304)
Share-based compensation	—	—		5,328		—		—		5,328
Issuance of stock under share-based compensation plans	148	—		8,773		—		—		8,773
Declaration of cash dividends	—	—		—		(42,343)		—		(42,343)
Balance at March 31, 2024	38,462	$	38	$	620,278	$	720,228	$	5,140	$	1,345,684
Net income	—	—		—		192,439		—		192,439
Foreign currency translation	—	—		—		—		(4,684)		(4,684)
Interest rate swaps, net of the change in taxes of $459	—	—		—		—		(1,376)		(1,376)
Repurchases of common stock, net of retirements	(181)	—		—		(68,519)		—		(68,519)
Share-based compensation	—	—		5,016		—		—		5,016
Issuance of stock under share-based compensation plans	8	—		1,053		—		—		1,053
Declaration of cash dividends	—	—		—		(45,944)		—		(45,944)

Balance at June 30, 2024	38,289	$	38	$	626,347	$	798,204	$	(920)	$	1,423,669


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive
	Shares	Amount		Capital		Earnings		Income		Total
Balance at December 31, 2022	39,069	$	39	$	575,776	$	653,484	$	5,895	$	1,235,194
Net income	—	—		—		101,699		—		101,699
Foreign currency translation	—	—		—		—		2,469		2,469
Interest rate swaps, net of the change in taxes of $1,269	—	—		—		—		(3,809)		(3,809)
Repurchases of common stock, net of retirements	(144)	—		—		(50,549)		—		(50,549)
Share-based compensation	—	—		4,923		—		—		4,923
Issuance of stock under share-based compensation plans	108	—		5,896		—		—		5,896
Declaration of cash dividends	—	—		—		(39,073)		—		(39,073)
Balance at March 31, 2023	39,033	$	39	$	586,595	$	665,561	$	4,555	$	1,256,750
Net income	—	—		—		232,250		—		232,250
Foreign currency translation	—	—		—		—		2,801		2,801
Interest rate swaps, net of the change in taxes of $(1,166)	—	—		—		—		3,497		3,497
Repurchases of common stock, net of retirements	—	—		—		—		—		—
Share-based compensation	—	—		5,073		—		—		5,073
Issuance of stock under share-based compensation plans	16	—		1,413		—		—		1,413
Declaration of cash dividends	—	—		—		(42,945)		—		(42,945)
Other	—	—				(307)		—		(307)
Balance at June 30, 2023	39,049	$	39	$	593,081	$	854,559	$	10,853	$	1,458,532

The accompanying Notes are an integral part of the Consolidated Financial Statements.

POOL CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Summary of Significant Accounting Policies

Pool Corporation (the Company, which may also 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 interim 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 2023 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 2023 Annual Report on Form 10-K. The results for our three and six-month periods ended June 30, 2024, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2024.

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 restricted stock awards lapse. We recorded excess tax benefits of $0.4 million in the second quarter of 2024 compared to $0.6 million in the second quarter of 2023 and $7.8 million in the six months ended June 30, 2024, compared to $5.4 million in the six months ended June 30, 2023.

Retained Earnings

We account for the retirement of repurchased shares as a reduction of Retained earnings. As of June 30, 2024, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, share retirements since the inception of our share repurchase programs of $2.5 billion and cumulative dividends of $1.2 billion.

Accumulated Other Comprehensive (Loss) Income

The table below presents the components of our Accumulated other comprehensive (loss) income balance (in thousands):


	June 30,				December 31,
	2024		2023		2023
Foreign currency translation adjustments	$	(21,051)	$	(14,338)	$	(12,699)
Unrealized gains on interest rate swaps, net of tax	20,131		25,191		19,281
Accumulated other comprehensive (loss) income	$	(920)	$	10,853	$	6,582

Recent Accounting Pronouncements Pending Adoption

The following table summarizes recent accounting pronouncements that we plan to adopt in future periods:


Standard	Description	Effective Date	Effect on Financial Statements and Other Significant Matters
Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures	In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes- Improvements to Income Tax Disclosures, which will require enhancements and further transparency to various income tax disclosures, most notably the tax rate reconciliation and income taxes paid.	Annual periods beginning after December 15, 2024 on a prospective basis. Retrospective application for all periods presented is permitted. Early adoption is also permitted.	We are currently evaluating the effect this standard will have on our disclosures.
ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures	In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which intends to improve reportable segment disclosures by requiring enhanced disclosures about significant segment expenses, enhance interim disclosure requirements, refine situations in which an entity can disclose multiple segment measures of profit or loss and provide advanced segment disclosure requirements for entities with a single reportable segment, as well as other disclosure requirements.	Annual periods beginning after December 15, 2023 on a retrospective basis for all periods presented. Early adoption is permitted.	We are currently evaluating the effect this standard will have on our disclosures.
ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative	In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which will impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, equity, derivatives and transfers of financial assets.	The amendments in ASU 2023-06 will be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited.	We are currently evaluating the effect this standard will have on our disclosures.

Note 2 – Earnings Per Share

We calculate basic and diluted earnings per share using the two-class method. Earnings per share under the two-class method is calculated using net income attributable to common stockholders, which is net income reduced by the earnings allocated to participating securities. Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders. Participating securities excluded from weighted average common shares outstanding were 208,000 for the three months ended June 30, 2024 and 205,000 for the three months ended June 30, 2023, and 206,000 for the six months ended June 30, 2024 and 209,000 for the six months ended June 30, 2023.

The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except per share data):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income	$	192,439	$	232,250	$	271,324	$	333,949
Amounts allocated to participating securities	(1,018)		(1,219)		(1,417)		(1,779)
Net income attributable to common stockholders	$	191,421	$	231,031	$	269,907	$	332,170

Weighted average common shares outstanding:
Basic	38,124		38,837		38,164		38,857
Effect of dilutive securities:
Stock options and employee stock purchase plan	201		278		235		298
Diluted	38,325		39,115		38,399		39,155

Earnings per share attributable to common stockholders:

SEC Form 10-Q filed by Pool Corporation