Pool Posts Flat Earnings as Sales Growth Slows
Adjusted earnings rose 4% to $5.38 a share despite pressure from freight and customer mix.
Swimming-pool supplies distributor Pool Corp. (POOL) reported flat second-quarter earnings as sales growth slowed and gross-margin pressure persisted.
Net sales rose 2% from a year earlier to $1.8 billion, easing from 6% growth in the first quarter. Inflation, steady maintenance demand and improved building-material sales supported the quarter, while discretionary spending remained muted.
Net income fell 3% to $188.1 million, and diluted earnings were unchanged at $5.17 a share. Excluding CEO transition costs, adjusted net income increased 1% and adjusted earnings rose 4%.
Gross margin narrowed 30 basis points to 29.7%, with elevated inbound freight and customer mix replacing equipment and early-buy mix as the main sources of pressure. Operating income declined 2% to $267.7 million after rising 7% in the first quarter. Excluding transition costs, second-quarter operating income increased 1% to $275.9 million.
Operating expenses rose 4% to $273.1 million. Excluding $8.3 million of costs tied to John Watwood's May appointment as chief executive, expense growth was 1%. The transition charges included $6.3 million of noncash share-based compensation and $2 million of cash costs.
For the first half, sales increased 4% to $3 billion, adjusted operating income rose 2% and adjusted diluted earnings increased 5% to $6.80 a share. Adjusted EBITDA grew about 2% to $396.2 million. Inventory stood at $1.4 billion at June 30, up 4% from a year earlier, as the company sold through peak-season stocking levels. Inventory had risen 14% at the end of March.
Pool confirmed its adjusted 2026 earnings guidance of $10.87 to $11.17 a share. It added a GAAP range of $10.66 to $10.96 a share, reflecting $0.21 of CEO transition costs; both ranges include $0.02 of year-to-date stock-compensation tax benefits.
The board expanded Pool's share-repurchase authorization to $600 million and raised the quarterly dividend 4% to $1.30 a share. The company repurchased $266.7 million of stock during the 12 months through June, while total debt increased sequentially to $1.3 billion, primarily because of repurchase-related borrowing.