Pool Corporation (POOL) reported a first-quarter loss of 12 cents per share, narrower than the Zacks Consensus Estimate for a loss of 15 cents. The beat was driven by a drop in expenses. However, adverse weather conditions, coupled with stressed conditions in the construction market, continued to impact its performance.
On a GAAP basis, the company reported a net loss of $6.1 million or 12 cents per share, compared to a net loss of $6.2 million or 13 cents in the prior-year quarter.
Pool Corp. reported a 3% year-over-year drop in net sales to $269.8 million. The company experienced a 5% decline in base business sales as the prior-year period had significant sales related to new drains and safety products, driven by regulatory changes. Moreover, in the first two months of 2010, weather conditions were unfavorable and weakness in the irrigation construction market continued.
Gross profit was down 6% from the year-ago period to $76.3 million, while gross margin fell 110 basis points year over year to 28.3%. The company continued to experience negative pressures from the competitive pricing environment. Additionally, the prior-year quarter realized the benefits from the inventory purchases made in late 2008 in anticipation of price increases.
However, operating expenses decreased 1% from the year-ago period to $84.2 million. Base business operating expenses were down 3% from the prior-year period. Results reflected the benefits of the cost containment measures executed in 2009.
Pool Corp. reported an operating loss of $7.9 million, compared with an operating loss of $3.6 million in the prior-year period. The company managed to reduce debt levels by $99.5 million and, therefore, its interest expense fell 29% year over year.
Pool Corp. no longer has equity interest in Latham Acquisition Corporation (LAC). While the company did not experience any impact for the LAC in the reported quarter, in the prior-year quarter equity loss in unconsolidated investments, net included $2.1 million related to LAC.
Turning to the balance sheet, net receivables declined 2% from the prior-year period due to the decline in sales in the reported quarter. Inventory levels decreased 4% year over year to $382.4 million as of Mar 31, 2010.
For full year 2010, Pool Corp. expects to report earnings of $1.00 to $1.15 per share. The Zacks Consensus Estimate is at $1.10. While the company expects positive sales comparisons in the second quarter and the remaining 2010, margins are anticipated to face continuous pressure.
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