Investor Relations

News Release Details

Home Investor Relations News Releases News Release Details

Pentair First Quarter 2001 EPS Beats Analysts' Consensus Estimates, Sales Increase 4%; Tools Segment Recovery Gaining Traction

April 23, 2001

ST. PAUL, Minn., April 23 /PRNewswire Interactive News Release/ -- Pentair (NYSE: PNR) today announced that its first quarter 2001 earnings per share (EPS) of $.42 exceeded analysts' consensus earnings estimates by 11 percent, while revenues increased four percent and free cash flow improved dramatically over the same period last year.

"The turnaround of our tools business is becoming evident, and our enclosures and water technologies businesses are working hard to offset the impact of difficult economic conditions that exist in many of our markets," said Randall J. Hogan, president and CEO. "We are benefiting from some of the cost savings initiated during our December 2000 restructuring, and additional savings will be realized in the second quarter and beyond."

First quarter 2001 operating income was $52.9 million, compared to $72.8 million in the first quarter of 2000. First quarter net sales totaled $671.4 million, versus $647.7 million in the year earlier period. Continuing EPS for the first quarter of 2001 was $.42, compared to continuing EPS of $.69 in the previous year. The $.42 of continuing EPS in the first quarter 2001 is a substantial improvement over pre-charge EPS of ($.02) in the fourth quarter of 2000. First quarter 2001 operating margins were 7.9 percent as compared to fourth quarter 2000 operating margins of 2.3 percent. Free cash flow for the first quarter reflected a use of funds of $47 million, which is a $120 million improvement compared to the first quarter of 2000.

In the Tools segment, Pentair said that first quarter sales were ahead of year-earlier levels, while operating income improved significantly over the fourth quarter of 2000 due to improved realized pricing and ongoing cost reduction efforts. Cash flow from the tools business improved dramatically in the first quarter versus the same period a year ago, net receivables in the tools business have decreased significantly, and inventories are down. Efforts to better manage the tool brands and sales channels are beginning to pay off, and new product development has been accelerated.

In the Water Technologies segment, margins improved in the first quarter over those of the fourth quarter 2000, while the impact of soft economic conditions and weather slowed sales as compared to year-earlier levels. A late spring delayed both the pool construction season and the start-up of drilling projects that require pumps, contributing to lower pool and pump unit sales, respectively. Orders grew four percent on strong demand for large pumps used in municipal water treatment operations. As a result, a strong backlog of municipal pump orders is expected to ship throughout the remainder of 2001 and into next year.

In the Enclosures segment, Pentair said that it continued to win new datacom and telecom business during the first quarter, but that unfavorable product mix reduced margins. Strong sales continued through most of the first quarter, but operating earnings suffered as customers' reduced capital spending resulted in a sales decline in higher-margin Hoffman- and Schroff-brand products. The business is reducing headcount and operating expenses, and is selectively in-sourcing production to optimize the efficiency of its manufacturing facilities. Meanwhile, the business is redoubling efforts to ensure the success of new product launches in support of growth commitments.

"We've made progress in restoring the tools business and in reducing costs across the board, but we're not done yet. We are vigorously pursuing additional cost reductions -- particularly those in the Enclosures business -- and new top-line growth opportunities," Hogan said. "Barring further decline in the current economic environment, we feel comfortable with estimates for Pentair's 2001 earnings performance."

A Pentair conference call scheduled for 9:00 a.m. CDT today will be webcast live via http://www.pentair.com . The conference call, which can be found on the site's "Financial Information" page, will be archived at the same location.

Pentair is a St. Paul-based manufacturer whose core businesses compete in tools, water technologies, and enclosures markets. The company employs 13,000 people in more than 50 locations around the world.

Any statements made about the company's anticipated financial results are forward-looking statements subject to risks and uncertainties such as continued economic growth, retail demand and other competitive pressures, the ability to successfully strengthen management, and other uncertainties as described in the company's Annual Report on Form 10K for the year ended December 31, 2000. Actual results could differ materially from anticipated results.

                          Pentair, Inc. and Subsidiaries
             Condensed Consolidated Statements of Income (Unaudited)

                                                           First Quarter
    In thousands, except per-share data                 2001           2000

    Net sales                                      $ 671,383      $ 647,691
    Cost of goods sold                               507,396        467,789
    Gross profit                                     163,987        179,902

    Selling, general and administrative              103,392        101,000
    Research and development                           7,739          8,618
    Restructuring charge (income)                         --        (2,468)
    Operating income                                  52,856         72,752
    Net interest expense                              17,716         18,948
    Other expense                                      2,500             --
    Income from continuing operations before
     income taxes                                     32,640         53,804
    Provision for income taxes                        12,077         20,163
    Income from continuing operations                 20,563         33,641
    Income (loss) from discontinued operations,
     net of tax                                           --          (975)
    Cumulative effect of accounting change,
     net of tax                                           --         (1,222)
    Net income                                       $20,563        $31,444

    Earnings per common share
     Basic
     Continuing operations                             $0.42          $0.69
     Income (loss) from discontinued operations           --          (0.02)
     Cumulative effect of accounting change               --          (0.02)

     Basic earnings per common share                   $0.42          $0.65

     Diluted
     Continuing operations                             $0.42          $0.69
     Income (loss) from discontinued operations           --          (0.02)
     Cumulative effect of accounting change               --          (0.02)

     Diluted earnings per common share                 $0.42          $0.65

    Weighted average common shares outstanding
     Basic                                            49,006         48,454
     Diluted                                          49,127         48,575

    Cash dividends declared per common share           $0.17          $0.16


                          Pentair, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets

                                   March 31     December 31       April 1
                                       2001            2000          2000
    In thousands                (Unaudited)                   (Unaudited)

    Assets
    Current assets
    Cash and cash equivalents       $33,003         $34,944       $38,898
    Accounts and notes receivable,
     net                            508,344         468,081       578,678
    Inventories                     383,194         392,495       398,259
    Other current assets             94,547          95,019        68,230
    Net assets of discontinued
     operations                     106,633         101,263       156,046
     Total current assets         1,125,721       1,091,802     1,240,111

    Property, plant and equipment,
     net                            346,820         352,984       354,144

    Goodwill, net                 1,132,070       1,141,102     1,147,762
    Other assets                     66,373          58,137        49,486
     Total assets                $2,670,984      $2,644,025    $2,791,503

    Liabilities and Shareholders' Equity
    Current liabilities
    Short-term borrowings         $ 170,111       $ 108,141     $ 285,625
    Current maturities of
     long-term debt                  24,569          23,999        26,414
    Accounts and notes payable      224,293         250,088       184,197
    Accrued expenses and other
     current liabilities            243,982         266,564       260,056
     Total current liabilities      662,955         648,792       756,292

    Long-term debt                  782,173         781,834       858,662
    Other noncurrent liabilities    202,421         202,808       166,254
     Total liabilities            1,647,549       1,633,434     1,781,208

    Shareholders' equity          1,023,435       1,010,591     1,010,295
    Total liabilities and
     shareholders' equity        $2,670,984      $2,644,025    $2,791,503


                          Pentair, Inc. and Subsidiaries
         Financial Information by Reportable Business Segment (Unaudited)

                     First     First    Second    Third    Fourth
                   Quarter   Quarter   Quarter  Quarter   Quarter     Year
    In thousands      2001      2000      2000     2000      2000     2000
    Net Sales
    Tools         $240,392  $231,610  $275,375 $280,203  $279,428  $1,066,616
    Water          220,852   231,967   261,727  214,119   195,859     903,672
    Enclosures     210,139   184,114   196,659  197,462   199,490     777,725
    Consolidated  $671,383  $647,691  $733,761 $691,784  $674,777  $2,748,013

    Operating Income (Loss) Before Restructuring Charge
    Tools           $7,863  $ 22,005  $ 17,235 $ 10,772  $(20,865) $   29,147
    Water           28,193    30,749    41,448   28,512    20,023     120,732
    Enclosures      21,237    23,149    24,542   24,786    22,166      94,643
    Other           (4,437)   (5,619)   (3,788)  (2,720)   (5,576)    (17,703)
    Consolidated  $ 52,856  $ 70,284  $ 79,437 $ 61,350  $ 15,748  $  226,819

    Operating Income (Loss) Before Restructuring Charge as a Percent of Net
     Sales
    Tools              3.3%      9.5%      6.3%     3.8%     (7.5%)      2.7%
    Water             12.8%     13.3%     15.8%    13.3%     10.2%      13.4%
    Enclosures        10.1%     12.6%     12.5%    12.6%     11.1%      12.2%
    Other              0.0%      0.0%      0.0%     0.0%      0.0%       0.0%
    Consolidated       7.9%     10.9%     10.8%     8.9%      2.3%       8.3%

    Restructuring Charge (Income) Expense
    Tools         $     --  $ (1,171) $      -- $    --  $  6,567  $   5,396
    Water               --        --         --      --        --         --
    Enclosures          --    (1,297)        --      --      (328)    (1,625)
    Other               --        --         --      --    21,018     21,018
    Consolidated  $      -- $ (2,468) $      -- $    --  $ 27,257  $  24,789

    Operating Income (Loss) After Restructuring Charge
    Tools (A)     $   7,863 $ 23,176  $ 17,235  $ 10,772 $(27,432) $  23,751
    Water            28,193   30,749    41,448    28,512   20,023    120,732
    Enclosures       21,237   24,446    24,542    24,786   22,494     96,268
    Other            (4,437)  (5,619)   (3,788)   (2,720) (26,594)   (38,721)

Consolidated $ 52,856 $ 72,752 $ 79,437 $ 61,350 $(11,509) $ 202,030

(A) Second quarter 2000 Tools segment operating income reflects one-time

        pre-tax costs to establish an additional $5.0 million in Accounts
        receivable reserves.  Fourth quarter 2000 Tools segment operating
        income reflects one-time pre-tax costs to establish an additional
        $25 million for accounts receivable ($17 million) and inventory
        valuation ($8 million) reserves.


                          Pentair, Inc. and Subsidiaries
        Financial Information by Reportable Business Segment (Unaudited) -
                                   (Continued)

                    First       Second        Third       Fourth
                  Quarter      Quarter      Quarter      Quarter        Year
    In thousands     1999         1999         1999         1999        1999

    Net Sales
    Tools        $154,831     $153,606     $214,747     $352,459    $875,643
    Water         105,049      123,544      164,353      189,981     582,927
    Enclosures    148,360      162,038      167,486      179,616     657,500
    Other              --           --           --           --          --
    Consolidated $408,240     $439,188     $546,586     $722,056  $2,116,070

    Operating Income (Loss) Before Restructuring Charge
    Tools        $ 18,815     $ 15,611     $ 24,702     $ 47,857    $106,985
    Water          14,052       17,595       20,113       21,602      73,362
    Enclosures     12,393       14,405       16,406       19,885      63,089
    Other          (4,661)      (4,324)      (5,051)      (4,626)    (18,662)
    Consolidated $ 40,599     $ 43,287     $ 56,170     $ 84,718    $224,774

    Operating Income (Loss) Before Restructuring Charge as a Percent of Net
    Sales
    Tools           12.2%        10.2%        11.5%        13.6%       12.2%
    Water           13.4%        14.2%        12.2%        11.4%       12.6%
    Enclosures       8.4%         8.9%         9.8%        11.1%        9.6%
    Other            0.0%         0.0%         0.0%         0.0%        0.0%
    Consolidated     9.9%         9.9%        10.3%        11.7%       10.6%

    Restructuring Charge (Income) Expense
    Tools          $6,305          $--          $--          $--      $6,305
    Water              --           --           --           --          --
    Enclosures     16,743           --           --           --      16,743
    Other              --           --           --           --          --
    Consolidated $ 23,048          $--          $--          $--    $ 23,048

    Operating Income (Loss) After Restructuring Charge
    Tools        $ 12,510     $ 15,611     $ 24,702     $ 47,857    $100,680
    Water          14,052       17,595       20,113       21,602      73,362
    Enclosures     (4,350)      14,405       16,406       19,885      46,346
    Other          (4,661)      (4,324)       (5,051)     (4,626)    (18,662)
    Consolidated $ 17,551      $ 43,287     $ 56,170     $ 84,718    $201,726

Contact: Mark Cain (651) 639-5278

SOURCE Pentair, Inc.

CONTACT: Mark Cain of Pentair, 651-639-5278