Pool Corporation (POOL) Shares Rise on Q3 Earnings Beat, Despite Sales Dip
Pool Corporation’s (POOL) stock surged on Thursday, buoyed by the company’s third-quarter earnings report. Despite a year-over-year decline in sales, the company exceeded analyst expectations for earnings per share, sending investors scrambling for a piece of the pool-related action.
Here’s a breakdown of the key takeaways from the report:
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Earnings Beat:
Pool Corp posted quarterly earnings of $3.27 per share, surpassing the estimated $3.29 per share, according to Benzinga Pro. This represents a 7% decline compared to the same period last year.*
Sales Miss:
Quarterly sales reached $1.43 billion, surpassing analyst estimates of $1.40 billion. However, this figure is still 3% lower than the $1.47 billion recorded in the same period last year.*
Strong Non-Discretionary Sales:
The company noted that its strong performance was driven by robust sales of non-discretionary maintenance products. This suggests that consumers are prioritizing essential pool upkeep, even as discretionary spending remains subdued.*
Soft Construction and Discretionary Sales:
Conversely, sales of pool construction and discretionary products continued to struggle. This indicates that consumers are holding back on larger, non-essential pool-related purchases, likely due to economic uncertainties and inflation.*
Gross Margin Holds Steady:
Gross profit for the quarter came in at $416.4 million, down 3% from the third quarter of 2023. However, the gross margin remained stable at 29.1%.*
Operating Income and Margin Decline:
Operating income experienced a 9% year-over-year decline to $176.4 million, and operating margin dropped to 12.3%.*
Technology Investments Pay Off:
Pool Corp’s CEO, Peter Arvan, highlighted the company’s progress in deploying its Pool360 technology and expanding digital marketing efforts. These initiatives have driven strong growth in private-label chemical sales, increased Pool360 usage, and sustained gross margins.*
Full-Year Guidance Maintained:
Pool Corp maintained its earnings guidance for the full year 2024, projecting earnings of $11.06 to $11.46 per diluted share. This includes a 21-cent tax benefit realized this year.POOL Price Action:
Following the earnings release, POOL shares rallied, experiencing a significant jump of 6.70% to reach $374.16 per share.This earnings report suggests that Pool Corporation remains a resilient player in the pool industry. While the company faces challenges in the construction and discretionary product segments, its strong performance in maintenance products, coupled with its ongoing technology investments, positions it favorably for future growth.