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Item 5. Market for Registrant’s Common Equity

2021-02-25 compared with 2020-02-27 · 9 added, 45 removed, 32 unchanged (63% of the section changed)

2 unchanged sentences

We initiated quarterly dividend payments to our shareholders in the second quarter of 2004 and we have continued payments in each subsequent quarter.

Our Board of Directors (our Board) has increased the dividend amount fourteen times, including in the fourth quarter of 2004, annually in the second quarters of 2005 through 2008 and in the second quarters of 2011 through 2019.

Our Board has increased the dividend amount fifteen times, including in the fourth quarter of 2004, annually in the second quarters of 2005 through 2008 and in the second quarters of 2011 through 2020.

Our Board may declare future dividends at their discretion, after considering various factors, including our earnings, capital requirements, financial position, contractual restrictions and other relevant business considerations.

3 unchanged sentences

The information included under the caption “Stock Performance Graph” in this Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (the 1934 Act) or to the liabilities of Section 18 of the 1934 Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the 1934 Act, except to the extent we specifically incorporate it by reference into such a filing.

The following graph compares the total shareholder return on our common stock for the last five fiscal years with the total return on the S&P MidCap 400 Index and the Nasdaq Index for the same period, in each case assuming the investment of $100 on December 31, 2014 and the reinvestment of all dividends.

We believe the S&P MidCap 400 Index includes companies with market capitalizations comparable to ours.

Additionally, we chose the S&P MidCap 400 Index for comparison, as opposed to an industry index, because we do not believe that we can reasonably identify a peer group or a published industry or line-of-business index that contains companies in a similar line of business.

The following graph compares the total shareholder return on our common stock for the last five fiscal years with the total return on the S&P 500 Index, S&P MidCap 400 Index and the Nasdaq Index for the same period, in each case assuming the investment of $100 on December 31, 2015 and the reinvestment of all dividends.

Our common stock was added to the S&P 500 Index in October 2020.

We believe the S&P 500 Index includes companies with market capitalization comparable to ours.

Additionally, we chose the S&P 500 Index for comparison, as opposed to an industry index, because we do not believe that we can reasonably identify a peer group or a published industry or line-of-business index that contains companies in a similar line of business.

Consistent with our prior year presentation, we have also included the S&P MidCap 400 Index.

Period Indexed Returns

1 unchanged sentence

Pool Corporation $ 100.00 $ 130.87 $ 164.60 $ 190.89 $ 275.84 $ 488.12

S&P 500 Index 100.00 111.96 136.40 130.42 171.49 203.04

S&P MidCap 400 Index 100.00 120.74 140.35 124.80 157.49 179.00

17 unchanged sentences

(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 2019.

(2) In May 2019, 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.

There were 17 shares surrendered for this purpose in the fourth quarter of 2020.

(2) As of February 19, 2021, our total authorization remaining was $172.0 million.

Selected Financial Data

The table below sets forth selected financial data from the Consolidated Financial Statements.

You should read this information in conjunction with the discussions in Item 7 of this Form 10-K and with the Consolidated Financial Statements and accompanying Notes in Item 8 of this Form 10-K.

(in thousands, except per share data) Year Ended December 31,

Statement of Income Data

Net sales $ 3,199,517 $ 2,998,097 $ 2,788,188 $ 2,570,803 $ 2,363,139

Operating income 341,246 313,889 284,371 255,859 216,222

Net income 261,575 234,461 191,339 148,603 128,224

Net income attributable to Pool Corporation 261,575 234,461 191,633 148,955 128,275

Earnings per share:

Basic $ 6.57 $ 5.82 $ 4.69 $ 3.56 $ 2.98

Diluted $ 6.40 $ 5.62 $ 4.51 $ 3.47 $ 2.90

Cash dividends declared per common share

$ 2.10 $ 1.72 $ 1.42 $ 1.19 $ 1.00

Balance Sheet Data

Working capital (4)

$ 582,722 $ 609,634 $ 460,682 $ 399,337 $ 356,899

Total assets (2), (4)

1,483,266 1,240,871 1,101,062 994,095 934,361

Total debt (2)

511,407 666,761 519,650 438,042 328,045

Stockholders’ equity 410,180 223,590 223,146 205,210 255,743

Base business sales growth (3)

5 % 7 % 7 % 7 % 5 %

Number of sales centers 373 364 351 344 336

(1) Our Net income and Net income attributable to Pool Corporation in 2019, 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 $23.5 million in 2019, $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 2015 to Long-term debt, net to conform to our 2019 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.

(4) On January 1, 2019, we adopted ASU 2016-02, Leases (Topic 842) and all the related amendments.

The adoption of ASU 2016-02 significantly increased assets and liabilities on our Consolidated Balance Sheet as we recorded a right-of-use asset and corresponding liability for each of our existing operating leases.

We elected to apply the practical expedient that allows us to exclude comparative presentation;

thus, we did not restate our prior period balance sheets to reflect the new guidance.

For additional information, see Note 1 of “Notes to Consolidated Financial Statements,” included in Item 8 of this Form 10-K.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity