Despite challenging weather conditions, the world's largest wholesale distributor of swimming pool supplies delivered a better-than-expected first quarter, with continued growth on the top and bottom lines.
Pool stock has steadily marched upward for the last several years on the back of healthy residential construction activity. The company lost between $10 million and $15 million in sales in the first quarter due to unfavorable weather, but Pool still saw an increase in sales of 2% year over year, reaching $597.5 million.
Pool's builders reported a healthy backlog of demand, so management believes it can make up the shortfall on the top line in the short term.
Strategic inventory buys and a deferral of customer early buys helped gross margin improve by 90 basis points to 29.2%. That extra margin helped grow earnings per share by 7% year over year, or 11% excluding the effect of the tax benefits in 2018 and 2019.
Management pointed out that home construction hasn't been particularly strong lately, but if home values remain stable, there should be a healthy environment for demand in the near term, especially for renovations.
Based on first-quarter results, management raised its 2019 guidance for earnings to a range of $6.09 to $6.39 per share, up from the previous guidance range of $6.05 to $6.35. Analysts expect the company to grow sales by 8.1% this year and 7.5% in 2020.