Pool Corporation third-quarter diluted EPS holds at $3.40 as sales rise 4%

Pool Corporation (POOL) said Thursday that third-quarter net sales rose 4% to $1.5 billion, according to an 8-K filing and the press release attached to it. Diluted earnings per share were $3.40, consistent with the same quarter a year earlier.

The results covered the quarter ended September 30. The company said sales growth accelerated from 2% in the second quarter.

Here's how the company did:

• Revenue: $1.50 billion vs. $1.45 billion a year earlier
• Diluted EPS: $3.40 vs. $3.40 a year earlier
• Adjusted diluted EPS: $3.40 vs. $3.39 a year earlier
• Operating income: $172.2 million vs. $178.0 million a year earlier
• Net income: $123.0 million vs. $127.0 million a year earlier

The company attributed 3% of the sales increase to price. Stronger maintenance activity and growth in building materials also contributed, it said.

Margins and expenses

Gross profit rose 2% to $436.3 million. Gross margin fell 60 basis points to 29.0% from 29.6%.

The company attributed the margin decline mainly to higher inbound freight costs and customer mix. It also pointed to the comparison against a prior-year benefit from mid-season price increases.

Selling and administrative expenses rose 5% to $264.1 million from $251.2 million. The company cited higher performance-based compensation tied to increased sales, higher employee insurance costs, and outside fees related to its strategic initiatives.

Operating income fell 3% to $172.2 million, and net income fell 3% to $123.0 million from $127.0 million.

John B. Watwood, president and CEO, said: “Building on our performance through the first half of the year, we delivered solid results in the third quarter of 2026 as we moved through the end of the peak selling season.”

Watwood also credited the company’s teams with top-line growth. “Our dedicated teams produced top-line growth by delivering to our customers when they needed it the most,” he said.

Cash flow and shareholder returns

Net cash provided by operations rose 47% to $419.8 million in the first nine months of 2026, from $285.7 million a year earlier.

Inventory fell 3% at September 30 from a year earlier, while third-quarter net sales rose 4%. Watwood said the company reduced inventory while growing sales.

Total debt outstanding rose $104.9 million to $1.2 billion at September 30.

In the third quarter alone, the company returned $158.7 million to shareholders through share repurchases and dividends. Over the first nine months, it returned $338.1 million, including $140.1 million in dividends and $198.0 million in share repurchases.

The company said the nine-month returns were primarily funded by operating cash flow. It also invested $49.8 million in the business and made $33.1 million in net debt repayments.

The company increased its quarterly dividend 4% to $1.30 per share from $1.25 per share in the third quarter of 2025.

Nine-month results

For the nine months, net sales rose 4% to $4.5 billion from $4.3 billion a year earlier.

Diluted EPS rose 1% to $10.02 from $9.97. Adjusted diluted EPS rose 4% to $10.21 from $9.86.

Operating expenses for the nine months included $8.3 million of CEO transition costs. The company said $6.3 million of that was non-cash share-based compensation for previously granted awards, and $2.0 million was cash transition costs.

Operating income was $522.5 million, compared with $528.2 million a year earlier. Adjusted operating income was $530.7 million, which the company described as in line with the same period of 2025.

Guidance

The company confirmed its full-year 2026 diluted EPS guidance range of $10.66 to $10.96. It also confirmed an adjusted diluted EPS range of $10.87 to $11.17.

The adjusted range includes $0.02 of year-to-date tax benefits under ASU 2016-09 and adds back $0.21 of after-tax CEO transition costs.

Watwood said: “Based on our performance to date and outlook for the remainder of the year, we are confirming our full-year adjusted diluted EPS guidance range of $10.87 to $11.17.”

The release does not break out results by segment.

The company describes itself as the world’s largest wholesale distributor of swimming pool and related backyard products. As of September 30, it operated 454 sales centers in North America, Europe and Australia.