PoolCorp (POOL) Q4 2022 earnings summary

Executive summary

• Tenth consecutive year of record results: 2022 net sales rose 17% to $6.18B, operating income increased 23% to $1.03B, and diluted EPS reached $18.70, up 17% YoY.

• Record performance reflected strong outdoor-living demand, ~10% inflationary product cost increases, acquisitions and market-share gains; near-term demand is expected to soften as construction and discretionary activity moderate.

Financial highlights

• Net sales increased 17% to $6.18B; base-business sales grew 12%. Gross profit rose 20% to $1.93B, with gross margin up 80 bps to 31.3%.

• Operating income rose 23% to $1.03B; operating margin increased 90 bps to 16.6%. Net income grew 15% to $748.5M; diluted EPS increased 17% to $18.70.

• Adjusted diluted EPS, excluding ASU 2016-09 tax benefits, increased 21% to $18.43 from $15.23 in 2021; reported EPS included a $0.27 benefit versus $0.74 in 2021.

• Cash from operations was $484.9M; cash dividends paid totaled $150.6M and share repurchases totaled $471.2M in 2022.

Outlook and guidance

• FY23 sales expected flat to down 3% YoY, including ~4% benefit from manufacturer price increases; pool-construction volumes forecast down 15%–20% and remodel/renovation volumes down 10%–15%.

• FY23 gross margin projected at ~30.0%, operating margin at ~15.0%, effective tax rate at 25.3%–25.5% excluding ASU 2016-09, and diluted EPS at $16.03–$17.03.

• Horizon sales expected down 5%–10%; Europe sales expected down 10%–20%. Quarterly outlook: low- to mid-single-digit declines in H1 and modest growth in H2.

• Plans include ~10 new sales centers, selective acquisitions, capital expenditures near 1% of net sales, and continued dividends and opportunistic repurchases.