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Pool Corp (POOL) Q2 Earnings Beat Estimates, Revenues Lag

Pool Corporation POOL reported mixed second-quarter 2022 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.

Following the announcement, shares of the company declined more than 10% during trading hours on Jul 21. Negative investor sentiments were witnessed as the company reported lower than expected revenue growth due to inflationary pressures. Also, it cited concerns regarding declines in unit volume driven by supply chain-constrained items and weather-related delays.

Earnings & Revenue Discussion

During second-quarter 2022, the company reported adjusted earnings per share (EPS) of $7.59, surpassing the Zacks Consensus Estimate of $7.40 by 2.6%. In the prior-year quarter, the company had reported an adjusted EPS of $6.18.

Pool Corporation Price, Consensus and EPS Surprise

 

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

 

Quarterly net revenues of $2,055.8 million missed the consensus mark of $2,127 million by 3.4%. However, the top-line increased 15% year over year. The upside was backed by solid demand for connected and smart technology products like automation, so coronation, variable speed pumps, robotic cleaners and customizations.

Segmental Performance

Pool Corp reports operations under two segments — The Base Business (constituting most of the business) and the Excluded (sale centers excluded from the Base business).

During the second quarter, revenues in the Base Business segment increased 10.2% year over year to $1,964 million. Operating income rose 18.1% year over year to $399.1 million. Operating margin expanded 130 basis points (bps) from the year-ago quarter’s level to 20.3%.

The Excluded segment reported net revenues of $91.8 million in the second quarter compared with $4.9 million reported in the prior-year quarter. During the quarter under review, the segment reported an operating income of $19.8 million compared with $0.5 million reported in the prior-year quarter. The segment’s operating margin came in at 21.5% compared with 10.2% reported in the prior-year quarter.

Operating Highlights & Expenses

During the second quarter, the cost of sales came in at $1,389 million, up 12.4% from the prior-year quarter’s levels. During the quarter, gross profit (as a percentage of net sales) increased 150 bps year over year to 32.4% from 30.9% reported in the year-ago quarter. Selling and administrative expenses increased 16.3% year over year to $247.9 million.

During the second quarter, operating income increased 23.7% year over year to $418.9 million. The operating margin rose 150 bps to 20.4% from the prior-year quarter’s level.

Net income during the quarter totaled $307.3 million, up from $259.7 million reported in the year-ago quarter.

Balance Sheet

As of Jun 30, 2022, Pool Corp’s cash and cash equivalents amounted to $91.5 million compared with $58.5 million as of Jun 30, 2021. As of June end, total net receivables (including pledged receivables) rose 29% year over year. During the quarter, its net long-term debt amounted to $1,575.7 million compared with $413.1 million reported in the prior-year quarter. Goodwill during the quarter came in at $693 million compared with $283.3 million reported in the prior-year quarter.

During the quarter, net cash provided by operating activities amounted to $28.7 million compared with $187.2 million reported in the prior-year quarter.

2022 Guidance

For 2022, Pool Corp expects EPS in the range of $18.38-$19.13, up from the prior estimate of $18.34-$19.09. The Zacks Consensus Estimate for 2022 earnings is currently pegged at $18.54.

Zacks Rank & Key Picks

Pool Corp currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Consumer Discretionary sector are G-III Apparel Group, Ltd. GIII, Caleres, Inc. CAL and MGM Resorts International MGM.

G-III Apparel sports a Zacks Rank #1 (Strong Buy). GIII has a trailing four-quarter earnings surprise of 97.5%, on average. The stock has declined 24.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for GIII’s current financial year sales and EPS indicates growth of 12.9% and 10.4%, respectively, from the year-ago period’s reported levels.

Caleres sports a Zacks Rank #1. CAL has a trailing four-quarter earnings surprise of 62.9%, on average. Shares of the company have increased 12% in the past year.

The Zacks Consensus Estimate for CAL’s current financial year sales and EPS suggests growth of 4.8% and 0.7%, respectively, from the year-ago period’s levels.

MGM Resorts carries a Zacks Rank #2 (Buy). MGM has a trailing four-quarter earnings surprise of 212.5%, on average. Shares of the company have declined 18.9% in the past year.

The Zacks Consensus Estimate for MGM’s current financial year sales and EPS suggests growth of 27.6% and 240.3%, respectively, from the year-ago period’s reported levels.


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Pool Corporation (POOL): Free Stock Analysis Report
 
MGM Resorts International (MGM): Free Stock Analysis Report
 
GIII Apparel Group, LTD. (GIII): Free Stock Analysis Report
 
Caleres, Inc. (CAL): Free Stock Analysis Report
 
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