Pool Corp.'s Earnings Defy Its Skeptics

Mid Cap Watch List member Pool Corporation (POOL) today reported record net sales for the first quarter of 2007 and affirmed its projected 2007 diluted earnings per share guidance.

Earnings for the first quarter of 2007 were $0.03 per diluted share on net income of $1.4 million, compared to $0.12 per diluted share on net income of $6.4 million in 2006. The decrease includes the impact of approximately $0.03 per diluted share related to incremental operating expenses for the 17 new sales centers opened in 2006 and the 7 new sales centers opened in the first quarter of 2007.

The results for the seasonally slow period compared with analyst estimates of $0.07 per share. For the full year, however, management believes things will be just fine:

“We realized a 4% increase in base business sales despite a tough comparison to the 15% base business sales growth in the first quarter of 2006 and unfavorable weather conditions during the first quarter of 2007. As we move into the heart of the pool season, we are prepared to take advantage of the numerous opportunities in the young swimming pool industry and we expect to deliver another year of solid results. Consistent with our prior guidance, we project that 2007 earnings per share will be in the range of $2.00 to $2.10 per diluted share,” commented Manuel Perez de la Mesa, President and CEO.

Consensus estimates of $2.00 were at the low end of the new guidance. The news cheered up investors who might have been expecting the housing slowdown to impact sales. The shares rallied on the news, closing higher by 5.17%.

POOL 1-yr chart: