x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
36-3943363
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
109 Northpark Boulevard, Covington, Louisiana
|
70433-5001
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(Address of principal executive offices)
|
(Zip Code)
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Title of each class
|
Name of each exchange on which registered
|
Common Stock, par value $0.001 per share
|
NASDAQ Global Select Market
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Large accelerated filer
x
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Accelerated filer
¨
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|
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Non-accelerated filer
¨
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Smaller reporting company
¨
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|
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Emerging growth company
¨
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Page
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PART I.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV.
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Item 15.
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Item 16.
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||
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||
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•
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SCP Distributors (SCP);
|
•
|
Superior Pool Products (Superior);
|
•
|
Horizon Distributors (Horizon); and
|
•
|
National Pool Tile (NPT).
|
•
|
long-term growth in housing units in warmer markets due to the population migration toward the southern United States, which contributes to the growing installed base of pools that homeowners must maintain;
|
•
|
increased homeowner spending on outdoor living spaces for relaxation and entertainment;
|
•
|
consumers bundling the purchase of a swimming pool and other products, with new irrigation systems, landscaping and improvements to outdoor living spaces often being key components to both pool installations and remodels; and
|
•
|
consumers using more automation and control products, higher quality materials and other pool features that add to our sales opportunities over time.
|
•
|
to promote the growth of our industry;
|
•
|
to promote the growth of our customers’ businesses; and
|
•
|
to continuously strive to operate more effectively.
|
•
|
swimming pool remodelers and builders;
|
•
|
specialty retailers that sell swimming pool supplies;
|
•
|
swimming pool repair and service businesses;
|
•
|
irrigation construction and landscape maintenance contractors; and
|
•
|
commercial customers who service large commercial installations such as hotels, universities and community recreational facilities.
|
•
|
maintenance products, such as chemicals, supplies and pool accessories;
|
•
|
repair and replacement parts for pool equipment, such as cleaners, filters, heaters, pumps and lights;
|
•
|
packaged pool kits including walls, liners, braces and coping for in-ground and above-ground pools;
|
•
|
pool equipment and components for new pool construction and the remodeling of existing pools;
|
•
|
irrigation and related products, including irrigation system components and professional lawn care equipment and supplies;
|
•
|
building materials, such as concrete, plumbing and electrical components, both functional and decorative pool surfaces, decking materials, tile, hardscapes and natural stone, used for pool installations and remodeling;
|
•
|
commercial products, including ASME heaters, safety equipment, and commercial pumps and filters; and
|
•
|
other pool construction and recreational products, which consist of a number of product categories and include discretionary recreational and related outdoor living products, such as spas, grills and components for outdoor kitchens, that enhance consumers’ use and enjoyment of outdoor living spaces.
|
•
|
to offer our customers a choice of distinctive product selections, locations and service personnel; and
|
•
|
to increase the level of customer service and operational efficiency provided by the sales centers in each network by promoting healthy competition between the two networks.
|
•
|
the breadth and availability of products offered;
|
•
|
the quality and level of customer service, including ease of ordering and product delivery;
|
•
|
the breadth and depth of sales and marketing programs;
|
•
|
consistency and stability of business relationships with customers and suppliers;
|
•
|
competitive product pricing; and
|
•
|
geographic proximity to the customer.
|
Weather
|
|
Possible Effects
|
Hot and dry
|
•
|
Increased purchases of chemicals and supplies
|
|
|
for existing swimming pools
|
|
•
|
Increased purchases of above-ground pools and
|
|
|
irrigation and lawn care products
|
|
|
|
Unseasonably cool weather or
|
•
|
Fewer pool and irrigation and landscaping installations
|
extraordinary amounts of rain
|
•
|
Decreased purchases of chemicals and supplies
|
|
•
|
Decreased purchases of impulse items such as
|
|
|
above-ground pools and accessories
|
|
|
|
Unseasonably early warming trends in spring/late cooling trends in fall
|
•
|
A longer pool and landscape season, thus positively impacting our sales
|
(primarily in the northern half of the U.S. and Canada)
|
|
|
|
|
|
Unseasonably late warming trends in spring/early cooling trends in fall
|
•
|
A shorter pool and landscape season, thus negatively impacting our sales
|
(primarily in the northern half of the U.S. and Canada)
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
United States
|
|
$
|
2,720,077
|
|
|
$
|
2,545,270
|
|
|
$
|
2,354,726
|
|
International
|
|
278,020
|
|
|
242,918
|
|
|
216,077
|
|
|||
|
|
$
|
2,998,097
|
|
|
$
|
2,788,188
|
|
|
$
|
2,570,803
|
|
|
|
December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
United States
|
|
$
|
100,905
|
|
|
$
|
95,659
|
|
|
$
|
79,064
|
|
International
|
|
6,059
|
|
|
5,280
|
|
|
4,226
|
|
|||
|
|
$
|
106,964
|
|
|
$
|
100,939
|
|
|
$
|
83,290
|
|
•
|
penetrate new markets;
|
•
|
generate sufficient cash flows to support expansion plans and general operating activities;
|
•
|
obtain financing;
|
•
|
identify appropriate acquisition candidates;
|
•
|
maintain favorable supplier arrangements and relationships; and
|
•
|
identify and divest assets which do not continue to create value consistent with our objectives.
|
•
|
difficulty in staffing international subsidiary operations;
|
•
|
different political economic and regulatory conditions;
|
•
|
local laws and customs;
|
•
|
currency fluctuations;
|
•
|
adverse tax consequences; and
|
•
|
dependence on other economies.
|
Network
|
|
12/31/17
(1)
|
|
New
Locations
|
|
Consolidated
Location
(2)
|
|
Acquired
Locations
|
|
12/31/18
|
|||||
SCP
|
|
168
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
170
|
|
Superior
|
|
67
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
70
|
|
Horizon
|
|
64
|
|
|
—
|
|
|
(1
|
)
|
|
4
|
|
|
67
|
|
NPT
(3)
|
|
16
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
17
|
|
Total Domestic
|
|
315
|
|
|
6
|
|
|
(1
|
)
|
|
4
|
|
|
324
|
|
SCP International
|
|
36
|
|
|
3
|
|
|
—
|
|
|
1
|
|
|
40
|
|
Total
|
|
351
|
|
|
9
|
|
|
(1
|
)
|
|
5
|
|
|
364
|
|
(1)
|
At the beginning of 2018, we converted one Superior sales center to SCP and one Horizon sales center to Superior.
|
(2)
|
Consolidated sales centers are those locations where we expect to transfer the majority of the existing business to our nearby sales center locations.
|
(3)
|
In addition to the stand-alone NPT sales centers, there are over 100 SCP and Superior locations that have consumer showrooms and serve as stocking locations that feature NPT brand tile and composite finish products.
|
Location
|
|
SCP
|
|
Superior
|
|
Horizon
|
|
NPT
|
|
Total
|
|||||
United States
|
|
|
|
|
|
|
|
|
|
|
|||||
California
|
|
29
|
|
|
25
|
|
|
17
|
|
|
6
|
|
|
77
|
|
Texas
|
|
21
|
|
|
5
|
|
|
16
|
|
|
6
|
|
|
48
|
|
Florida
|
|
35
|
|
|
5
|
|
|
4
|
|
|
1
|
|
|
45
|
|
Arizona
|
|
6
|
|
|
7
|
|
|
9
|
|
|
2
|
|
|
24
|
|
Georgia
|
|
6
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
9
|
|
Nevada
|
|
2
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
8
|
|
Tennessee
|
|
5
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
8
|
|
Washington
|
|
1
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
7
|
|
Alabama
|
|
4
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
6
|
|
New York
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Virginia
|
|
2
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
6
|
|
Colorado
|
|
1
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
5
|
|
Louisiana
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
New Jersey
|
|
3
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
5
|
|
North Carolina
|
|
3
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
5
|
|
Pennsylvania
|
|
3
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
5
|
|
Illinois
|
|
3
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Indiana
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Missouri
|
|
3
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Ohio
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Oregon
|
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
4
|
|
South Carolina
|
|
3
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Arkansas
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Idaho
|
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
3
|
|
Oklahoma
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
3
|
|
Connecticut
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Kansas
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Maryland
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
Massachusetts
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Michigan
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Minnesota
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Mississippi
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Hawaii
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Iowa
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Kentucky
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Nebraska
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
New Mexico
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Puerto Rico
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Utah
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Wisconsin
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Total United States
|
|
170
|
|
|
70
|
|
|
67
|
|
|
17
|
|
|
324
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|||||
Canada
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
Australia
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
France
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Mexico
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Portugal
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Spain
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Belgium
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Colombia
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Croatia
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Germany
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Italy
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
United Kingdom
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Total International
|
|
40
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
Total
|
|
210
|
|
|
70
|
|
|
67
|
|
|
17
|
|
|
364
|
|
|
|
Base
Period
|
|
Indexed Returns
Years Ending
|
||||||||||||||||||||
Company / Index
|
|
12/31/13
|
|
12/31/14
|
|
12/31/15
|
|
12/31/16
|
|
12/31/17
|
|
12/31/18
|
||||||||||||
Pool Corporation
|
|
$
|
100.00
|
|
|
$
|
110.71
|
|
|
$
|
142.95
|
|
|
$
|
186.96
|
|
|
$
|
235.19
|
|
|
$
|
272.69
|
|
S&P MidCap 400 Index
|
|
100.00
|
|
|
109.77
|
|
|
107.38
|
|
|
129.65
|
|
|
150.71
|
|
|
134.01
|
|
||||||
NASDAQ Index
|
|
100.00
|
|
|
114.75
|
|
|
122.74
|
|
|
133.62
|
|
|
173.22
|
|
|
168.30
|
|
Period
|
|
Total Number
of Shares Purchased
(1)
|
|
Average
Price
Paid per
Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plan
(2)
|
|
Maximum Approximate
Dollar
Value of Shares
That May Yet be Purchased
Under
the Plan
(3)
|
||||||
October 1 – October 31, 2018
|
|
353,071
|
|
|
$
|
145.63
|
|
|
353,071
|
|
|
$
|
166,922,688
|
|
November 1 – November 30, 2018
|
|
339,645
|
|
|
$
|
148.36
|
|
|
339,645
|
|
|
$
|
116,531,471
|
|
December 1 – December 31, 2018
|
|
321,409
|
|
|
$
|
145.46
|
|
|
321,409
|
|
|
$
|
69,779,132
|
|
Total
|
|
1,014,125
|
|
|
$
|
146.49
|
|
|
1,014,125
|
|
|
|
|
(1)
|
These shares may include shares of our common stock surrendered to us by employees in order to satisfy minimum tax withholding obligations in connection with certain exercises of employee stock options or lapses upon vesting of restrictions on previously restricted share awards, and/or to cover the exercise price of such options granted under our share-based compensation plans. There were
no
shares surrendered for this purpose in the fourth quarter of
2018
.
|
(2)
|
In
May 2018
, our Board authorized an additional
$200.0 million
under our share repurchase program for the repurchase of shares of our common stock in the open market at prevailing market prices or in privately negotiated transactions.
|
(3)
|
As of
February 21, 2019
, our total authorization remaining was
$49.2 million
.
|
(in thousands, except per share data)
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2018
(1)
|
|
2017
(1)
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statement of Income Data
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
2,998,097
|
|
|
$
|
2,788,188
|
|
|
$
|
2,570,803
|
|
|
$
|
2,363,139
|
|
|
$
|
2,246,562
|
|
Operating income
|
|
313,889
|
|
|
284,371
|
|
|
255,859
|
|
|
216,222
|
|
|
188,870
|
|
|||||
Net income
|
|
234,461
|
|
|
191,339
|
|
|
148,603
|
|
|
128,224
|
|
|
111,030
|
|
|||||
Net income attributable to Pool Corporation
|
|
234,461
|
|
|
191,633
|
|
|
148,955
|
|
|
128,275
|
|
|
110,692
|
|
|||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
5.82
|
|
|
$
|
4.69
|
|
|
$
|
3.56
|
|
|
$
|
2.98
|
|
|
$
|
2.50
|
|
Diluted
|
|
$
|
5.62
|
|
|
$
|
4.51
|
|
|
$
|
3.47
|
|
|
$
|
2.90
|
|
|
$
|
2.44
|
|
Cash dividends declared per common share
|
|
$
|
1.72
|
|
|
$
|
1.42
|
|
|
$
|
1.19
|
|
|
$
|
1.00
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Working capital
|
|
$
|
609,634
|
|
|
$
|
460,682
|
|
|
$
|
399,337
|
|
|
$
|
356,899
|
|
|
$
|
345,305
|
|
Total assets
(2)
|
|
1,240,871
|
|
|
1,101,062
|
|
|
994,095
|
|
|
934,361
|
|
|
890,971
|
|
|||||
Total debt
(2)
|
|
666,761
|
|
|
519,650
|
|
|
438,042
|
|
|
328,045
|
|
|
318,872
|
|
|||||
Stockholders’ equity
|
|
223,590
|
|
|
223,146
|
|
|
205,210
|
|
|
255,743
|
|
|
244,352
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Base business sales growth
(3)
|
|
7
|
%
|
|
7
|
%
|
|
7
|
%
|
|
5
|
%
|
|
7
|
%
|
|||||
Number of sales centers
|
|
364
|
|
|
351
|
|
|
344
|
|
|
336
|
|
328
|
|
(1)
|
Our Net income and Net income attributable to Pool Corporation in 2018 and 2017 were impacted by both U.S. tax reform and Accounting Standards Update (ASU) 2016-09,
Improvements to Employee Share-Based Payment Accounting
. In the first quarter of 2017, we adopted ASU 2016-09, which requires us to recognize all excess tax benefits or deficiencies related to share-based compensation as a component of our income tax provision on our Consolidated Statements of Income, rather than a component of stockholders’ equity on our Consolidated Balance Sheets. This adoption benefited our Net income and Net income attributable to Pool Corporation by
$15.3 million
in 2018 and
$12.6 million
in 2017. As a result of U.S. tax reform, we recorded a provisional tax benefit of
$12.0 million
in the fourth quarter of 2017, which primarily reflects re‑measurement of our net deferred tax liability. No such tax benefits were applicable in prior years.
|
(2)
|
Upon adoption of Accounting Standards Update 2015-03,
Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs
, we now include financing costs, net of accumulated amortization as a component of long-term debt. For comparability across all periods presented on our Consolidated Balance Sheets, we reclassified certain amounts from Other assets, net in prior periods to Long-term debt, net to conform to our 2018 through 2016 presentation.
|
(3)
|
For a discussion regarding our calculation of base business sales, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - RESULTS OF OPERATIONS,” of this Form 10-K.
|
•
|
share repurchases in the open market of $183.6 million;
|
•
|
growth in net working capital of
$165.8 million
;
|
•
|
quarterly cash dividend payments to shareholders, totaling $
69.4 million
for the year;
|
•
|
net capital expenditures of
$31.6 million
; and
|
•
|
payments of $
2.6 million
for acquisitions.
|
•
|
We expect sales growth of 7% to 9%, impacted by the following factors and assumptions:
|
◦
|
normal weather patterns for
2019
;
|
◦
|
continued growth from replacement, remodeling and construction activity and market expansion through newer product offerings like hardscapes and commercial pools;
|
◦
|
inflationary product cost increases of approximately 3% to 4% (or approximately 2% above the historical average);
|
◦
|
estimated 1% growth from acquisitions completed throughout 2018; and
|
◦
|
same selling days in
2019
compared to
2018
, with one less day in the first quarter and one additional day in the third quarter in
2019
.
|
•
|
By quarter, we expect shifts in our
2019
sales activity, which will affect sales growth comparisons to
2018
. For the first quarter of
2019
, we expect the loss of a selling day, a delayed Easter and lower customer early buy sales to defer an estimated $20 million to $30 million of sales to the second and third quarters in
2019
.
|
•
|
We expect relatively neutral gross margin trends for the full year with higher gross margin growth in the first quarter of
2019
compared to
2018
due to projected benefits from our strategic inventory purchases in
2018
and expected lower customer early buy sales in the first quarter of
2019
. We expect gross margin growth to moderate substantially in the second and third quarters and become a difficult comparison in the fourth quarter of
2019
based on our
2018
results.
|
•
|
We expect operating expenses will grow at approximately 60% of the rate of our gross profit growth, reflecting inflationary increases and incremental costs to support our sales growth expectations. The main challenges in achieving this metric include managing people and facility costs in tight labor and real estate markets. However, we continue to see significant opportunity to leverage our existing infrastructure to achieve this goal.
|
•
|
those that require the use of assumptions about matters that are inherently and highly uncertain at the time the estimates are made; and
|
•
|
those for which changes in the estimates or assumptions, or the use of different estimates and assumptions, could have a material impact on our consolidated results of operations or financial condition.
|
•
|
aging statistics and trends;
|
•
|
customer payment history;
|
•
|
independent credit reports; and
|
•
|
discussions with customers.
|
Class 0
|
new products with less than 12 months usage
|
|
|
Classes 1-4
|
highest sales value items, which represent approximately 80% of net sales at the sales center
|
|
|
Classes 5-12
|
lower sales value items, which we keep in stock to provide a high level of customer service
|
|
|
Class 13
|
products with no sales for the past 12 months at the local sales center level, excluding special order products not yet delivered to the customer
|
|
|
Null class
|
non-stock special order items
|
•
|
the level of inventory in relation to historical sales by product, including inventory usage by class based on product sales at both the sales center and on a company-wide basis;
|
•
|
changes in customer preferences or regulatory requirements;
|
•
|
seasonal fluctuations in inventory levels;
|
•
|
geographic location; and
|
•
|
superseded products and new product offerings.
|
•
|
differences between estimated and actual performance;
|
•
|
our projections related to achievement of multiple-year performance objectives for our SPIP; and
|
•
|
the discretionary components of the bonus plans.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
|
71.0
|
|
|
71.1
|
|
|
71.2
|
|
Gross profit
|
|
29.0
|
|
|
28.9
|
|
|
28.8
|
|
Operating expenses
|
|
18.6
|
|
|
18.7
|
|
|
18.9
|
|
Operating income
|
|
10.5
|
|
|
10.2
|
|
|
10.0
|
|
Interest and other non-operating expenses, net
|
|
0.7
|
|
|
0.5
|
|
|
0.6
|
|
Income before income taxes and equity earnings
|
|
9.8
|
%
|
|
9.7
|
%
|
|
9.4
|
%
|
Note: Due to rounding, percentages may not add to operating income or income before income taxes and equity earnings.
|
Acquired
|
|
Acquisition
Date
|
|
Net
Sales Centers
Acquired
|
|
Periods
Excluded
|
Turf & Garden, Inc.
(1)
|
|
November 2018
|
|
4
|
|
November - December 2018
|
Tore Pty. Ltd. (Pool Power)
(1)
|
|
January 2018
|
|
1
|
|
January - December 2018
|
Chem Quip, Inc.
(1)
|
|
December 2017
|
|
5
|
|
December 2017 and
January - December 2018
|
Intermark
|
|
December 2017
|
|
1
|
|
December 2017 and
January - December 2018
|
E-Grupa
|
|
October 2017
|
|
1
|
|
October - December 2017 and January - December 2018
|
New Star Holdings Pty. Ltd. (Newline)
|
|
July 2017
|
|
1
|
|
January - September 2018 and July - September 2017
|
Lincoln Aquatics
(1)
|
|
April 2017
|
|
1
|
|
January - July 2018 and
May - July 2017
|
(1)
|
We acquired certain distribution assets of each of these companies.
|
December 31, 2017
|
351
|
|
Acquired locations
|
5
|
|
New locations
|
9
|
|
Consolidated location
|
(1
|
)
|
December 31, 2018
|
364
|
|
(in millions)
|
|
Year Ended December 31,
|
|
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||||
Net sales
|
|
$
|
2,998.1
|
|
|
$
|
2,788.2
|
|
|
$
|
209.9
|
|
|
8%
|
•
|
continued improvement in consumer discretionary expenditures, including continued growth in remodeling and replacement activity (see discussion below);
|
•
|
market share growth, particularly in building materials and commercial product categories;
|
•
|
chemicals, our largest product category at
12%
of total net sales for 2018, had increased sales of
7%
compared to 2017; and
|
•
|
inflation driven (estimated at approximately 1%) product selling price increases, with higher increases on certain swimming pool equipment and parts in the fourth quarter of 2018.
|
(in millions)
|
|
Year Ended December 31,
|
|
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||||
Gross profit
|
|
$
|
870.2
|
|
|
$
|
805.3
|
|
|
$
|
64.9
|
|
|
8%
|
Gross margin
|
|
29.0
|
%
|
|
28.9
|
%
|
|
|
|
|
(in millions)
|
|
Year Ended December 31,
|
|
|
||||||||||
|
|
2018
|
|
2017
|
|
Change
|
||||||||
Operating expenses
|
|
$
|
556.3
|
|
|
$
|
520.9
|
|
|
$
|
35.4
|
|
|
7%
|
Operating expenses as a percentage of net sales
|
|
18.6
|
%
|
|
18.7
|
%
|
|
|
|
|
(Unaudited)
|
|
Base Business
|
|
Excluded
|
|
Total
|
||||||||||||||||||
(in thousands)
|
|
Year Ended
|
|
Year Ended
|
|
Year Ended
|
||||||||||||||||||
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Net sales
|
|
$
|
2,749,672
|
|
|
$
|
2,558,368
|
|
|
$
|
38,516
|
|
|
$
|
12,435
|
|
|
$
|
2,788,188
|
|
|
$
|
2,570,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Gross profit
|
|
793,866
|
|
|
737,335
|
|
|
11,423
|
|
|
3,752
|
|
|
805,289
|
|
|
741,087
|
|
||||||
Gross margin
|
|
28.9
|
%
|
|
28.8
|
%
|
|
29.7
|
%
|
|
30.2
|
%
|
|
28.9
|
%
|
|
28.8
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating expenses
|
|
508,273
|
|
|
481,924
|
|
|
12,645
|
|
|
3,304
|
|
|
520,918
|
|
|
485,228
|
|
||||||
Expenses as a % of net sales
|
|
18.5
|
%
|
|
18.8
|
%
|
|
32.8
|
%
|
|
26.6
|
%
|
|
18.7
|
%
|
|
18.9
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating income (loss)
|
|
285,593
|
|
|
255,411
|
|
|
(1,222
|
)
|
|
448
|
|
|
284,371
|
|
|
255,859
|
|
||||||
Operating margin
|
|
10.4
|
%
|
|
10.0
|
%
|
|
(3.2
|
)%
|
|
3.6
|
%
|
|
10.2
|
%
|
|
10.0
|
%
|
Acquired
|
|
Acquisition
Date
|
|
Net
Sales Centers
Acquired
|
|
Periods
Excluded
|
Chem Quip, Inc.
(1) (2)
|
|
December 2017
|
|
5
|
|
December 2017
|
Intermark
|
|
December 2017
|
|
1
|
|
December 2017
|
E-Grupa
|
|
October 2017
|
|
1
|
|
October - December 2017
|
New Star Holdings Pty. Ltd.
|
|
July 2017
|
|
1
|
|
July - December 2017
|
Lincoln Aquatics
(1)
|
|
April 2017
|
|
1
|
|
May - December 2017
|
Metro Irrigation Supply Company Ltd.
(1)
|
|
April 2016
|
|
8
|
|
January - June 2017 and
April - June 2016
|
The Melton Corporation
(1)
|
|
November 2015
|
|
2
|
|
January 2017 and
January 2016
|
Seaboard Industries, Inc.
(1)
|
|
October 2015
|
|
3
|
|
January 2017 and
January 2016
|
(1)
|
We acquired certain distribution assets of each of these companies.
|
(2)
|
We completed this acquisition on December 29, 2017. Thus we reported no results of operations in fiscal 2017 for this acquisition due to the acquisition date; however, the acquired sales centers are included in the sales center count below.
|
December 31, 2016
|
344
|
|
Acquired locations
|
9
|
|
New locations
|
1
|
|
Consolidated locations
|
(3
|
)
|
December 31, 2017
|
351
|
|
(in millions)
|
|
Year Ended December 31,
|
|
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||||
Net sales
|
|
$
|
2,788.2
|
|
|
$
|
2,570.8
|
|
|
$
|
217.4
|
|
|
8%
|
•
|
continued improvement in consumer discretionary expenditures, including continued growth in remodeling and replacement activity (see discussion below);
|
•
|
market share growth, particularly in building materials and commercial product categories;
|
•
|
increased pool and spa chemical sales, our largest product category at 12% of total net sales for 2017, up 4% compared to 2016, excluding the recent Lincoln Aquatics acquisition;
|
•
|
inflation driven (estimated at close to 1%) product selling price increases; and,
|
•
|
acquisitions, particularly in the commercial market (Lincoln Aquatics) and Australia (Newline Pool Products).
|
(in millions)
|
|
Year Ended December 31,
|
|
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||||
Gross profit
|
|
$
|
805.3
|
|
|
$
|
741.1
|
|
|
$
|
64.2
|
|
|
9%
|
Gross margin
|
|
28.9
|
%
|
|
28.8
|
%
|
|
|
|
|
(in millions)
|
|
Year Ended December 31,
|
|
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
||||||||
Operating expenses
|
|
$
|
520.9
|
|
|
$
|
485.2
|
|
|
$
|
35.7
|
|
|
7%
|
Operating expenses as a percentage of net sales
|
|
18.7
|
%
|
|
18.9
|
%
|
|
|
|
|
(Unaudited)
|
|
QUARTER
|
||||||||||||||||||||||||||||||
(in thousands)
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||||||||||
Statement of Income Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net sales
|
|
$
|
585,900
|
|
|
$
|
1,057,804
|
|
|
$
|
811,311
|
|
|
$
|
543,082
|
|
|
$
|
546,441
|
|
|
$
|
988,163
|
|
|
$
|
743,401
|
|
|
$
|
510,183
|
|
Gross profit
|
|
166,073
|
|
|
308,655
|
|
|
235,003
|
|
|
160,442
|
|
|
153,621
|
|
|
289,664
|
|
|
216,606
|
|
|
145,398
|
|
||||||||
Operating income
|
|
33,541
|
|
|
162,042
|
|
|
92,337
|
|
|
25,970
|
|
|
30,998
|
|
|
154,186
|
|
|
81,928
|
|
|
17,259
|
|
||||||||
Net income
|
|
31,339
|
|
|
117,049
|
|
|
69,261
|
|
|
16,811
|
|
|
22,270
|
|
|
94,620
|
|
|
48,783
|
|
|
25,665
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net sales as a % of annual net sales
|
|
20
|
%
|
|
35
|
%
|
|
27
|
%
|
|
18
|
%
|
|
20
|
%
|
|
35
|
%
|
|
27
|
%
|
|
18
|
%
|
||||||||
Gross profit as a % of annual gross profit
|
|
19
|
%
|
|
35
|
%
|
|
27
|
%
|
|
18
|
%
|
|
19
|
%
|
|
36
|
%
|
|
27
|
%
|
|
18
|
%
|
||||||||
Operating income as a % of annual operating income
|
|
11
|
%
|
|
52
|
%
|
|
29
|
%
|
|
8
|
%
|
|
11
|
%
|
|
54
|
%
|
|
29
|
%
|
|
6
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total receivables, net
|
|
$
|
314,596
|
|
|
$
|
404,415
|
|
|
$
|
287,773
|
|
|
$
|
207,801
|
|
|
$
|
290,019
|
|
|
$
|
370,285
|
|
|
$
|
262,796
|
|
|
$
|
196,265
|
|
Product inventories, net
|
|
703,793
|
|
|
606,583
|
|
|
609,983
|
|
|
672,579
|
|
|
647,884
|
|
|
542,805
|
|
|
484,287
|
|
|
536,474
|
|
||||||||
Accounts payable
|
|
467,795
|
|
|
300,232
|
|
|
204,706
|
|
|
237,835
|
|
|
465,928
|
|
|
273,309
|
|
|
209,092
|
|
|
245,249
|
|
||||||||
Total debt
|
|
568,110
|
|
|
657,120
|
|
|
580,703
|
|
|
666,761
|
|
|
490,217
|
|
|
553,480
|
|
|
564,573
|
|
|
519,650
|
|
Note: Due to rounding, the sum of quarterly percentage amounts may not equal 100%.
|
•
|
cash flows generated from operating activities;
|
•
|
the adequacy of available bank lines of credit;
|
•
|
the quality of our receivables;
|
•
|
acquisitions;
|
•
|
dividend payments;
|
•
|
capital expenditures;
|
•
|
changes in income tax laws and regulations;
|
•
|
the timing and extent of share repurchases; and
|
•
|
the ability to attract long-term capital with satisfactory terms.
|
•
|
capital expenditures primarily for maintenance and growth of our sales center structure, technology-related investments and fleet vehicles;
|
•
|
strategic acquisitions executed opportunistically;
|
•
|
payment of cash dividends as and when declared by our Board of Directors (Board);
|
•
|
repayment of debt to maintain an average total leverage ratio (as defined below) between 1.5 and 2.0; and
|
•
|
repurchases of our common stock under our Board authorized share repurchase program.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
|
$
|
118,656
|
|
|
$
|
175,311
|
|
|
$
|
165,378
|
|
Investing activities
|
|
(34,158
|
)
|
|
(52,220
|
)
|
|
(55,643
|
)
|
|||
Financing activities
|
|
(97,571
|
)
|
|
(114,449
|
)
|
|
(99,672
|
)
|
•
|
Maximum Average Total Leverage Ratio
. On the last day of each fiscal quarter, our average total leverage ratio must be less than 3.25 to 1.00. Average Total Leverage Ratio is the ratio of the trailing twelve months (TTM) Average Total Funded Indebtedness plus the TTM Average Accounts Securitization Proceeds divided by the TTM EBITDA (as those terms are defined in the Credit Facility). As of
December 31, 2018
, our average total leverage ratio equaled
1.72
(compared to
1.63
as of
December 31, 2017
) and the TTM average total debt amount used in this calculation was
$608.9 million
.
|
•
|
Minimum Fixed Charge Coverage Ratio
. On the last day of each fiscal quarter, our fixed charge ratio must be greater than or equal to 2.25 to 1.00. Fixed Charge Ratio is the ratio of the TTM EBITDAR divided by TTM Interest Expense paid or payable in cash plus TTM Rental Expense (as those terms are defined in the Credit Facility). As of
December 31, 2018
, our fixed charge ratio equaled
5.33
(compared to
5.53
as of
December 31, 2017
) and TTM Rental Expense was
$57.4 million
.
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Long-term debt
|
|
$
|
667,799
|
|
|
$
|
9,168
|
|
|
$
|
108,500
|
|
|
$
|
550,131
|
|
|
$
|
—
|
|
Operating leases
|
|
196,765
|
|
|
50,416
|
|
|
85,991
|
|
|
44,338
|
|
|
16,020
|
|
|||||
|
|
$
|
864,564
|
|
|
$
|
59,584
|
|
|
$
|
194,491
|
|
|
$
|
594,469
|
|
|
$
|
16,020
|
|
|
|
|
|
Estimated Interest Payments Due by Period
|
||||||||||||||||
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Interest
|
|
$
|
77,940
|
|
|
$
|
22,588
|
|
|
$
|
41,058
|
|
|
$
|
14,294
|
|
|
$
|
—
|
|
Functional Currencies
|
|
Canada
|
Canadian Dollar
|
United Kingdom
|
British Pound
|
Belgium
|
Euro
|
Croatia
|
Kuna
|
France
|
Euro
|
Germany
|
Euro
|
Italy
|
Euro
|
Portugal
|
Euro
|
Spain
|
Euro
|
Mexico
|
Mexican Peso
|
Colombia
|
Colombian Peso
|
Australia
|
Australian Dollar
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net sales
|
$
|
2,998,097
|
|
|
$
|
2,788,188
|
|
|
$
|
2,570,803
|
|
Cost of sales
|
2,127,924
|
|
|
1,982,899
|
|
|
1,829,716
|
|
|||
Gross profit
|
870,173
|
|
|
805,289
|
|
|
741,087
|
|
|||
Selling and administrative expenses
|
556,284
|
|
|
520,918
|
|
|
485,228
|
|
|||
Operating income
|
313,889
|
|
|
284,371
|
|
|
255,859
|
|
|||
Interest and other non-operating expenses, net
|
20,896
|
|
|
15,189
|
|
|
14,481
|
|
|||
Income before income taxes and equity earnings
|
292,993
|
|
|
269,182
|
|
|
241,378
|
|
|||
Provision for income taxes
|
58,774
|
|
|
77,982
|
|
|
92,931
|
|
|||
Equity earnings in unconsolidated investments, net
|
242
|
|
|
139
|
|
|
156
|
|
|||
Net income
|
234,461
|
|
|
191,339
|
|
|
148,603
|
|
|||
Net loss attributable to noncontrolling interest
|
—
|
|
|
294
|
|
|
352
|
|
|||
Net income attributable to Pool Corporation
|
$
|
234,461
|
|
|
$
|
191,633
|
|
|
$
|
148,955
|
|
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
5.82
|
|
|
$
|
4.69
|
|
|
$
|
3.56
|
|
Diluted
|
$
|
5.62
|
|
|
$
|
4.51
|
|
|
$
|
3.47
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
40,311
|
|
|
40,838
|
|
|
41,872
|
|
|||
Diluted
|
41,693
|
|
|
42,449
|
|
|
42,984
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends declared per common share
|
$
|
1.72
|
|
|
$
|
1.42
|
|
|
$
|
1.19
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
234,461
|
|
|
$
|
191,339
|
|
|
$
|
148,603
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(4,945
|
)
|
|
5,545
|
|
|
(1,661
|
)
|
|||
Change in unrealized gains and losses on interest rate swaps,
net of the change in taxes of $(425), $(769) and $(839)
|
1,276
|
|
|
1,205
|
|
|
1,312
|
|
|||
Total other comprehensive income (loss)
|
(3,669
|
)
|
|
6,750
|
|
|
(349
|
)
|
|||
Comprehensive income
|
230,792
|
|
|
198,089
|
|
|
148,254
|
|
|||
Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
74
|
|
|
378
|
|
|||
Comprehensive income attributable to Pool Corporation
|
$
|
230,792
|
|
|
$
|
198,163
|
|
|
$
|
148,632
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
16,358
|
|
|
$
|
29,940
|
|
Receivables, net
|
69,493
|
|
|
76,597
|
|
||
Receivables pledged under receivables facility
|
138,308
|
|
|
119,668
|
|
||
Product inventories, net
|
672,579
|
|
|
536,474
|
|
||
Prepaid expenses and other current assets
|
18,506
|
|
|
19,569
|
|
||
Total current assets
|
915,244
|
|
|
782,248
|
|
||
|
|
|
|
||||
Property and equipment, net
|
106,964
|
|
|
100,939
|
|
||
Goodwill
|
188,472
|
|
|
189,435
|
|
||
Other intangible assets, net
|
12,004
|
|
|
13,223
|
|
||
Equity interest investments
|
1,213
|
|
|
1,127
|
|
||
Other assets
|
16,974
|
|
|
14,090
|
|
||
Total assets
|
$
|
1,240,871
|
|
|
$
|
1,101,062
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
|
|||
Current liabilities:
|
|
|
|
|
|||
Accounts payable
|
$
|
237,835
|
|
|
$
|
245,249
|
|
Accrued expenses and other current liabilities
|
58,607
|
|
|
65,482
|
|
||
Short-term borrowings and current portion of long-term debt
|
9,168
|
|
|
10,835
|
|
||
Total current liabilities
|
305,610
|
|
|
321,566
|
|
||
|
|
|
|
||||
Deferred income taxes
|
29,399
|
|
|
24,585
|
|
||
Long-term debt, net
|
657,593
|
|
|
508,815
|
|
||
Other long-term liabilities
|
24,679
|
|
|
22,950
|
|
||
Total liabilities
|
1,017,281
|
|
|
877,916
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|||
Common stock, $.001 par value; 100,000,000 shares authorized;
39,506,067 shares issued and outstanding at December 31, 2018 and
40,212,477 shares issued and outstanding at December 31, 2017
|
40
|
|
|
40
|
|
||
Additional paid-in capital
|
453,193
|
|
|
426,750
|
|
||
Retained deficit
|
(218,646
|
)
|
|
(196,316
|
)
|
||
Accumulated other comprehensive loss
|
(10,997
|
)
|
|
(7,328
|
)
|
||
Total stockholders’ equity
|
223,590
|
|
|
223,146
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,240,871
|
|
|
$
|
1,101,062
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
234,461
|
|
|
$
|
191,339
|
|
|
$
|
148,603
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|||||
Depreciation
|
26,122
|
|
|
24,157
|
|
|
20,338
|
|
|||
Amortization
|
1,793
|
|
|
1,568
|
|
|
1,639
|
|
|||
Share-based compensation
|
12,874
|
|
|
12,482
|
|
|
9,902
|
|
|||
Excess tax benefits from share-based compensation
|
—
|
|
|
—
|
|
|
(7,370
|
)
|
|||
Provision for doubtful accounts receivable, net of write-offs
|
2,286
|
|
|
(154
|
)
|
|
(155
|
)
|
|||
Provision for inventory obsolescence, net of write-offs
|
1,462
|
|
|
(267
|
)
|
|
(448
|
)
|
|||
Provision (benefit) for deferred income taxes
|
4,661
|
|
|
(4,636
|
)
|
|
3,749
|
|
|||
Gains on sales of property and equipment
|
(289
|
)
|
|
(285
|
)
|
|
(320
|
)
|
|||
Equity earnings in unconsolidated investments, net
|
(242
|
)
|
|
(139
|
)
|
|
(156
|
)
|
|||
Net losses (gains) on foreign currency transactions
|
560
|
|
|
(171
|
)
|
|
679
|
|
|||
Impairments of goodwill and other non-operating assets
|
—
|
|
|
1,200
|
|
|
4,113
|
|
|||
Other
|
808
|
|
|
166
|
|
|
923
|
|
|||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|||||
Receivables
|
(14,371
|
)
|
|
(21,903
|
)
|
|
(5,666
|
)
|
|||
Product inventories
|
(142,170
|
)
|
|
(35,783
|
)
|
|
(8,050
|
)
|
|||
Prepaid expenses and other assets
|
1,018
|
|
|
(4,096
|
)
|
|
(3,077
|
)
|
|||
Accounts payable
|
(6,567
|
)
|
|
5,077
|
|
|
(17,896
|
)
|
|||
Accrued expenses and other current liabilities
|
(3,750
|
)
|
|
6,756
|
|
|
18,570
|
|
|||
Net cash provided by operating activities
|
118,656
|
|
|
175,311
|
|
|
165,378
|
|
|||
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
|
|
||||
Acquisition of businesses, net of cash acquired
|
(2,578
|
)
|
|
(12,834
|
)
|
|
(19,730
|
)
|
|||
Purchases of property and equipment, net of sale proceeds
|
(31,580
|
)
|
|
(39,390
|
)
|
|
(34,352
|
)
|
|||
Payments to fund credit agreement
|
—
|
|
|
—
|
|
|
(5,322
|
)
|
|||
Collections from credit agreement
|
—
|
|
|
—
|
|
|
3,737
|
|
|||
Other investments, net
|
—
|
|
|
4
|
|
|
24
|
|
|||
Net cash used in investing activities
|
(34,158
|
)
|
|
(52,220
|
)
|
|
(55,643
|
)
|
|||
|
|
|
|
|
|
||||||
Financing activities
|
|
|
|
|
|
|
|||||
Proceeds from revolving line of credit
|
1,138,195
|
|
|
1,067,868
|
|
|
1,154,090
|
|
|||
Payments on revolving line of credit
|
(998,503
|
)
|
|
(1,011,977
|
)
|
|
(1,072,557
|
)
|
|||
Proceeds from asset-backed financing
|
198,400
|
|
|
161,600
|
|
|
155,000
|
|
|||
Payments on asset-backed financing
|
(189,900
|
)
|
|
(145,100
|
)
|
|
(126,500
|
)
|
|||
Proceeds from short-term borrowings and current portion of long-term debt
|
17,127
|
|
|
27,333
|
|
|
18,442
|
|
|||
Payments on short-term borrowings and current portion of long-term debt
|
(18,793
|
)
|
|
(17,603
|
)
|
|
(19,037
|
)
|
|||
Payments on deferred and contingent acquisition consideration
|
(661
|
)
|
|
(324
|
)
|
|
—
|
|
|||
Purchase of redeemable non-controlling interest
|
—
|
|
|
(2,573
|
)
|
|
—
|
|
|||
Payments of deferred financing costs
|
(106
|
)
|
|
(1,104
|
)
|
|
(69
|
)
|
|||
Excess tax benefits from share-based compensation
|
—
|
|
|
—
|
|
|
7,370
|
|
|||
Proceeds from stock issued under share-based compensation plans
|
13,569
|
|
|
11,466
|
|
|
11,752
|
|
|||
Payments of cash dividends
|
(69,430
|
)
|
|
(58,029
|
)
|
|
(49,749
|
)
|
|||
Purchases of treasury stock
|
(187,469
|
)
|
|
(146,006
|
)
|
|
(178,414
|
)
|
|||
Net cash used in financing activities
|
(97,571
|
)
|
|
(114,449
|
)
|
|
(99,672
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(509
|
)
|
|
(658
|
)
|
|
(1,344
|
)
|
|||
Change in cash and cash equivalents
|
(13,582
|
)
|
|
7,984
|
|
|
8,719
|
|
|||
Cash and cash equivalents at beginning of year
|
29,940
|
|
|
21,956
|
|
|
13,237
|
|
|||
Cash and cash equivalents at end of year
|
$
|
16,358
|
|
|
$
|
29,940
|
|
|
$
|
21,956
|
|
|
|
Common Stock
|
|
Additional
Paid-In
|
|
Retained
|
|
Accumulated
Other
Comprehensive
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Loss
|
|
Total
|
|||||||||||
Balance at December 31, 2015
|
|
42,711
|
|
|
$
|
43
|
|
|
$
|
374,138
|
|
|
$
|
(104,709
|
)
|
|
$
|
(13,729
|
)
|
|
$
|
255,743
|
|
Net income attributable to Pool Corporation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
148,955
|
|
|
—
|
|
|
148,955
|
|
|||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,661
|
)
|
|
(1,661
|
)
|
|||||
Interest rate swaps, net of the change in taxes of $(839)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,312
|
|
|
1,312
|
|
|||||
Repurchases of common stock, net of retirements
|
|
(2,064
|
)
|
|
(2
|
)
|
|
—
|
|
|
(178,412
|
)
|
|
—
|
|
|
(178,414
|
)
|
|||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
9,902
|
|
|
—
|
|
|
—
|
|
|
9,902
|
|
|||||
Issuance of shares under incentive stock plans, including tax benefit of $7,370
|
|
443
|
|
|
—
|
|
|
19,122
|
|
|
—
|
|
|
—
|
|
|
19,122
|
|
|||||
Declaration of cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49,749
|
)
|
|
—
|
|
|
(49,749
|
)
|
|||||
Balance at December 31, 2016
|
|
41,090
|
|
|
41
|
|
|
403,162
|
|
|
(183,915
|
)
|
|
(14,078
|
)
|
|
205,210
|
|
|||||
Net income attributable to Pool Corporation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
191,633
|
|
|
—
|
|
|
191,633
|
|
|||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,545
|
|
|
5,545
|
|
|||||
Interest rate swaps, net of the change in taxes of $(769)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,205
|
|
|
1,205
|
|
|||||
Repurchases of common stock, net of retirements
|
|
(1,353
|
)
|
|
(1
|
)
|
|
—
|
|
|
(146,005
|
)
|
|
—
|
|
|
(146,006
|
)
|
|||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
12,482
|
|
|
—
|
|
|
—
|
|
|
12,482
|
|
|||||
Issuance of shares under incentive stock plans (see Note 1 for tax benefit accounting change)
|
|
475
|
|
|
—
|
|
|
11,466
|
|
|
—
|
|
|
—
|
|
|
11,466
|
|
|||||
Declaration of cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,029
|
)
|
|
—
|
|
|
(58,029
|
)
|
|||||
Redemption value adjustment of redeemable non-controlling interest
|
|
—
|
|
|
—
|
|
|
(360
|
)
|
|
—
|
|
|
—
|
|
|
(360
|
)
|
|||||
Balance at December 31, 2017
|
|
40,212
|
|
|
40
|
|
|
426,750
|
|
|
(196,316
|
)
|
|
(7,328
|
)
|
|
223,146
|
|
|||||
Net income attributable to Pool Corporation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
234,461
|
|
|
—
|
|
|
234,461
|
|
|||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,945
|
)
|
|
(4,945
|
)
|
|||||
Interest rate swaps, net of the change in taxes of $(425)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,276
|
|
|
1,276
|
|
|||||
Repurchases of common stock, net of retirements
|
|
(1,291
|
)
|
|
—
|
|
|
—
|
|
|
(187,469
|
)
|
|
—
|
|
|
(187,469
|
)
|
|||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
12,874
|
|
|
—
|
|
|
—
|
|
|
12,874
|
|
|||||
Issuance of shares under incentive stock plans (see Note 1 for tax benefit accounting change)
|
|
585
|
|
|
—
|
|
|
13,569
|
|
|
—
|
|
|
—
|
|
|
13,569
|
|
|||||
Declaration of cash dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,322
|
)
|
|
—
|
|
|
(69,322
|
)
|
|||||
Balance at December 31, 2018
|
|
39,506
|
|
|
$
|
40
|
|
|
$
|
453,193
|
|
|
$
|
(218,646
|
)
|
|
$
|
(10,997
|
)
|
|
$
|
223,590
|
|
2018
|
|
2017
|
|
2016
|
||||||
$
|
48,610
|
|
|
$
|
45,247
|
|
|
$
|
39,879
|
|
2018
|
|
2017
|
|
2016
|
||||||
$
|
7,390
|
|
|
$
|
7,477
|
|
|
$
|
7,011
|
|
Level 1
|
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
|
Level 2
|
Inputs to the valuation methodology include:
|
•
|
quoted prices for similar assets or liabilities in active markets;
|
•
|
quoted prices for identical or similar assets or liabilities in inactive markets;
|
•
|
inputs other than quoted prices that are observable for the asset or liability; or
|
•
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
Level 3
|
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
|
|
Fair Value at December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Level 2
|
|
|
|
|
||||
Unrealized gains on interest rate swaps
|
|
$
|
2,378
|
|
|
$
|
1,585
|
|
Unrealized losses on interest rate swaps
|
|
—
|
|
|
703
|
|
||
|
|
|
|
|
||||
Level 3
|
|
|
|
|
||||
Contingent consideration liabilities
|
|
$
|
1,117
|
|
|
$
|
1,824
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at beginning of year
|
|
$
|
3,897
|
|
|
$
|
4,050
|
|
|
$
|
4,205
|
|
Bad debt expense
|
|
4,164
|
|
|
916
|
|
|
1,199
|
|
|||
Write-offs, net of recoveries
|
|
(1,879
|
)
|
|
(1,069
|
)
|
|
(1,354
|
)
|
|||
Balance at end of year
|
|
$
|
6,182
|
|
|
$
|
3,897
|
|
|
$
|
4,050
|
|
•
|
the level of inventory in relation to historical sales by product, including inventory usage by class based on product sales at both the sales center and on a company-wide basis;
|
•
|
changes in customer preferences or regulatory requirements;
|
•
|
seasonal fluctuations in inventory levels;
|
•
|
geographic location; and
|
•
|
superseded products and new product offerings.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at beginning of year
|
|
$
|
6,264
|
|
|
$
|
6,531
|
|
|
$
|
6,979
|
|
Provision for inventory write-downs
|
|
3,998
|
|
|
2,660
|
|
|
2,036
|
|
|||
Deduction for inventory write-offs
|
|
(2,536
|
)
|
|
(2,927
|
)
|
|
(2,484
|
)
|
|||
Balance at end of year
|
|
$
|
7,726
|
|
|
$
|
6,264
|
|
|
$
|
6,531
|
|
Buildings
|
40 years
|
Leasehold improvements
(1)
|
1 - 10 years
|
Autos and trucks
|
3 - 6 years
|
Machinery and equipment
|
3 - 15 years
|
Computer equipment
|
3 - 7 years
|
Furniture and fixtures
|
5 - 10 years
|
(1)
|
For substantial improvements made near the end of a lease term where we are reasonably certain the lease will be renewed, we amortize the leasehold improvement over the remaining life of the lease including the expected renewal period.
|
2018
|
|
2017
|
|
2016
|
||||||
$
|
26,122
|
|
|
$
|
24,157
|
|
|
$
|
20,338
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Redeemable noncontrolling interest, beginning of period
|
$
|
—
|
|
|
$
|
2,287
|
|
|
$
|
2,665
|
|
Redemption value adjustment of noncontrolling interest
|
—
|
|
|
360
|
|
|
—
|
|
|||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(294
|
)
|
|
(352
|
)
|
|||
Other comprehensive income (loss) attributable to noncontrolling interest
|
—
|
|
|
220
|
|
|
(26
|
)
|
|||
Less: purchase of redeemable noncontrolling interest
|
—
|
|
|
2,573
|
|
|
—
|
|
|||
Redeemable noncontrolling interest, end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,287
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Foreign currency translation adjustments
|
$
|
(12,422
|
)
|
|
$
|
(7,478
|
)
|
Unrealized gains on interest rate swaps, net of tax
(1)
|
1,425
|
|
|
150
|
|
||
Accumulated other comprehensive loss
|
$
|
(10,997
|
)
|
|
$
|
(7,328
|
)
|
(1)
|
In February 2018, the Financial Accounting Standards Board (FASB) issued guidance that allows entities the option to reclassify the tax effects related to items in accumulated other comprehensive income (loss) to retained earnings (deficit) if deemed to be stranded in accumulated other comprehensive income (loss) due to U.S. tax reform. We do not have any material amounts stranded in Accumulated other comprehensive loss from U.S. tax reform.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
17,796
|
|
|
$
|
12,957
|
|
|
$
|
8,052
|
|
Income taxes, net of refunds
|
50,091
|
|
|
84,251
|
|
|
80,378
|
|
Standard
|
Description
|
Effective Date
|
Effect on Financial Statements and Other Significant Matters
|
ASU 2016-02,
Leases
(Topic 842)
|
Requires lessees to record most leases on their balance sheets but recognize expenses in a manner similar to current guidance. The guidance is required to be applied using a modified retrospective approach.
|
Annual periods beginning after December 15, 2018
|
The adoption of ASU 2016-02 will significantly increase assets and liabilities on our consolidated balance sheets. We are finalizing our testing of the information gathered to properly account for the new standard. Based on our current lease portfolio, assumptions related to borrowing rates, and conclusions related to renewal periods, we expect to record a right-of-use asset and corresponding liability for each of our existing operating leases of approximately $180.0 million. We do not expect a material impact on our results of operations and cash flows. Upon adoption, we expect to apply the package of practical expedients available within the new standard, which is intended to provide some relief to issuers. We will also have expanded disclosures upon adoption.
|
ASU 2017-12,
Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities
|
Eliminates the requirement to separately measure and report hedge ineffectiveness. For qualifying cash flow and net investment hedges, the change in the fair value of the hedging instrument will be recorded in Other Comprehensive Income (OCI), and amounts deferred in OCI will be reclassified to earnings in the same income statement line item that is used to present the earnings effect of the hedged item.
|
Annual periods beginning after December 15, 2018
|
We do not expect this accounting pronouncement will have a material impact on our financial position, results of operations and related disclosures.
|
Standard
|
Description
|
Effective Date
|
Effect on Financial Statements and Other Significant Matters
|
ASU 2016-13,
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
|
Changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied using a cumulative-effect transition method.
|
Annual periods beginning after December 15, 2019
|
We are currently evaluating the effect this will have on our financial position, results of operations and related disclosures.
|
ASU 2017-04,
Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
|
Eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (commonly referred to as Step 2 under the current guidance). Rather, the measurement of a goodwill impairment charge will be based on the excess of a reporting unit’s carrying value over its fair value (Step 1 under the current guidance). This guidance should be applied prospectively.
|
Annual and interim impairment tests performed in periods beginning after December 15, 2019
|
We are currently evaluating the effect this will have on our financial position, results of operations and related disclosures.
|
Goodwill (gross) at December 31, 2016
|
$
|
194,674
|
|
Acquired goodwill
|
3,068
|
|
|
Foreign currency translation adjustments
|
1,572
|
|
|
Goodwill (gross) at December 31, 2017
|
199,314
|
|
|
|
|
||
Accumulated impairment losses at December 31, 2016
|
(9,879
|
)
|
|
Goodwill impairment
|
—
|
|
|
Accumulated impairment losses at December 31, 2017
|
(9,879
|
)
|
|
|
|
||
Goodwill (net) at December 31, 2017
|
$
|
189,435
|
|
|
|
||
Goodwill (gross) at December 31, 2017
|
$
|
199,314
|
|
Acquired goodwill
|
334
|
|
|
Foreign currency translation adjustments
|
(1,297
|
)
|
|
Goodwill (gross) at December 31, 2018
|
198,351
|
|
|
|
|
||
Accumulated impairment losses at December 31, 2017
|
(9,879
|
)
|
|
Goodwill impairment
|
—
|
|
|
Accumulated impairment losses at December 31, 2018
|
(9,879
|
)
|
|
|
|
||
Goodwill (net) at December 31, 2018
|
$
|
188,472
|
|
|
December 31,
|
|
Weighted Average Useful Life
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
|||||||||||||||||||||
|
Intangibles Gross
|
|
Accumulated Amortization
|
|
Intangibles Net
|
|
Intangibles Gross
|
|
Accumulated Amortization
|
|
Intangibles Net
|
|
|||||||||||||
Horizon tradename
|
$
|
8,400
|
|
|
$
|
—
|
|
|
$
|
8,400
|
|
|
$
|
8,400
|
|
|
$
|
—
|
|
|
$
|
8,400
|
|
|
Indefinite
|
Pool Systems tradename and trademarks
|
1,002
|
|
|
—
|
|
|
1,002
|
|
|
1,109
|
|
|
—
|
|
|
1,109
|
|
|
Indefinite
|
||||||
National Pool Tile (NPT) tradename
|
1,500
|
|
|
(812
|
)
|
|
688
|
|
|
1,500
|
|
|
(738
|
)
|
|
762
|
|
|
20
|
||||||
Non-compete agreements
|
5,019
|
|
|
(3,157
|
)
|
|
1,862
|
|
|
5,078
|
|
|
(2,243
|
)
|
|
2,835
|
|
|
4.89
|
||||||
Patents
|
473
|
|
|
(421
|
)
|
|
52
|
|
|
523
|
|
|
(406
|
)
|
|
117
|
|
|
5
|
||||||
Total other intangibles
|
$
|
16,394
|
|
|
$
|
(4,390
|
)
|
|
$
|
12,004
|
|
|
$
|
16,610
|
|
|
$
|
(3,387
|
)
|
|
$
|
13,223
|
|
|
|
2019
|
|
$
|
953
|
|
2020
|
|
866
|
|
|
2021
|
|
298
|
|
|
2022
|
|
108
|
|
|
2023
|
|
75
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Receivables, net:
|
|
|
|
|
||||
Trade accounts
|
|
$
|
16,451
|
|
|
$
|
26,681
|
|
Vendor programs
|
|
57,304
|
|
|
50,302
|
|
||
Other, net
|
|
1,920
|
|
|
3,511
|
|
||
Total receivables
|
|
75,675
|
|
|
80,494
|
|
||
Less: Allowance for doubtful accounts
|
|
(6,182
|
)
|
|
(3,897
|
)
|
||
Receivables, net
|
|
$
|
69,493
|
|
|
$
|
76,597
|
|
|
|
|
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
||||
Prepaid expenses
|
|
$
|
15,114
|
|
|
$
|
14,700
|
|
Other current assets
|
|
3,392
|
|
|
4,869
|
|
||
Prepaid expenses and other current assets
|
|
$
|
18,506
|
|
|
$
|
19,569
|
|
|
|
|
|
|
||||
Property and equipment, net:
|
|
|
|
|
|
|||
Land
|
|
$
|
3,193
|
|
|
$
|
3,003
|
|
Buildings
|
|
5,318
|
|
|
4,255
|
|
||
Leasehold improvements
|
|
45,098
|
|
|
41,908
|
|
||
Autos and trucks
|
|
82,216
|
|
|
70,570
|
|
||
Machinery and equipment
|
|
61,945
|
|
|
55,128
|
|
||
Computer equipment
|
|
39,307
|
|
|
38,194
|
|
||
Furniture and fixtures
|
|
9,778
|
|
|
9,670
|
|
||
Fixed assets in progress
|
|
1,751
|
|
|
1,072
|
|
||
Total property and equipment
|
|
248,606
|
|
|
223,800
|
|
||
Less: Accumulated depreciation
|
|
(141,642
|
)
|
|
(122,861
|
)
|
||
Property and equipment, net
|
|
$
|
106,964
|
|
|
$
|
100,939
|
|
|
|
|
|
|
||||
Accrued expenses and other current liabilities:
|
|
|
|
|
|
|||
Salaries and payroll deductions
|
|
$
|
12,475
|
|
|
$
|
9,987
|
|
Performance-based compensation
|
|
25,261
|
|
|
31,807
|
|
||
Taxes payable
|
|
8,337
|
|
|
7,970
|
|
||
Other current liabilities
|
|
12,534
|
|
|
15,718
|
|
||
Accrued expenses and other current liabilities
|
|
$
|
58,607
|
|
|
$
|
65,482
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Variable rate debt
|
|
|
|
|
||||
Short-term borrowings
|
|
$
|
—
|
|
|
$
|
1,937
|
|
Current portion of long-term debt:
|
|
|
|
|
||||
Australian credit facility
|
|
9,168
|
|
|
8,898
|
|
||
Short-term borrowings and current portion of long-term debt
|
|
$
|
9,168
|
|
|
$
|
10,835
|
|
|
|
|
|
|
||||
Long-term portion:
|
|
|
|
|
||||
Revolving credit facility
|
|
550,131
|
|
|
410,439
|
|
||
Receivables securitization facility
|
|
108,500
|
|
|
100,000
|
|
||
Less: financing costs, net
|
|
1,038
|
|
|
1,624
|
|
||
Long-term debt, net
|
|
$
|
657,593
|
|
|
$
|
508,815
|
|
Total debt
|
|
$
|
666,761
|
|
|
$
|
519,650
|
|
a.
|
a base rate, which is the highest of (i) the Wells Fargo Bank, National Association prime rate, (ii) the Federal Funds Rate plus
0.500%
and (iii) the London Interbank Offered Rate (LIBOR) Market Index Rate plus
1.000%
; or
|
b.
|
LIBOR.
|
a.
|
a base rate, which is the greatest of (i) the Canadian Reference Bank prime rate and (ii) the annual rate of interest equal to the sum of the Canadian Dealer Offered Rate (CDOR) plus
1.000%
; or
|
b.
|
CDOR.
|
a.
|
for financial institutions using the commercial paper market, commercial paper rates based on the applicable variable rates in the commercial paper market at the time of issuance; or
|
b.
|
for financial institutions not using the commercial paper market, LMIR.
|
Derivative
|
|
Amendment Date
|
|
Notional
Amount
(in millions)
|
|
Fixed
Interest
Rate
|
|||
Interest rate swap 6
|
|
October 1, 2015
|
|
$
|
75.0
|
|
|
2.273
|
%
|
Interest rate swap 7
|
|
October 1, 2015
|
|
25.0
|
|
|
2.111
|
%
|
|
Interest rate swap 8
|
|
October 1, 2015
|
|
50.0
|
|
|
2.111
|
%
|
Derivative
|
|
Inception Date
|
|
Notional
Amount (in millions) |
|
Fixed
Interest Rate |
|||
Forward-starting interest rate swap
|
|
July 6, 2016
|
|
$
|
150.0
|
|
|
1.1425
|
%
|
Derivative
|
|
Effective Date
|
|
Notional
Amount
(in millions)
|
|
Fixed
Interest
Rate
|
|||
Interest rate swap 1
|
|
November 21, 2011
|
|
$
|
25.0
|
|
|
1.185
|
%
|
Interest rate swap 2
|
|
November 21, 2011
|
|
25.0
|
|
|
1.185
|
%
|
|
Interest rate swap 3
|
|
December 21, 2011
|
|
50.0
|
|
|
1.100
|
%
|
|
Interest rate swap 4
|
|
January 17, 2012
|
|
25.0
|
|
|
1.050
|
%
|
|
Interest rate swap 5
|
|
January 19, 2012
|
|
25.0
|
|
|
0.990
|
%
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Deferred financing costs:
|
|
|
|
|
||||
Balance at beginning of year
|
|
$
|
4,606
|
|
|
$
|
4,883
|
|
Financing costs deferred
|
|
106
|
|
|
1,104
|
|
||
Write-off of fully amortized deferred financing costs
|
|
—
|
|
|
(1,381
|
)
|
||
Balance at end of year
|
|
4,712
|
|
|
4,606
|
|
||
Less: Accumulated amortization
|
|
(3,674
|
)
|
|
(2,982
|
)
|
||
Deferred financing costs, net of accumulated amortization
|
|
$
|
1,038
|
|
|
$
|
1,624
|
|
|
|
Shares
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual Term
(Years)
|
|
Aggregate
Intrinsic Value
|
|||||
Balance at December 31, 2017
|
|
2,287,399
|
|
|
$
|
39.67
|
|
|
|
|
|
||
Granted
|
|
85,375
|
|
|
138.03
|
|
|
|
|
|
|
||
Less: Exercised
|
|
491,448
|
|
|
23.97
|
|
|
|
|
|
|
||
Forfeited
|
|
2,175
|
|
|
84.32
|
|
|
|
|
|
|
||
Balance at December 31, 2018
|
|
1,879,151
|
|
|
$
|
48.19
|
|
|
3.76
|
|
$
|
188,773,097
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2018
|
|
1,358,874
|
|
|
$
|
31.52
|
|
|
2.45
|
|
$
|
159,166,141
|
|
|
|
Outstanding
Stock Options
|
|
Exercisable
Stock Options
|
||||||||||||
Range of Exercise Prices
|
|
Shares
|
|
Weighted Average
Remaining
Contractual Term
(Years)
|
|
Weighted Average Exercise Price
|
|
Shares
|
|
Weighted Average Exercise Price
|
||||||
$ 18.44 to $ 24.50
|
|
817,077
|
|
|
1.33
|
|
$
|
21.42
|
|
|
817,077
|
|
|
$
|
21.42
|
|
$ 24.51 to $ 69.85
|
|
719,599
|
|
|
4.51
|
|
51.06
|
|
|
541,797
|
|
|
46.75
|
|
||
$ 69.86 to $ 138.11
|
|
342,475
|
|
|
7.96
|
|
106.05
|
|
|
—
|
|
|
—
|
|
||
|
|
1,879,151
|
|
|
3.76
|
|
$
|
48.19
|
|
|
1,358,874
|
|
|
$
|
31.52
|
|
|
|
Year Ended December 31,
|
||||||||||
(in thousands, except share amounts)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Options exercised
|
|
491,448
|
|
|
364,984
|
|
|
343,237
|
|
|||
Cash proceeds
|
|
$
|
11,779
|
|
|
$
|
9,809
|
|
|
$
|
10,340
|
|
Intrinsic value of options exercised
|
|
$
|
61,469
|
|
|
$
|
33,302
|
|
|
$
|
21,094
|
|
Tax benefits realized
|
|
$
|
15,367
|
|
|
$
|
12,809
|
|
|
$
|
7,891
|
|
|
|
Year Ended December 31,
|
|||||||||||||
(Weighted average)
|
|
2018
|
|
2017
|
|
2016
|
|||||||||
Expected volatility
|
|
23.7
|
%
|
|
|
26.6
|
%
|
|
|
29.7
|
%
|
|
|||
Expected term
|
|
7.3
|
|
years
|
|
7.3
|
|
years
|
|
7.1
|
|
years
|
|||
Risk-free interest rate
|
|
2.87
|
%
|
|
|
2.44
|
%
|
|
|
1.75
|
%
|
|
|||
Expected dividend yield
|
|
1.5
|
%
|
|
|
1.5
|
%
|
|
|
1.5
|
%
|
|
|||
Grant date fair value
|
|
$
|
35.71
|
|
|
|
$
|
32.00
|
|
|
|
$
|
22.86
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Option grants share-based compensation expense
|
|
$
|
3,218
|
|
|
$
|
3,553
|
|
|
$
|
3,735
|
|
Option grants share-based compensation tax benefits
|
|
805
|
|
|
888
|
|
|
1,409
|
|
|
|
Shares
|
|
Weighted Average
Grant Date Fair Value
|
|||
Balance unvested at December 31, 2017
|
|
297,524
|
|
|
$
|
83.36
|
|
Granted (at market price)
(1)
|
|
80,598
|
|
|
138.25
|
|
|
Less: Vested
|
|
68,149
|
|
|
64.78
|
|
|
Forfeited
|
|
2,200
|
|
|
77.89
|
|
|
Balance unvested at December 31, 2018
|
|
307,773
|
|
|
$
|
101.93
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Restricted stock awards - shares vested
|
|
68,149
|
|
|
79,224
|
|
|
95,420
|
|
|||
Fair value of restricted stock awards vested
|
|
$
|
9,642
|
|
|
$
|
9,260
|
|
|
$
|
7,960
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Restricted stock awards share-based compensation expense
|
|
$
|
9,151
|
|
|
$
|
8,547
|
|
|
$
|
5,993
|
|
a.
|
as amended in May 2016, the closing price of our common stock at the end of a six month plan period ending either July 31 or January 31 (prior to the amendment, the six month plan period ended on June 30 or December 31); or
|
b.
|
the average of the beginning and ending closing prices of our common stock for such six month period.
|
2018
|
|
2017
|
|
2016
|
|||
15,966
|
|
|
16,610
|
|
|
8,649
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
39,504
|
|
|
$
|
71,329
|
|
|
$
|
77,000
|
|
State and other
|
|
14,609
|
|
|
11,289
|
|
|
12,182
|
|
|||
Total current provision for income taxes
|
|
54,113
|
|
|
82,618
|
|
|
89,182
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
4,676
|
|
|
(6,643
|
)
|
|
4,079
|
|
|||
State and other
|
|
(15
|
)
|
|
2,007
|
|
|
(330
|
)
|
|||
Total deferred provision for income taxes
|
|
4,661
|
|
|
(4,636
|
)
|
|
3,749
|
|
|||
Provision for income taxes
|
|
$
|
58,774
|
|
|
$
|
77,982
|
|
|
$
|
92,931
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Federal statutory rate
|
|
21.00
|
%
|
|
35.00
|
%
|
|
35.00
|
%
|
Change in valuation allowance
|
|
(0.13
|
)
|
|
(0.06
|
)
|
|
0.10
|
|
Stock-based compensation
|
|
(5.23
|
)
|
|
(4.67
|
)
|
|
—
|
|
Re-measurement of net deferred tax liability
|
|
—
|
|
|
(4.46
|
)
|
|
—
|
|
Other, primarily state income tax rate
|
|
4.42
|
|
|
3.16
|
|
|
3.40
|
|
Total effective tax rate
|
|
20.06
|
%
|
|
28.97
|
%
|
|
38.50
|
%
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Product inventories
|
|
$
|
5,413
|
|
|
$
|
4,287
|
|
Accrued expenses
|
|
776
|
|
|
1,804
|
|
||
Leases
|
|
1,189
|
|
|
1,188
|
|
||
Share-based compensation
|
|
9,427
|
|
|
8,884
|
|
||
Uncertain tax positions
|
|
2,558
|
|
|
2,087
|
|
||
Net operating losses
|
|
5,058
|
|
|
5,441
|
|
||
Other
|
|
2,080
|
|
|
1,629
|
|
||
Total non-current
|
|
26,501
|
|
|
25,320
|
|
||
Less: Valuation allowance
|
|
(5,058
|
)
|
|
(5,440
|
)
|
||
Component reclassified for net presentation
|
|
(20,897
|
)
|
|
(19,071
|
)
|
||
Total non-current, net
|
|
546
|
|
|
809
|
|
||
|
|
|
|
|
||||
Total deferred tax assets
|
|
546
|
|
|
809
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
|
|
||
Trade discounts on purchases
|
|
2,094
|
|
|
1,520
|
|
||
Prepaid expenses
|
|
1,804
|
|
|
1,857
|
|
||
Intangible assets, primarily goodwill
|
|
30,988
|
|
|
29,348
|
|
||
Depreciation
|
|
14,924
|
|
|
10,870
|
|
||
Interest rate swaps
|
|
486
|
|
|
61
|
|
||
Total non-current
|
|
50,296
|
|
|
43,656
|
|
||
Component reclassified for net presentation
|
|
(20,897
|
)
|
|
(19,071
|
)
|
||
Total non-current, net
|
|
29,399
|
|
|
24,585
|
|
||
|
|
|
|
|
||||
Total deferred tax liabilities
|
|
29,399
|
|
|
24,585
|
|
||
|
|
|
|
|
||||
Net deferred tax liability
|
|
$
|
28,853
|
|
|
$
|
23,776
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at beginning of year
|
|
$
|
9,937
|
|
|
$
|
7,846
|
|
|
$
|
5,978
|
|
Increases for tax positions taken during a prior period
|
|
76
|
|
|
129
|
|
|
10
|
|
|||
Increases for tax positions taken during the current period
|
|
3,809
|
|
|
3,260
|
|
|
2,819
|
|
|||
Decreases resulting from the expiration of the statute of limitations
|
|
1,603
|
|
|
869
|
|
|
961
|
|
|||
Decreases relating to settlements
|
|
40
|
|
|
429
|
|
|
—
|
|
|||
Balance at end of year
|
|
$
|
12,179
|
|
|
$
|
9,937
|
|
|
$
|
7,846
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
234,461
|
|
|
$
|
191,339
|
|
|
$
|
148,603
|
|
Net loss attributable to noncontrolling interest
|
|
—
|
|
|
294
|
|
|
352
|
|
|||
Net income attributable to Pool Corporation
|
|
$
|
234,461
|
|
|
$
|
191,633
|
|
|
$
|
148,955
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
40,311
|
|
|
40,838
|
|
|
41,872
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||
Stock options and employee stock purchase plan
(1)
|
|
1,382
|
|
|
1,611
|
|
|
1,112
|
|
|||
Diluted
|
|
41,693
|
|
|
42,449
|
|
|
42,984
|
|
|||
|
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
5.82
|
|
|
$
|
4.69
|
|
|
$
|
3.56
|
|
Diluted
|
|
$
|
5.62
|
|
|
$
|
4.51
|
|
|
$
|
3.47
|
|
|
|
|
|
|
|
|
||||||
Anti-dilutive stock options excluded from diluted earnings per share computations
(2)
|
|
—
|
|
|
108
|
|
|
1
|
|
(1)
|
As a result of the adoption of ASU 2016-09, the calculation of the effect of dilutive securities for 2018 and 2017 excludes any derived excess tax benefits or deficiencies from assumed future proceeds, resulting in an increase in diluted weighted average shares outstanding as compared to 2016.
|
(2)
|
Since these options have exercise prices that are higher than the average market prices of our common stock, including them in the calculation would have an anti-dilutive effect on earnings per share.
|
2018
|
|
2017
|
|
2016
|
||||||
$
|
70,102
|
|
|
$
|
66,161
|
|
|
$
|
63,940
|
|
2019
|
|
$
|
50,416
|
|
2020
|
|
48,580
|
|
|
2021
|
|
37,411
|
|
|
2022
|
|
28,078
|
|
|
2023
|
|
16,260
|
|
|
Thereafter
|
|
16,020
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
NCC
|
|
$
|
1,155
|
|
|
$
|
1,122
|
|
|
$
|
1,035
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Defined contribution and international retirement plans
|
|
$
|
7,239
|
|
|
$
|
6,946
|
|
|
$
|
5,817
|
|
Deferred compensation plan
|
|
245
|
|
|
325
|
|
|
194
|
|
|
Quarter
|
||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
(1)
|
||||||||||||||||
Net sales
|
$
|
585,900
|
|
|
$
|
1,057,804
|
|
|
$
|
811,311
|
|
|
$
|
543,082
|
|
|
$
|
546,441
|
|
|
$
|
988,163
|
|
|
$
|
743,401
|
|
|
$
|
510,183
|
|
Gross profit
|
166,073
|
|
|
308,655
|
|
|
235,003
|
|
|
160,442
|
|
|
153,621
|
|
|
289,664
|
|
|
216,606
|
|
|
145,398
|
|
||||||||
Net income
|
31,339
|
|
|
117,049
|
|
|
69,261
|
|
|
16,811
|
|
|
22,270
|
|
|
94,620
|
|
|
48,783
|
|
|
25,665
|
|
||||||||
Net income attributable to Pool Corporation
|
31,339
|
|
|
117,049
|
|
|
69,261
|
|
|
16,811
|
|
|
22,281
|
|
|
94,903
|
|
|
48,783
|
|
|
25,665
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
$
|
0.78
|
|
|
$
|
2.89
|
|
|
$
|
1.71
|
|
|
$
|
0.42
|
|
|
$
|
0.54
|
|
|
$
|
2.30
|
|
|
$
|
1.20
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.75
|
|
|
$
|
2.80
|
|
|
$
|
1.66
|
|
|
$
|
0.41
|
|
|
$
|
0.52
|
|
|
$
|
2.21
|
|
|
$
|
1.16
|
|
|
$
|
0.62
|
|
(1)
|
Our fourth quarter 2017 Net income and Net income attributable to Pool Corporation reflects benefits recorded due to U.S. tax reform. For additional information related to the impact of U.S. tax reform on our financial statements, see Note 7.
|
(a)
|
The following documents are filed as part of this report:
|
(1)
|
Consolidated Financial Statements:
|
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
(2)
|
Financial Statement Schedules.
|
|
|
|
|
|
All schedules are omitted because they are not applicable or are not required or because the required information is provided in our Consolidated Financial Statements or accompanying Notes included in Item 8 of this Form 10-K.
|
|
|
|
|
(3)
|
The exhibits listed in the Index to Exhibits.
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
No.
|
|
Description
|
|
Filed/
Furnished
with this
Form 10-K
|
|
Form
|
|
File No.
|
|
Date Filed
|
3.1
|
|
|
|
|
10-Q
|
|
000-26640
|
|
08/09/2006
|
|
3.2
|
|
|
|
|
8-K
|
|
000-26640
|
|
02/08/2019
|
|
4.1
|
|
|
|
|
8-K
|
|
000-26640
|
|
05/19/2006
|
|
10.1
|
*
|
|
|
|
8-K
|
|
000-26640
|
|
05/06/2016
|
|
10.2
|
*
|
|
|
|
8-K
|
|
000-26640
|
|
05/06/2016
|
|
10.3
|
*
|
|
|
|
10-K
|
|
000-26640
|
|
02/26/2015
|
|
10.4
|
*
|
|
|
|
10-K
|
|
000-26640
|
|
02/26/2016
|
|
10.5
|
*
|
|
|
|
8-K
|
|
000-26640
|
|
05/06/2009
|
|
10.6
|
*
|
|
|
|
8-K
|
|
000-26640
|
|
05/06/2009
|
|
10.7
|
*
|
|
|
|
10-K
|
|
000-26640
|
|
03/18/2003
|
|
10.8
|
*
|
|
|
|
10-K
|
|
000-26640
|
|
03/31/1999
|
|
10.9
|
*
|
|
|
|
10-K
|
|
000-26640
|
|
03/01/2005
|
|
10.10
|
*
|
|
|
|
10-K
|
|
000-26640
|
|
02/24/2017
|
|
10.11
|
*
|
|
|
|
10-K
|
|
000-26640
|
|
03/01/2010
|
|
10.12
|
*
|
|
|
|
10-Q
|
|
000-26640
|
|
04/29/2005
|
|
10.13
|
*
|
|
|
|
10-Q
|
|
000-26640
|
|
04/29/2005
|
|
10.14
|
|
|
|
|
10-Q
|
|
000-26640
|
|
04/29/2005
|
|
10.15
|
*
|
|
X
|
|
10-K
|
|
000-26640
|
|
02/27/2019
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
No.
|
|
Description
|
|
Filed/
Furnished
with this
Form 10-K
|
|
Form
|
|
File No.
|
|
Date Filed
|
10.16
|
|
|
|
|
10-Q
|
|
000-26640
|
|
10/31/2011
|
|
10.17
|
|
|
|
|
10-Q
|
|
000-26640
|
|
07/31/2013
|
|
10.18
|
|
|
|
|
10-Q
|
|
000-26640
|
|
07/31/2013
|
|
10.19
|
|
|
|
|
8-K
|
|
000-26640
|
|
09/24/2013
|
|
10.20
|
|
|
|
|
10-Q
|
|
000-26640
|
|
10/30/2014
|
|
10.21
|
|
|
|
|
8-K
|
|
000-26640
|
|
11/25/2014
|
|
10.22
|
|
|
|
|
8-K
|
|
000-26640
|
|
11/20/2015
|
|
10.23
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/02/2017
|
|
10.24
|
|
|
|
|
8-K
|
|
000-26640
|
|
09/24/2018
|
|
10.25
|
*
|
|
X
|
|
10-K
|
|
000-26640
|
|
02/27/2019
|
|
10.26
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/17/2013
|
|
10.27
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/17/2013
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
No.
|
|
Description
|
|
Filed/
Furnished
with this
Form 10-K
|
|
Form
|
|
File No.
|
|
Date Filed
|
10.28
|
|
|
|
|
10-Q
|
|
000-26640
|
|
07/30/2014
|
|
10.29
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/28/2014
|
|
10.30
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/20/2015
|
|
10.31
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/20/2015
|
|
10.32
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/31/2016
|
|
10.33
|
|
|
|
|
8-K
|
|
000-26640
|
|
09/01/2017
|
|
10.34
|
|
|
|
|
8-K
|
|
000-26640
|
|
11/29/2017
|
|
10.35
|
|
|
|
|
8-K
|
|
000-26640
|
|
11/02/2018
|
|
10.36
|
|
|
|
|
8-K
|
|
000-26640
|
|
10/17/2013
|
|
|
Subsidiaries of the registrant.
|
|
X
|
|
|
|
|
|
|
|
|
Consent of Ernst & Young LLP.
|
|
X
|
|
|
|
|
|
|
|
|
Certification by Mark W. Joslin pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
|
|
|
|
Certification by Peter D. Arvan pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
|
|
|
|
Certification by Peter D. Arvan and Mark W. Joslin pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
X
|
|
|
|
|
|
|
|
101.INS
|
+
|
XBRL Instance Document
|
|
X
|
|
|
|
|
|
|
101.SCH
|
+
|
XBRL Taxonomy Extension Schema Document
|
|
X
|
|
|
|
|
|
|
101.CAL
|
+
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
X
|
|
|
|
|
|
|
101.DEF
|
+
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
X
|
|
|
|
|
|
|
101.LAB
|
+
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
X
|
|
|
|
|
|
|
101.PRE
|
+
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
X
|
|
|
|
|
|
|
*
|
Indicates a management contract or compensatory plan or arrangement
|
+
|
Attached as Exhibit 101 to this report are the following items formatted in XBRL (Extensible Business Reporting Language):
|
1.
|
Consolidated Statements of Income for the
years ended December 31, 2018, December 31, 2017 and December 31, 2016
;
|
2.
|
Consolidated Statements of Comprehensive Income for the
years ended December 31, 2018, December 31, 2017 and December 31, 2016
;
|
3.
|
Consolidated Balance Sheets at
December 31, 2018 and December 31, 2017
;
|
4.
|
Consolidated Statements of Cash Flows for the
years ended December 31, 2018, December 31, 2017 and December 31, 2016
;
|
5.
|
Consolidated Statements of Changes in Stockholders’ Equity for the
years ended December 31, 2018, December 31, 2017 and December 31, 2016
; and
|
6.
|
Notes to Consolidated Financial Statements.
|
|
POOL CORPORATION
|
|
|
By:
|
/s/ JOHN E. STOKELY
|
|
John E. Stokely, Chairman of the Board
|
|
and Lead Independent Director
|
Signature:
|
Title:
|
|
|
/s/ JOHN E. STOKELY
|
|
John E. Stokely
|
Chairman of the Board and Lead Independent Director
|
|
|
/s/ PETER D. ARVAN
|
|
Peter D. Arvan
|
President and Chief Executive Officer
|
|
|
/s/ MARK W. JOSLIN
|
|
Mark W. Joslin
|
Senior Vice President and Chief Financial Officer
|
|
|
/s/ MELANIE M. HOUSEY HART
|
|
Melanie M. Housey Hart
|
Corporate Controller and Chief Accounting Officer
|
|
|
/s/ ANDREW W. CODE
|
|
Andrew W. Code
|
Director
|
|
|
/s/ TIMOTHY M. GRAVEN
|
|
Timothy M. Graven
|
Director
|
|
|
/s/ DEBRA S. OLER
|
|
Debra S. Oler
|
Director
|
|
|
/s/ MANUEL J. PEREZ DE LA MESA
|
|
Manuel J. Perez de la Mesa
|
Director
|
|
|
/s/ HARLAN F. SEYMOUR
|
|
Harlan F. Seymour
|
Director
|
|
|
/s/ ROBERT C. SLEDD
|
|
Robert C. Sledd
|
Director
|
|
|
/s/ DAVID G. WHALEN
|
|
David G. Whalen
|
Director
|
Group I
|
||
CAGR
|
Ending EPS
|
Salary %
|
10%
|
$7.00
|
50%
|
11%
|
$7.19
|
60%
|
12%
|
$7.39
|
70%
|
13%
|
$7.59
|
80%
|
14%
|
$7.79
|
90%
|
15%
|
$8.00
|
100%
|
16%
|
$8.21
|
120%
|
17%
|
$8.42
|
140%
|
18%
|
$8.64
|
160%
|
19%
|
$8.86
|
180%
|
20%
|
$9.09
|
200%
|
Group II
|
||
CAGR
|
Ending EPS
|
Salary %
|
10%
|
$7.00
|
25%
|
11%
|
$7.19
|
30%
|
12%
|
$7.39
|
35%
|
13%
|
$7.59
|
40%
|
14%
|
$7.79
|
45%
|
15%
|
$8.00
|
50%
|
16%
|
$8.21
|
60%
|
17%
|
$8.42
|
70%
|
18%
|
$8.64
|
80%
|
19%
|
$8.86
|
90%
|
20%
|
$9.09
|
100%
|
Group III
|
||
CAGR
|
Ending EPS
|
Salary %
|
10%
|
$7.00
|
12.5%
|
11%
|
$7.19
|
15.0%
|
12%
|
$7.39
|
17.5%
|
13%
|
$7.59
|
20.0%
|
14%
|
$7.79
|
22.5%
|
15%
|
$8.00
|
25.0%
|
16%
|
$8.21
|
30.0%
|
17%
|
$8.42
|
35.0%
|
18%
|
$8.64
|
40.0%
|
19%
|
$8.86
|
45.0%
|
20%
|
$9.09
|
50.0%
|
Subsidiary
|
State or Jurisdiction of
Incorporation or Organization
|
SCP Distributors LLC
|
Delaware
|
Superior Commerce LLC
|
Delaware
|
Splash Holdings, Inc.
|
Delaware
|
Alliance Trading, Inc.
|
Delaware
|
Superior Pool Products LLC
|
Delaware
|
SCP International, Inc.
|
Delaware
|
Pool Development LLC
|
Delaware
|
Horizon Distributors, Inc.
|
Delaware
|
Poolfx Supply LLC
|
Delaware
|
Cypress, Inc.
|
Nevada
|
SCP Pool B.V.
|
Netherlands
|
SCP (UK) Holdings Limited
|
United Kingdom
|
SCP (UK) Limited
|
United Kingdom
|
Garden Leisure Products Limited
|
United Kingdom
|
The Swimming Pool Warehouse Limited
|
United Kingdom
|
Cascade Swimming Pools Limited
|
United Kingdom
|
Norcal Pool Supplies Limited
|
United Kingdom
|
SCP Pool Portugal LDA
|
Portugal
|
SCP Pool Distributors Spain S.L.U.
|
Spain
|
SCP Europe SAS
|
France
|
SCP France SAS
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France
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SCP Italy S.r.l.
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Italy
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SCP Adriatica, d.o.o.
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Croatia
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SCP Benelux SA
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Belgium
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SCP Germany GmbH
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Germany
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SCP Distributors Canada Inc.
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Ontario
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SCP Mexico S.A. de C.V.
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Mexico
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Pool Distributors Colombia S.A.S.
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Colombia
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Pool Systems Pty. Ltd.
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Australia
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New Star Holdings Pty. Ltd.
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Australia
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Bundalo Pty. Ltd.
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Australia
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1.
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Form S-8 No. 333-58805, pertaining to the SCP Pool Corporation Employee Stock Purchase Plan,
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2.
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Form S-8 No. 333-142706, pertaining to the Pool Corporation 2007 Long‑Term Incentive Plan,
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3.
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Form S-8 No. 333-158990, pertaining to the Pool Corporation Amended and Restated 2007 Long-Term Incentive Plan, and
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4.
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Form S-8 No. 333-211205, pertaining to the Pool Corporation Amended and Restated 2007 Long-Term Incentive Plan
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1.
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I have reviewed this annual report on Form 10-K of Pool Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 27, 2019
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/s/ MARK W. JOSLIN
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Mark W. Joslin
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Senior Vice President and Chief Financial Officer
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1.
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I have reviewed this annual report on Form 10-K of Pool Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: February 27, 2019
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/s/ PETER D. ARVAN
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Peter D. Arvan
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President and Chief Executive Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ PETER D. ARVAN
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Peter D. Arvan
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President and Chief Executive Officer
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/s/ MARK W. JOSLIN
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Mark W. Joslin
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Senior Vice President and Chief Financial Officer
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