Pool Corp. (POOL) recently announced its decision to hike quarterly dividend by a penny to 14 cents per share. This translates into an 8.0% increase from the prior dividend. The increased dividend will be paid on June 1, to stockholders of record on May 16. This brings the forward annual dividend yield as of May 10, to 1.83%. Over the last five-year period, Pool’s dividend has grown at a rate of 8.9%; a much faster pace than the average industry growth rate of 3.1%. The last time Pool raised its dividend rate by one penny was in 2008.
Pool has also raised shareholder value through a share repurchase activity. Simultaneously with the dividend hike, its board of directors authorized a new $100.0 million share buyback program. As of May 4, there were 48,172,536 shares outstanding in its common stock. Pool repurchased 1.3 million shares during the first quarter at an average price of $24.19. Pool also repurchased 173,000 additional shares since the end of the quarter at an average price of $24.48.
Based in Covington, Louisiana, Pool Corp. is the world's largest wholesale distributor of swimming pool supplies, equipment and related products. The company has a consistent track record of paying quarterly dividends, supported by its cash position.
Turning to Pool’s balance sheet, cash and cash equivalents slipped 1% year over year to $11.4 million in the recently concluded first quarter. Net receivables grew 10% from the prior-year period to $173.8 million attributable to higher sales in March 2011. The inventory level upped 15% year over year to $438.8 million at the end of the first quarter reflecting stock piling related to recent acquisitions and higher purchase levels in anticipation of increased seasonal demand for the second quarter. Total debt outstanding was $280.2 million, reflecting an increase of $2.0 million compared to March 31, 2010. The debt level was raised to support the greater level of business activity as well as share repurchases.
For full-year 2011, management raised its earnings per share expectation in the range of $1.35–$1.45 from $1.27–$1.35 on the back of strong first quarter results. Pool anticipates modest sales growth for the remainder of 2011.
We appreciate Pool’s efforts to boost long-term shareholder value concurrently with its improvement. The first-quarter results of Pool signaled a turnaround in its struggling green business. We believe that an increase in dividend payment and the share buyback program affirm the company’s optimistic outlook and depicts that it is heading toward strong future growth.
The company’s competitors include Arctic Cat Inc. (ACAT) and Johnson Outdoors Inc. (JOUT).
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