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Pool Corporation Reports Record Third Quarter Results

Highlights

  • Record net sales for Q3 2020 with both overall and base business sales growth of 27%
  • Q3 2020 diluted EPS increase of 50% to a record $2.92, or excluding tax benefits in both periods, an increase of 47% to $2.71
  • Record cash provided by operations of $388.9 million, an increase of $145.7 million from the first nine months of 2019
  • 2020 earnings guidance increased to $8.05 - $8.35 per diluted share or $8.20 - $8.50, excluding non-cash impairments recorded in Q1 2020, from previous $6.90 - $7.30 range or $7.05 - $7.45, excluding impairments

COVINGTON, La., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Pool Corporation (Nasdaq/GSM:POOL) today reported record results for the third quarter of 2020.

"I could not be happier with the truly outstanding results that we reported for the third quarter. Consumer spending on outdoor living products remained strong, and our team continued to execute at a very high level, which resulted in stellar results this quarter across a broad range of operating metrics," said Peter D. Arvan, president and CEO. "In addition, as part of our strategic growth initiatives, we further expanded our network through two acquisitions, Northeastern Swimming Pool Distributors, Inc., which closed on September 11, 2020, and Jet Line Products, Inc., which closed on October 1, 2020. These businesses bring solid teams that have excelled at building exceptional customer relationships, and we are excited to have them join the POOLCORP family."

In the third quarter of 2020, net sales increased 27% to a record $1.14 billion compared to $898.5 million in the third quarter of 2019. Our sales benefited from continued elevated demand for residential pool products, driven by home-centric trends influenced by the COVID-19 pandemic, as working from home becomes routine and families create and enjoy safe social and entertainment alternatives in their own backyards. We realized broad sales gains across many product categories, as maintenance, replacement, refurbishment and construction activities across most geographies were strong.

Gross profit increased 27% to a record $328.7 million in the third quarter of 2020 from $257.9 million in the same period of 2019. Gross margin increased 20 basis points to 28.9% in the third quarter of 2020 compared to 28.7% in the third quarter of 2019, with increased purchase volumes driving improvements in supply chain management.

Selling and administrative expenses (operating expenses) increased 18% to $180.5 million in the third quarter of 2020 compared to $153.4 million in the third quarter of 2019, primarily reflecting a $20.1 million increase in performance-based compensation. Excluding performance-based compensation in both periods, operating expenses increased 5% due to growth-driven freight expenses and greater facility-related costs. As a percentage of net sales, operating expenses decreased to 15.8% in the third quarter of 2020 compared to 17.1% in the same period of 2019 as we continued to realize benefits from discretionary spending controls implemented earlier in the year.

Operating income in the third quarter of 2020 increased 42% to $148.2 million compared to $104.5 million in the same period in 2019. Operating margin was 13.0% in the third quarter of 2020 compared to 11.6% in the third quarter of 2019.

We recorded an $8.5 million, or $0.21 per diluted share, tax benefit from Accounting Standards Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, in the quarter ended September 30, 2020, compared to a tax benefit of $4.5 million, or $0.11 per diluted share, realized in the same period of 2019.

Net income increased 50% to $119.1 million in the third quarter of 2020 compared to $79.5 million in the third quarter of 2019. Earnings per share increased 50% to $2.92 per diluted share in the third quarter of 2020 compared to $1.95 in the same period of 2019. Excluding the impact from ASU 2016-09 in both periods, earnings per diluted share increased 47% to $2.71 in the third quarter of 2020 compared to $1.84 in the third quarter of 2019.

Net sales for the nine months ended September 30, 2020 increased 18% to a record $3.10 billion from $2.62 billion in the nine months ended September 30, 2019. Gross margin declined 30 basis points to 28.8% compared to 29.1% in the same period last year, primarily due to sales of lower margin, big-ticket items, such as in-ground and above-ground pools and pool equipment, which comprised a larger portion of our product mix in the nine months ended September 30, 2020 compared to the first nine months of 2019.

Operating expenses for the nine months ended September 30, 2020 increased 12% compared to the first nine months of 2019. In the first quarter of 2020, we recorded impairment charges of $6.9 million, which included $2.5 million from a long-term note, as collectability was impacted by the COVID-19 pandemic, and non-cash goodwill and intangibles impairment charges of $4.4 million, equal to the total goodwill and intangibles carrying amounts of our Australian reporting units. Excluding impairment charges, operating expenses were up 11%, reflecting a $32.1 million increase in performance-based compensation, in addition to growth-driven freight expenses and greater facility-related costs.

Operating income for the first nine months of 2020 increased 24% to a record $389.7 million compared to $315.4 million in the same period last year.   Adjusted operating income, excluding non-cash impairments, for the first nine months of 2020 increased 26% from the prior year to $396.6 million. See the reconciliation of GAAP to non-GAAP measures in the addendum of this release. Operating margin for the nine months ended September 30, 2020 was 12.6% compared to 12.1% for the nine months ended September 30, 2019.

We recorded a $22.6 million, or $0.55 per diluted share, tax benefit from ASU 2016-09 in the nine months ended September 30, 2020 compared to a $21.1 million, or $0.52 per diluted share, tax benefit in the same period of 2019.

Net income for the nine months ended September 30, 2020 increased 26% to a record $307.6 million compared to $243.6 million for the nine months ended September 30, 2019. Adjusted net income for the first nine months of 2020, excluding the $6.3 million, or $0.15 per diluted share, impact of non-cash impairments, net of tax, increased 29% to $313.9 million. Earnings per share for the first nine months of 2020 increased 26% to $7.53 per diluted share versus $5.97 in the first nine months of 2019. Excluding the impact of non-cash impairments, net of tax, adjusted diluted EPS increased 29% over 2019.

On the balance sheet at September 30, 2020, total net receivables, including pledged receivables, increased 19% compared to September 30, 2019, driven by our September sales growth and partially offset by improved collections. Inventory levels decreased 1% compared to September 30, 2019, reflecting the strong pace of sales in the third quarter of 2020. Total debt outstanding was $339.9 million at September 30, 2020, a $207.6 million decrease from total debt at September 30, 2019, as we have utilized our operating cash flows to decrease debt balances.

Cash provided by operations was $388.9 million in the first nine months of 2020 compared to $243.3 million in the first nine months of 2019, an improvement of $145.7 million. The improvement in cash provided by operations primarily reflects an increase in net income, a decline in inventory balances between periods and improvements in working capital management. Adjusted EBITDA (as defined in the addendum to this release) was $429.4 million and $347.1 million for the nine months ended September 30, 2020, and September 30, 2019, respectively. Interest expense decreased compared to last year primarily due to lower average debt levels and lower average interest rates.

"Our success is a direct result of the contributions and achievements of the POOLCORP team who have continued supporting our customers through these difficult and uncertain times. As we move forward into the fourth quarter, we believe that demand for our products remains strong, and our teams are committed to sustaining our track record of operational excellence. Based on our results to date and expectations for the remainder of the year, we are increasing and narrowing our annual earnings guidance to $8.05 to $8.35 per diluted share, including the impact of year-to-date tax benefits of $0.55 and the $0.15 impact of non-cash impairments recorded in the first quarter of 2020," commented Arvan. "Excluding the impact of non-cash impairments, we expect 2020 adjusted diluted EPS of $8.20 to $8.50. Our previous 2020 earnings guidance range disclosed in our July 23, 2020 earnings release was $6.90 to $7.30 per diluted share or $7.05 to $7.45, excluding the impact of non-cash impairments." See the reconciliation of GAAP to non-GAAP measures in the addendum of this release.

POOLCORP is the world's largest wholesale distributor of swimming pool and related backyard products. POOLCORP operates 381 sales centers in North America, Europe and Australia, through which it distributes more than 200,000 national brand and private label products to roughly 120,000 wholesale customers. For more information, please visit www.poolcorp.com.

This news release includes "forward-looking" statements that involve risks and uncertainties that are generally identifiable through the use of words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "should" and similar expressions and include projections of earnings. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date of this release, and we undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. Actual results may differ materially due to a variety of factors, including impacts on our business from the COVID-19 pandemic, the sensitivity of our business to weather conditions, changes in the economy and the housing market, our ability to maintain favorable relationships with suppliers and manufacturers, competition from other leisure product alternatives and mass merchants, excess tax benefits or deficiencies recognized under ASU 2016-09 and other risks detailed in POOLCORP's 2019 Annual Report on Form 10-K, 2020 Quarterly Reports on Form 10-Q and other reports and filings filed with the Securities and Exchange Commission (SEC).

CONTACT:
Curtis J. Scheel
Director of Investor Relations
985.801.5341
curtis.scheel@poolcorp.com

POOL CORPORATION
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)

 Three Months Ended Nine Months Ended
 September 30, September 30,
 2020 2019 2020 2019
Net sales$1,139,229  $898,500  $3,097,362  $2,617,283 
Cost of sales810,531  640,569  2,205,555  1,854,408 
Gross profit328,698  257,931  891,807  762,875 
Percent28.9% 28.7% 28.8% 29.1%
        
Selling and administrative expenses180,465  153,391  495,186  447,427 
Impairment of goodwill and other assets-  -  6,944   
Operating income148,233  104,540  389,677  315,448 
Percent13.0% 11.6% 12.6% 12.1%
        
Interest and other non-operating expenses, net1,861  5,498  9,292  18,538 
Income before income taxes and equity earnings146,372  99,042  380,385  296,910 
Provision for income taxes27,360  19,593  73,068  53,569 
Equity earnings in unconsolidated investments, net86  76  248  210 
Net income$119,098  $79,525  $307,565  $243,551 
        
Earnings per share:       
Basic$2.97  $1.99  $7.68  $6.13 
Diluted$2.92  $1.95  $7.53  $5.97 
Weighted average shares outstanding:       
Basic40,123  39,933  40,073  39,750 
Diluted40,839  40,865  40,849  40,811 
        
Cash dividends declared per common share$0.58  $0.55  $1.71  $1.55 


POOL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

  September 30, September 30, Change
  2020 2019  $  % 
              
Assets            
Current assets:            
 Cash and cash equivalents$74,749  $36,693  $38,056  104 %
 Receivables, net (1) 135,555   95,971   39,584  41  
 Receivables pledged under receivables facility 230,857   211,827   19,030  9  
 Product inventories, net (2) 612,824   616,217   (3,393) (1) 
 Prepaid expenses and other current assets 12,696   12,384   312  3  
Total current assets 1,066,681   973,092   93,589  10  
              
Property and equipment, net 109,086   112,816   (3,730)  (3)  
Goodwill 199,360   188,133   11,227  6  
Other intangible assets, net 10,522   11,235   (713)  (6)  
Equity interest investments 1,314   1,237   77  6  
Operating lease assets 180,230   175,878   4,352  2  
Other assets 20,396   19,017   1,379  7  
Total assets$1,587,589  $1,481,408  $106,181  7 %
              
Liabilities and stockholders' equity            
Current liabilities:            
 Accounts payable$268,412  $214,309  $54,103  25 %
 Accrued expenses and other current liabilities 145,420   81,459   63,961  79  
 Short-term borrowings and current portion of long-term debt 11,709   11,840   (131)  (1)  
 Current operating lease liabilities 56,977   56,025   952  2  
Total current liabilities 482,518   363,633   118,885  33  
              
Deferred income taxes 29,476   27,951   1,525  5  
Long-term debt, net 328,225   535,720   (207,495)  (39)  
Other long-term liabilities 32,846   26,737   6,109  23  
Non-current operating lease liabilities 125,023   121,397   3,626  3  
Total liabilities 998,088   1,075,438   (77,350)  (7)  
Total stockholders' equity 589,501   405,970   183,531  45  
Total liabilities and stockholders' equity$1,587,589  $1,481,408  $106,181  7 %


(1)The allowance for doubtful accounts was $5.3 million at September 30, 2020 and $6.2 million at September 30, 2019.
(2)The inventory reserve was $11.4 million at September 30, 2020 and $9.9 million at September 30, 2019.


POOL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

 Nine Months Ended
September 30,
   
  2020  2019  Change
Operating activities        
Net income$307,565  $243,551  $64,014 
Adjustments to reconcile net income to net cash provided by operating activities:        
 Depreciation 20,979   20,648   331 
 Amortization 975   1,049   (74)
 Share-based compensation 11,095   10,243   852 
 Equity earnings in unconsolidated investments, net (248)  (210)  (38)
 Impairment of goodwill and other assets 6,944      6,944 
 Other 1,092   5,334   (4,242)
Changes in operating assets and liabilities, net of effects of acquisitions:        
 Receivables (135,129)  (98,538)   (36,591)
 Product inventories 99,767   68,827   30,940 
 Prepaid expenses and other assets 311   1,231   (920)
 Accounts payable 3,385   (29,782)   33,167 
 Accrued expenses and other current liabilities 72,178   20,900   51,278 
Net cash provided by operating activities 388,914   243,253   145,661 
         
Investing activities        
Acquisition of businesses, net of cash acquired (24,655)  (8,913)   (15,742)
Purchases of property and equipment, net of sale proceeds (16,897)  (26,926)   10,029 
Net cash used in investing activities (41,552)  (35,839)   (5,713)
         
Financing activities        
Proceeds from revolving line of credit 749,840   836,534   (86,694)
Payments on revolving line of credit (909,637)  (1,011,430)   101,793 
Proceeds from asset-backed financing 261,700   189,000   72,700 
Payments on asset-backed financing (266,700)  (136,300)   (130,400)
Payments on term facility (6,938)     (6,938)
Proceeds from short-term borrowings and current portion of long-term debt 13,255   27,633   (14,378)
Payments on short-term borrowings and current portion of long-term debt (13,291)  (24,962)   11,671 
Payments of deferred financing costs (12)  -   (12)
Payments of deferred and contingent acquisition consideration (281)  (311)   30 
Proceeds from stock issued under share-based compensation plans 16,696   17,042   (346)
Payments of cash dividends (68,599)  (61,752)   (6,847)
Purchases of treasury stock (76,194)  (23,188)   (53,006)
Net cash used in financing activities (300,161)  (187,734)   (112,427)
Effect of exchange rate changes on cash and cash equivalents (1,035)  655   (1,690)
Change in cash and cash equivalents 46,166   20,335   25,831 
Cash and cash equivalents at beginning of period 28,583   16,358   12,225 
Cash and cash equivalents at end of period$74,749  $36,693  $38,056 


ADDENDUM

Base Business

The following table breaks out our consolidated results into the base business component and the excluded component (sales centers excluded from base business):

(Unaudited) Base Business Excluded Total
(in thousands) Three Months Ended Three Months Ended Three Months Ended
  September 30, September 30, September 30,
  2020 2019 2020 2019 2020 2019
Net sales $1,133,608  $895,489  $5,621  $3,011   $1,139,229  $898,500 
             
Gross profit 326,692  257,525  2,006  406   328,698  257,931 
Gross margin 28.8% 28.8% 35.7% 13.5 % 28.9% 28.7%
             
Operating expenses 178,773  152,630  1,692  761   180,465  153,391 
Expenses as a % of net sales 15.8% 17.0% 30.1% 25.3 % 15.8% 17.1%
             
Operating income (loss) 147,919  104,895  314  (355)  148,233  104,540 
Operating margin 13.0% 11.7% 5.6% (11.8)% 13.0% 11.6%



(Unaudited) Base Business Excluded Total
(in thousands) Nine Months Ended Nine Months Ended Nine Months Ended
  September 30, September 30, September 30,
  2020 2019 2020 2019 2020 2019
Net sales $3,078,463  $2,601,801  $18,899  $15,482   $3,097,362  $2,617,283 
             
Gross profit 885,002  759,858  6,805  3,017   891,807  762,875 
Gross margin 28.7% 29.2% 36.0% 19.5 % 28.8% 29.1%
             
Operating expenses (1) 495,710  443,107  6,420  4,320   502,130  447,427 
Expenses as a % of net sales 16.1% 17.0% 34.0% 27.9 % 16.2% 17.1%
             
Operating income (loss) (1) 389,292  316,751  385  (1,303)  389,677  315,448 
Operating margin 12.6% 12.2% 2.0% (8.4)% 12.6% 12.1%


(1)Base business and total include $6.9 million of impairment from goodwill and other assets.

We have excluded the following acquisitions from base business for the periods identified:

Acquired  Acquisition
Date
 Net
Sales Centers
Acquired
 Periods
Excluded
Northeastern Swimming Pool Distributors, Inc. (1) September 2020 3 September 2020
Master Tile Network LLC (1) February 2020 4 February - September 2020
W.W. Adcock, Inc. (1) January 2019 4 January - March 2020 and
January - March 2019
Turf & Garden, Inc. (1) November 2018 4 January 2020 and
January 2019


(1)We acquired certain distribution assets of each of these companies.

When calculating our base business results, we exclude sales centers that are acquired, closed or opened in new markets for a period of 15 months. We also exclude consolidated sales centers when we do not expect to maintain the majority of the existing business and existing sales centers that are consolidated with acquired sales centers.

We generally allocate corporate overhead expenses to excluded sales centers on the basis of their net sales as a percentage of total net sales. After 15 months of operations, we include acquired, consolidated and new market sales centers in the base business calculation including the comparative prior year period.

The table below summarizes the changes in our sales center count in the first nine months of 2020.

December 31, 2019373  
Acquired locations7  
New locations3  
Closed/consolidated locations(2) 
September 30, 2020381  

Adjusted EBITDA

We define Adjusted EBITDA as net income or net loss plus interest and other non-operating expenses, income taxes, depreciation, amortization, share-based compensation, goodwill and other non-cash impairments and equity earnings or loss in unconsolidated investments.  Adjusted EBITDA is not a measure of cash flow or liquidity as determined by generally accepted accounting principles (GAAP). We have included Adjusted EBITDA as a supplemental disclosure because we believe that it is widely used by our investors, industry analysts and others as a useful supplemental liquidity measure in conjunction with cash flows provided by or used in operating activities to help investors understand our ability to provide cash flows to fund growth, service debt, repurchase shares and pay dividends as well as compare our cash flow generating capacity from year to year.

We believe Adjusted EBITDA should be considered in addition to, not as a substitute for, operating income or loss, net income or loss, cash flows provided by or used in operating, investing and financing activities or other income statement or cash flow statement line items reported in accordance with GAAP. Other companies may calculate Adjusted EBITDA differently than we do, which may limit its usefulness as a comparative measure.

The table below presents a reconciliation of Adjusted EBITDA to net cash provided by operating activities. Please see page 6 for our Condensed Consolidated Statements of Cash Flows.

(Unaudited) Three Months Ended  Nine Months Ended
(in thousands) September 30,  September 30,
   2020  2019  2020  2019
Adjusted EBITDA$159,310  $115,508  $429,360  $347,065 
 Add:           
 Interest and other non-operating expenses, net of interest income (1,758)  (5,390)  (8,982)  (18,215)
 Provision for income taxes (27,360)  (19,593)  (73,068)  (53,569)
 Other (2,079)  2,776   1,092   5,334 
 Change in operating assets and liabilities 39,601   52,511   40,512   (37,362)
Net cash provided by operating activities$167,714  $145,812  $388,914  $243,253 


The table below presents a reconciliation of net income to Adjusted EBITDA.

(Unaudited) Three Months Ended  Nine Months Ended
(in thousands) September 30,  September 30,
   2020  2019  2020  2019
Net income$119,098  $79,525  $307,565  $243,551 
 Add:           
 Interest and other non-operating expenses (1) 1,861   5,498   9,292   18,538 
 Provision for income taxes 27,360   19,593   73,068   53,569 
 Share-based compensation 3,874   3,649   11,095   10,243 
 Equity earnings in unconsolidated investments (86)  (76)  (248)  (210)
 Impairment of goodwill and other assets -   -   6,944   - 
 Depreciation 6,986   7,090   20,979   20,648 
 Amortization (2) 217   229   665   726 
Adjusted EBITDA$159,310  $115,508  $429,360  $347,065 


(1)Shown net of interest income and includes gains and losses on foreign currency transactions and amortization of deferred financing costs as discussed below.
(2)Excludes amortization of deferred financing costs of $103 and $108 for the three months ended September 30, 2020 and September 30, 2019, respectively, and $310 and $323 for the nine months ended September 30, 2020 and September 30, 2019, respectively. This non-cash expense is included in Interest and other non-operating expenses, net on the Consolidated Statements of Income.

2020 Diluted EPS Guidance

We have included adjusted projected 2020 diluted EPS, a non-GAAP financial measure, in this press release as a supplemental disclosure to demonstrate the impact of our non-cash impairment charge recorded in the first quarter of 2020 on our projected 2020 diluted EPS and provide investors and others with additional information about our potential future operating performance. We believe adjusted projected 2020 diluted EPS should be considered in addition to, not as a substitute for, our projected 2020 diluted EPS presented in accordance with GAAP, and in the context of our other forward-looking and cautionary statements in this press release.

The table below presents a reconciliation of projected 2020 diluted EPS to adjusted projected 2020 diluted EPS.

(Unaudited)2020 Guidance Range
 Floor Ceiling
Diluted EPS (1)$8.05  $8.35 
After-tax non-cash impairment charges0.15  0.15 
Adjusted Diluted EPS (1)$8.20  $8.50 


(1)Includes 2020 year-to-date ASU 2016-09 tax benefit of $0.55 per diluted share and does not include potential additional tax benefits.

Adjusted Income Statement Information

We have included adjusted operating income, adjusted net income and adjusted diluted EPS, which are non-GAAP financial measures, in this press release as supplemental disclosures because we believe these measures are useful to investors and others in assessing our year-over-year operating performance. We believe these measures should be considered in addition to, not as a substitute for, operating income, net income, and diluted EPS presented in accordance with GAAP, respectively, and in the context of our other disclosures in this press release. Other companies may calculate these non-GAAP financial measures differently than we do, which may limit their usefulness as comparative measures.

The table below presents a reconciliation of operating income to adjusted operating income.

(Unaudited)Nine Months Ended
(in thousands)September 30,
 2020
Operating income$389,677 
Impairment of goodwill and other assets6,944 
Adjusted operating income$396,621 

The table below presents a reconciliation of net income to adjusted net income.

(Unaudited)Nine Months Ended
(in thousands)September 30,
 2020
Net income$307,565 
Impairment of goodwill and other assets6,944 
Tax impact on impairment of long-term note (1)(654)
Adjusted net income$313,855 


(1) As described in our April 23, 2020 earnings release, our effective tax rate at March 31, 2020 was a 0.1% benefit. Excluding impairment from goodwill and intangibles and tax benefits from ASU 2016-19 recorded in the first quarter of 2020, our effective tax rate for the first quarter of 2020 was 25.4%, which we used to calculate the tax impact related to the $2.5 million long-term note impairment.

The table below presents a reconciliation of diluted EPS to adjusted diluted EPS.

(Unaudited)Nine Months Ended
 September 30,
 2020 2019
Diluted EPS$7.53  $5.97 
After-tax non-cash impairment charges0.15  - 
Adjusted diluted EPS excluding after-tax non-cash impairment charges7.68  5.97 
Tax benefit(0.55) (0.52)
Adjusted diluted EPS excluding after-tax non-cash impairment charges and tax benefit$7.13  $5.45 

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Oct 22, 2020
Disclaimer:

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995


Matters discussed in this website contain forward-looking information that involves risks and uncertainties. Forward-looking statements express our current expectations or forecasts of possible future results or events, including projections of earnings and other financial performance measures, statements of management's expectations regarding plans and objectives, and industry, general economic and other financial forecasts of trends and other matters. You can identify these statements by the fact that they do not relate strictly to historic or current facts and often use words such as "anticipate", "estimate", "expect", "believe," "will likely result," "outlook," "project," "should" and other words and expressions of similar meaning. No assurance can be given that the results in any forward-looking statements will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. For these statements we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act. Certain factors that may affect our business and could cause actual results to differ materially from those expressed in any forward-looking statements include the following:
  • The demand for our swimming pool, irrigation and related outdoor lifestyle products may be adversely affected by unfavorable economic conditions.
  • We are susceptible to adverse weather conditions.
  • Our distribution business is highly dependent on our ability to maintain favorable relationships with suppliers.
  • We face intense competition both from within our industry and from other leisure product alternatives.
  • More aggressive competition by store- and internet-based mass merchants and large pool or irrigation supply retailers could adversely affect our sales.
  • We depend on our ability to attract, develop and retain highly qualified personnel.
  • Past growth may not be indicative of future growth, and while we contemplate continued growth through internal expansion and acquisitions, no assurance can be made as to our ability to:
    • penetrate new markets;
    • generate sufficient cash flows to support expansion plans and general operating activities;
    • obtain financing;
    • maintain favorable supplier arrangements and relationships; and
    • identify and divest assets which do not continue to create value consistent with our objectives.
  • Our business is highly seasonal.
  • The nature of our business subjects us to compliance with employment, environmental, health, transportation, safety, and other governmental regulations.
  • We store chemicals, fertilizers and other combustible materials that involve fire, safety and casualty risks.
  • We conduct business internationally, which exposes us to additional risks
  • Changes in tax laws and accounting standards related to tax matters have caused, and may in the future cause, fluctuations in our effective tax rate.
  • We depend on a global network of suppliers to source our products. Product quality or safety concerns could negatively impact our sales and expose us to legal claims.
  • We rely on information technology systems to support our business operations. Any disturbance or breach of our technological infrastructure could adversely affect our financial condition and results of operations. Additionally, failure to maintain the security of confidential information could damage our reputation and expose us to litigation.
  • A terrorist attack or the threat of a terrorist attack could have a material adverse effect on our business.
The foregoing factors are not exhaustive and new factors may emerge which impact our business. It is impossible for us to predict all such factors. Therefore, forward-looking statements should not be relied upon as a prediction of actual future results. We cannot guarantee that any future event or result will be realized, although we believe we have been prudent in our plans and assumptions. Should additional risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from those anticipated. Investors should bear this in mind as they consider forward-looking statements.
We undertake no obligation to publicly update forward-looking statements, whether as a result of subsequent events, new information or otherwise.


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