Pool Corporation POOL reported fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line declined from the prior-year quarter's figure. The company’s results were affected by lower sales volumes of discretionary pool products, attributed to a decline in pool construction and discretionary replacement activities. Following the results, the company’s shares dropped 2.6% during trading hours on Feb 22.

Earnings & Revenues Discussion

During the third quarter, the company reported adjusted earnings per share (EPS) of $1.30, beating the Zacks Consensus Estimate of $1.28. In the prior-year quarter, the company reported an adjusted EPS of $1.79.

Quarterly net revenues of $1 billion missed the consensus mark of $1.02 billion. The top line declined 8.5% year over year. The downside was caused by lower sales volume from reduced pool construction activities.

Pool Corporation Price, Consensus and EPS Surprise

 

Pool Corporation price-consensus-eps-surprise-chart | Pool Corporation Quote

 

Operating Highlights & Expenses

During the fourth quarter, the cost of sales came in at $709.3 million, compared with $780.2 million reported in the prior-year quarter. Our estimate for the cost of sales was $735.4 million.

During the quarter, gross profits (as a percentage of net sales) declined 50 basis points (bps) year over year to 29.3% from 28.8% reported in the year-ago quarter. Our estimate for the metric was 27.6%.

During the fourth quarter, operating income declined 26.1% year over year to $79.3 million. Our estimate for operating income was $84.1 million. The operating margin came in at 7.9%, down 190 bps from the prior-year quarter’s level.

Selling and administrative expenses increased 2.9% year over year to $214.4 million. Our estimate for the metric was $195.9 million.

Net income during the quarter totaled $51.4 million compared with $71.9 million reported in the year-ago quarter. Our estimate for net income was $51.8 million.

Balance Sheet

As of Dec 31, 2023, the company’s cash and cash equivalents amounted to $66.5 million compared with $45.6 million as of Dec 31, 2022. During the quarter, its net long-term debt amounted to $1.02 billion compared with $1.4 billion reported in the year-ago quarter. Goodwill during the quarter came in at $700 million compared with $692 million reported in the prior-year quarter.

As of Dec 31, 2023, net cash provided by operating activities amounted to $888.3 million compared with $484.9 million reported in the prior-year period.