Pool Corp. (NASDAQ:POOL) Q4 2014 Earnings Conference Call - Final Transcript

Feb 12, 2015 • 11:00 am ET

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Pool Corp. (NASDAQ:POOL) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Pool Corporation Fourth Quarter 2014 Conference Call. [Operator Instructions] I'd now like to turn the conference over to Mark Joslin, Vice President and Chief Financial Officer. Please go ahead.

Executive
Mark W. Joslin

Thank you. Good morning, everyone, and welcome to our 2014 year-end earnings call. I'd like to remind our listeners that our discussion comments and responses to questions today may include forward-looking statements, including management's outlook for 2015 and future periods.

Actual results may differ materially from those discussed today. Information regarding the factors and variables that could cause actual results to differ materially from projected results is discussed in our 10-K.

Now I'll turn the call over to our president and CEO Manny Perez De La Mesa. Manny?

Executive
Manuel J. Perez De La Mesa

Thank you, Mark, and good morning to everyone on the call. Well, based on the reaction of the stock in the last hour or two hours, I don't think I need to say very much, but I will. Let me give you my prepared remarks. 2014 marked another strong year of performance with 8% sales growth, 9% gross profits growth, a 14% increase in operating income and a 19% increase in earnings per share. Our cash flow from operations was 110% of net income, and there after tax return on invested capital was 18%. During 2014, we also surpassed the cumulative return of $1 billion to shareholders in the form of dividends and share repurchases, finishing the year having returned $1.1 billion since going public in 1995. These results are only possible because of the commitment of our people throughout the company to execute on our mission of providing exceptional value to our customers and suppliers as we work to realize our vision of being the best distributor of outdoor lifestyle products. We are very fortunate to have individuals who genuinely care and endeavor to use the available tools and resources to promote the growth of the industry, promote the growth of our customers' businesses, and continuously strive to operate more effectively.

In 2014, once again, an abbreviated season impacted our sales growth and seasonal markets as we realized 5.4% base business sales growth in these markets compared to 8.4% base business sales growth in the year around markets, California, Florida, Texas and Arizona, our overall 6.9% base business sales growth compared with the estimated 3% to 5% industry growth as we continue to grow share. Two of the important drivers of both market share and sales growth were building materials with 20% sales growth and commercial with 14% sales growth. All together, these two product categories represent over 13% of our total company sales as we make outdoor living come to life.

To provide context to our results and illustrate the opportunities available to us, new pool construction was essentially flat in 2014 versus 2013, and down approximately 70%, 7-0-percent from the peak level of 2005. Remodeling and replacement activity in 2014 continued its gradual recovery, but behavior was still down 20% from historically normal remodeling and