PoolCorp (POOL) Q4 2018 earnings summary

Executive summary

• Sixth consecutive year of record sales and earnings; 2018 sales reached $3.0B, up 8%, while adjusted diluted EPS rose 23% despite adverse weather in key markets.

• Delivered diluted EPS of $5.62, increased the dividend 22%, and returned $257M through dividends and share repurchases.

Financial highlights

• Net sales rose 8% to $2,998.1M; gross profit increased 8% to $870.2M for FY18.

• Operating income grew 10% to $313.9M; net income attributable to shareholders was $234.5M, up 22%, and diluted EPS was $5.62, up 25%.

• Excluding ASU 2016-09 tax benefits of $0.36/share in 2018 and $0.24/share in 2017, diluted EPS increased 23% YoY.

Outlook and guidance

• FY19 sales growth expected at 7%–9%, assuming normal weather, continued replacement/remodeling and construction demand, 3%–4% product inflation, and ~1% acquisition contribution.

• FY19 diluted EPS projected at $6.05–$6.35, including an estimated $0.18 favorable ASU 2016-09 impact; effective tax rate expected at ~25.5%, excluding that benefit.

• Gross margin trends expected relatively neutral for FY19; operating expense growth targeted at ~60% of gross profit growth. Cash from operations expected to approximate net income, excluding inventory-purchase timing effects.

• Plans to open 4–6 sales centers and selectively pursue acquisitions in 2019; anticipated share repurchases of $150M–$200M, subject to Board authorization.