Highlights Net sales of $1.1 billion exceeded $1.0 billion in the first quarter for the fourth consecutive year Operating income of $108.7 million with a solid operating margin of 9.7% Net cash provided by operations improved 41% to a Q1 record $145.4 million Q1 2024 diluted EPS of $2.04 or $1.85 without tax benefits Updates annual earnings guidance range to $13.19 to $14.19 per diluted share to reflect additional tax benefits COVINGTON, La., April 25, 2024 (GLOBE NEWSWIRE) -- Pool Corporation (Nasdaq/GSM:POOL) today reported results for the first quarter of 2024. "For the fourth consecutive year, we exceeded $1.0 billion of net sales in the first quarter despite headwinds that included challenges from current macroeconomic conditions and mixed weather. We also posted strong cash flows from operations of $145.4 million, a 41% improvement from last year, and added four additional locations to our expansive sales center network. Our team is energized for the swimming pool season ahead and we remain focused on our strategic goals, including organic growth of our sales center network and investments that provide our customers with convenient access to our broad assortment of products and tools to help them grow. With the introduction of new offerings from our Pool360 digital ecosystem, our customers are positioned with more capabilities for a successful year," commented Peter D. Arvan, president and CEO. First quarter ended March 31, 2024 compared to the first quarter ended March 31, 2023 Net sales decreased 7% in the first quarter of 2024 to $1.1 billion compared to $1.2 billion in the first quarter of 2023 following significant growth in 2021 and 2022. Base business results approximated consolidated results for the period. Maintenance activities were stable during the quarter, indicating steady demand for non-discretionary products, while pool construction and discretionary activities were weaker. Inflationary product cost increases moderated and net sales benefited approximately 2% compared to a benefit of 4% to 5% in the first quarter of 2023. Gross profit decreased 8% to $338.6 million in the first quarter of 2024 from $369.8 million in the same period of 2023. Gross margin decreased 40 basis points to 30.2% in the first quarter of 2024 compared to 30.6% in the first quarter of 2023. In the first quarter of 2024, our gross margin was impacted by the following factors. Gross margin in the first quarter of 2024 included a benefit of $12.6 million, or 110 basis points, related to a reduction of estimated import taxes previously recorded in the fourth quarter of 2022. Gross margin benefited from ongoing supply chain management initiatives. We realized a higher cost of product in the first quarter of 2024 compared to the first quarter of 2023. In 2023, we started the year carrying a large amount of lower cost strategically-purchased inventory and successfully reduced this excess inventory to normalized levels by the end of the 2023 season. The lower-cost inventory was more impactful on gross margin in the first quarter of 2023 when a higher portion was sold relative to the full year. Changes in product mix weighed on our gross margin; we expect this mix to shift as sales of higher margin products increase as the season progresses. Greater customer preseason early buys during the quarter compared to last year and a higher concentration of sales to larger customers negatively impacted our margin. Selling and administrative expenses (operating expenses) increased 3% to $229.8 million in the first quarter of 2024 compared to $224.0 million in the first quarter of 2023. While we managed variable costs in line with lower sales volumes, expense growth drivers included rent and facility costs, inflationary wage increases, insurance costs, technology initiatives and investments in greenfield locations. As a percentage of net sales, operating expenses increased to 20.5% in the first quarter of 2024 compared to 18.6% in the same period of 2023. Operating income in the first quarter of 2024 decreased 25% to $108.7 million from $145.8 million in 2023. Operating margin was 9.7% in the first quarter of 2024 compared to 12.1% in the first quarter of 2023. Interest and other non-operating expenses, net for the first quarter of 2024 decreased $2.4 million compared to the first quarter of 2023, primarily due to a decrease in average debt between periods. We recorded a $7.4 million tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in the quarter ended March 31, 2024, compared to a tax benefit of $4.8 million realized in the same period of 2023. This resulted in a $0.19 per diluted share tax benefit in the first quarter of 2024 compared to a $0.12 per diluted share tax benefit realized in the same period of 2023. Net income decreased 22% to $78.9 million in the first quarter of 2024 compared to $101.7 million in the first quarter of 2023. Earnings per diluted share decreased 21% to $2.04 in the first quarter of 2024 compared to $2.58 in the same period of 2023. Without the impact from ASU 2016-09 in both periods, earnings per diluted share decreased 25% to $1.85 compared to $2.46 in the first quarter of 2023. Balance Sheet and Liquidity Total net receivables, including pledged receivables, trended in line with net sales activity at March 31, 2024 compared to March 31, 2023. We reduced our inventory levels compared to March 31, 2023 by $189.7 million, or 11%, to $1.5 billion, consistent with the trends stemming from our inventory management efforts executed over the 2023 swimming pool season following strategic buys in prior years. Total debt outstanding was $979.2 million at March 31, 2024, down $386.6 million from March 31, 2023. Net cash provided by operations improved to a record $145.4 million in the first three months of 2024 compared to $103.2 million in the first three months of 2023, primarily driven by positive changes in working capital, partially offset by lower net income. Adjusted EBITDA decreased 22% to $124.6 million for the three months ended March 31, 2024 compared to $160.3 million last year. Outlook "We are updating our annual earnings guidance range to $13.19 to $14.19 per diluted share to reflect the impact of year- to-date tax benefits of $0.19. As we enter the swimming pool season, we expect sales and gross margin trends to improve with a return to seasonal buying patterns. Further, we are encouraged by the stability of our maintenance business and are confident that we are holding onto market share gains from the past few years. Through this period of stabilization for the outdoor living industry, we remain confident in the growth opportunities available through continuous improved execution, strategic product and software additions, targeted expansion and selected acquisitions. With our talented team's support, we are committed to maintaining our position as the industry leader and providing comprehensive support to our customers through our extensive sales center network and robust capital resources," said Arvan. Non-GAAP Financial Measures This press release contains certain non-GAAP measures (adjusted EBITDA and adjusted diluted EPS). See the addendum to this release for definitions of our non-GAAP measures and reconciliations of our non-GAAP measures to GAAP measures. About Pool Corporation POOLCORP is the world's largest wholesale distributor of swimming pool and related backyard products. POOLCORP operates 442 sales centers in North America, Europe and Australia, through which it distributes more than 200,000 products to roughly 125,000 wholesale customers. For more information, please visit www.poolcorp.com. Forward-Looking Statements This news release includes "forward-looking" statements that involve risks and uncertainties that are generally identifiable through the use of words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "should," "will," "may," 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 economic conditions, consumer discretionary spending, the housing market, inflation or interest rates; our ability to maintain favorable relationships with suppliers and manufacturers; the extent to which home-centric trends will continue to moderate or reverse; competition from other leisure product alternatives or mass merchants; our ability to continue to execute our growth strategies; changes in the regulatory environment; new or additional taxes, duties or tariffs; excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in POOLCORP's 2023 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports and filings filed with the Securities and Exchange Commission (SEC) as updated by POOLCORP's subsequent filings with the SEC. Investor Relations Contacts: Kristin S. Curtis J. POOL CORPORATION Consolidated Statements of Income (Unaudited) (In thousands, except per share data)       Three Months Ended   March 31,     2024       2023   Net sales $ 1,120,810     $ 1,206,774   Cost of sales   782,250       837,019   Gross profit   338,560       369,755   Percent   30.2 %     30.6 %         Selling and administrative expenses   229,840       223,984   Operating income   108,720       145,771   Percent   9.7 %     12.1 %         Interest and other non-operating expenses, net   13,419       15,835   Income before income taxes and equity in earnings   95,301       129,936   Provision for income taxes   16,473       28,273   Equity in earnings of unconsolidated investments, net   57       36   Net income $ 78,885     $ 101,699           Earnings per share attributable to common stockholders: (1)       Basic $ 2.05     $ 2.60   Diluted $ 2.04     $ 2.58   Weighted average common shares outstanding:       Basic   38,205       38,877   Diluted   38,467       39,189           Cash dividends declared per common share $ 1.10     $ 1.00   (1) Earnings per share under the two-class method is calculated using net income attributable to common stockholders (net income reduced by earnings allocated to participating securities), which was $78.5 million and $101.2 million for the three months ended March 31, 2024 and March 31, 2023, respectively. Participating securities excluded from weighted average common shares outstanding were 205,000 and 213,000 for the three months ended March 31, 2024 and March 31, 2023, respectively. POOL CORPORATIONCondensed Consolidated Balance Sheets(Unaudited)(In thousands)                       March 31,   March 31,     Change       2024   2023     $   %                             Assets                       Current assets:                         Cash and cash equivalents $ 67,974   $ 26,470   $ 41,504     157   %   Receivables, net (1)   150,240     163,048     (12,808 )   (8 )     Receivables pledged under receivables facility   376,935     401,123     (24,188 )   (6 )     Product inventories, net (2)   1,496,947     1,686,683     (189,736 )   (11 )     Prepaid expenses and other current assets   44,521     27,875     16,646     60     Total current assets   2,136,617     2,305,199     (168,582 )   (7 )