Pool Corporation Reports Record Second Quarter Results
biz.yahoo.com
Thursday July 20, 8:00 am ET
Earnings Per Share Grows by 23%
COVINGTON, La.--(BUSINESS WIRE)--July 20, 2006--Pool Corporation (the "Company" or "POOL") (Nasdaq/GSM:POOL) today reported record sales and net income for the second quarter of 2006.
Earnings per share for the second quarter of 2006 increased 23% to $1.12 per diluted share on net income of $62.1 million, compared to $0.91 per diluted share on net income of $50.7 million last year.
Net sales for the quarter ended June 30, 2006 increased $141.7 million, or 25%, to $705.7 million, compared to $564.0 million in the second quarter of 2005. Base business sales growth of 13% contributed $70.5 million to the increase due to the growth in the installed base of pools, market share gains, price inflation and the continued expansion of complementary product sales, which increased 23% over the second quarter of 2005. Much of the remaining increase in net sales is attributable to the acquisition of the Horizon business.
Gross profit for the second quarter of 2006 increased $46.3 million, or 29%, to $209.0 million from $162.7 million in the comparable 2005 period. Gross profit as a percentage of net sales (gross margin) was 29.6% for the second quarter of 2006 compared to 28.8% for the second quarter of 2005. Base business gross margins of 29.6% improved by 80 basis points over 2005. This gross margin improvement was achieved primarily through supply chain management initiatives including favorable sales mix from focus on higher margin products and the benefits of forward inventory purchases.
Operating expenses increased $24.4 million, or 30%, to $105.7 million in the second quarter of 2006 from $81.3 million in the second quarter of 2005. Base business operating expenses were relatively consistent as a percent of sales quarter over quarter.
Operating income increased $21.9 million, or 27%, to $103.3 million from $81.4 million. Operating income as a percentage of net sales (operating margin) increased to 14.6% from 14.4% in 2005. Base business operating margin increased to 15.0% of net sales, an improvement of 60 basis points over 2005.
Interest expense increased to $3.9 million for the current quarter from $1.9 million in the second quarter of 2005. This increase is attributable to higher debt levels due to funding the Horizon acquisition, forward inventory buys and second quarter share repurchases, coupled with higher interest rates.
"The second quarter provided another solid financial performance that reflects the continued success of our strategic initiatives. These strong results, combined with our recent share repurchases and increased quarterly dividend, demonstrate a comprehensive approach to creating tangible value for our shareholders," commented Manuel Perez de la Mesa, President and CEO.
Net sales for the six months ended June 30, 2006 increased $225.2 million, or 27%, to $1,054.3 million, compared to $829.1 million in the comparable 2005 period. Base business sales increased 13%, which included growth in complementary product sales of 27% over the first six months of 2005. Gross margin increased 80 basis points to 29.1% in the first half of 2006 from 28.3% for the same period last year.
Operating income for the first six months of 2006 increased 29% to $118.4 million, or 11.2% of net sales, compared to operating income of $91.6 million, or 11.1% of net sales, in the same period last year. Base business operating margin increased 70 basis points for the year, while base business operating earnings grew by 20%. Earnings per share for the first six months of 2006 increased 24% to $1.23 per diluted share on net income of $68.5 million, compared to $0.99 per diluted share on net income of $54.8 million in the comparable 2005 period.
The use of cash in operations decreased $1.8 million to $49.2 million in the first six months of 2006 compared to $51.0 million in the same period in 2005. Also during the quarter the Company repurchased 1.0 million shares of its common stock, using $43.8 million in borrowing capacity to fund these purchases.
The Company has adjusted prior period financial statements to reflect the impact of share-based compensation and provide a consistent quarter-to-quarter comparison of financial results. Therefore, the results for all periods presented above include the effects of stock option expense. |
