Pool Corp(US:POOL)2025-10-29 16:09Financial Performance - Net sales for Q3 2025 were $1.451 billion, a 1% increase from $1.433 billion in Q3 2024[89] - Gross profit rose by $12.8 million to $429.2 million, with gross margin improving by 50 basis points to 29.6% compared to 29.1% in Q3 2024[91] - Net income for Q3 2025 was $127.0 million, up from $125.7 million in Q3 2024[68] - Earnings per diluted share increased by 4% to $3.40 in Q3 2025, compared to $3.27 in Q3 2024[69] - For the first nine months of 2025, net sales were $4,307.2 million, consistent with $4,323.5 million in the same period of 2024, reflecting a slight decrease of $16.3 million[100] - Net income for the first nine months of 2025 decreased by 6% to $374.8 million, with diluted EPS falling 3% to $9.97 compared to $10.30 in 2024[107] Expenses and Costs - Selling and administrative expenses increased by 5% to $251.2 million, driven by higher employee-related costs and facility expenses due to sales center network expansion[92] - Operating expenses increased by 3% to $748.5 million for the first nine months of 2025, driven by inflationary impacts and investments in technology initiatives[103] - The company experienced a decline in gross margin due to a less advantageous customer and product mix, despite positive impacts from strategic pricing and supply chain initiatives[102] Debt and Financing - Total debt outstanding increased by $138.2 million to $1.1 billion, primarily to fund share repurchases of $159.1 million in the first nine months of 2025[74] - Net cash used in financing activities was $182.4 million for the first nine months of 2025, significantly lower than $411.8 million in the same period of 2024, reflecting a shift from net debt payments to net debt proceeds[133] - The company has $1.3 billion in borrowing capacity under its Credit Facility, with $221.3 million of revolving borrowings and a $500.0 million term loan outstanding as of September 30, 2025[135][136] Taxation - The effective tax rate for 2025 is projected to be around 25.0%, excluding the impact of ASU 2016-09[79] - The effective income tax rate for the first nine months of 2025 was 24.0%, compared to 23.2% in the same period of 2024, with a tax benefit from ASU 2016-09 of $4.2 million[106] Cash Flow - Net cash provided by operations was $285.7 million in the first nine months of 2025, a decrease from $488.6 million in the same period of 2024, primarily due to working capital investments and deferred tax payments[131] - Net cash used in investing activities increased by $6.3 million in the first nine months of 2025 compared to the same period in 2024, driven by higher acquisition costs and capital expenditures[132] Future Projections - The company expects full-year 2025 sales to be relatively flat compared to 2024, with a projected benefit of 2% from price increases[76] - Gross margin for the full year 2025 is expected to align with 2024's gross margin of 29.7%[77] - The company anticipates diluted EPS for 2025 to be in the range of $10.81 to $11.31, including year-to-date tax benefits of $0.11[80] Operational Metrics - Seasonal fluctuations in sales and operating income are expected, with the second and third quarters typically generating the highest revenue due to increased swimming pool use and installation[113] - Capital expenditures were 1.1% of net sales in 2024 and 2023, with projections for 2025 to be approximately 1.0% to 1.5% of net sales[130] Leverage and Coverage Ratios - As of September 30, 2025, the average total leverage ratio was 1.58, compared to 1.47 as of June 30, 2025, remaining below the maximum limit of 3.25[144] - The fixed charge coverage ratio was 4.88 as of September 30, 2025, compared to 4.90 as of June 30, 2025, exceeding the minimum requirement of 2.25[144] Share Repurchase and Stock - The company is authorized to purchase up to $493.2 million of its common stock under the current share repurchase program, expecting to fund these repurchases with operational cash and borrowings[149] - Interest expense related to variable rate borrowings is managed through interest rate swap contracts, which convert some variable rates to fixed rates[145][146] Risk Management - There have been no material changes in the company's exposure to currency risk during the nine months ended September 30, 2025[152] - The company refers to its 2024 Annual Report on Form 10-K for additional information on currency risk[152]