GOLDEN VALLEY, Minn., Oct 16, 2003 /PRNewswire-FirstCall via COMTEX/ -- Pentair
(NYSE: PNR) reported earnings per share (EPS) of $0.77 for the third quarter
2003, noting that third quarter margins in the Company's Water Technologies
Group improved to the same level as in last year's third quarter, and that the
Enclosures Group recorded its seventh consecutive quarter of sequential margin
improvement. Pentair's three operating groups, all of which realized sales
gains in the third quarter over year-ago levels, contributed positively to
Free Cash Flow (Cash from Operations less Capital Expenditures) of
$89.9 million during the third quarter, resulting in year-to-date Free Cash
Flow of $148.6 million, or 135 percent of net income.
Pentair's third quarter net sales totaled $685.0 million, up nine percent
from sales of $629.3 million in the same period a year ago, while operating
income totaled $67.7 million, ten percent greater than the $61.8 million
reported in the third quarter of 2002. Third quarter 2003 EPS of $0.77
reflects a three percent increase over EPS of $0.75 in the same period last
year. The third quarter marked Pentair's sixth consecutive quarter of
favorable quarter-over-quarter EPS comparisons.
Randall J. Hogan, Pentair chairman and CEO, said: "We've seen continued
progress on margins and some encouraging sales trends in both our Water
Technologies and Enclosures Groups. Our Tools business also realized a slight
improvement in sales, but severe price competition in the marketplace
continues to affect the Tools margins. Overall, our businesses are performing
well in markets that appear to be stable, if not improving."
In the Water Technologies Group, third quarter 2003 sales of
$270.9 million increased 21 percent versus the same period last year, driven
by acquisitions, pool equipment, residential and commercial pumps and the
European water business. Operating income of $36.2 million gained 21 percent
over the same period last year, with pump margins increasing due to
productivity improvements and material savings. The European water business
also contributed stronger profits resulting from increased volume and the
effects of currency translation. Margins in the Group were 13.4 percent,
matching those of the same period last year. Pentair noted that, on a year-to-
date basis, the Water Technologies Group is its largest business and it has
been the largest contributor to the Company's operating income each year since
2000.
In the Tools Group, net sales of $268.0 million in the third quarter of
2003 were up one percent compared to the same period last year. The sales gain
was primarily attributed to the Oldham Saw acquisition. Lower volume in higher
margin products, competitive pricing, some inflationary cost increases, and
expenses related to capacity reductions continued to affect operating income,
which totaled $21.4 million in the third quarter of 2003, 16 percent lower
than in the same period last year. Margins of 8.0 percent were 160 basis
points below those of the same period last year.
In the Enclosures Group, third quarter 2003 sales of $146.2 million were
up almost five percent over the same period in 2002. The improved volume was
driven by increased sales in electronics markets combined with share gains in
U.S. commercial and networking markets. Third quarter operating income of
$13.6 million gained 53 percent over that of the previous year's third
quarter, while margins increased 300 basis points to 9.3 percent. Higher
profits in the Group were driven primarily by volume-related efficiencies and
continued productivity improvements.
"We made solid gains in working capital, supply chain management, our lean
enterprise initiative, and organic growth, and we're redoubling efforts to
offset competitive market price pressures in the Tools Group through
additional materials savings and improved productivity," Hogan said. "Looking
forward, we expect fourth quarter 2003 EPS of between $0.62 and $0.70,
compared to EPS of $0.56 in the same period last year."
A Pentair conference call scheduled for 11:00 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 Minnesota-based manufacturer whose core businesses compete in
tools, water technologies, and enclosures markets. The company employs 12,000
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; foreign currency effects; retail and industrial
demand; product introductions; and pricing and other competitive pressures.
Forward-looking statements included herein are made as of the date hereof and
the company undertakes no obligation to update publicly such statements to
reflect subsequent events or circumstances. Actual results could differ
materially from anticipated results.
Contact: Mark Cain of Pentair, (763) 656-5278
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
Three months ended Nine months ended
In thousands, except Sept. 27 Sept. 28 Sept. 27 Sept. 28
per-share data 2003 2002 2003 2002
Net sales $685,014 $629,301 $2,041,519 $1,940,480
Cost of goods sold 518,007 480,332 1,535,733 1,478,520
Gross profit 167,007 148,969 505,786 461,960
% of net sales 24.4% 23.7% 24.8% 23.8%
Selling, general and
administrative 88,267 78,243 277,181 253,530
% of net sales 12.9% 12.4% 13.6% 13.1%
Research and development 10,995 8,904 32,340 26,289
% of net sales 1.6% 1.4% 1.6% 1.4%
Operating income 67,745 61,822 196,265 182,141
% of net sales 9.9% 9.8% 9.6% 9.4%
Net interest expense 9,600 8,205 29,430 32,411
% of net sales 1.4% 1.3% 1.4% 1.7%
Income before income taxes 58,145 53,617 166,835 149,730
% of net sales 8.5% 8.5% 8.2% 7.7%
Provision for income taxes 19,770 16,214 56,724 47,913
Effective tax rate 34.0% 30.2% 34.0% 32.0%
Net income $38,375 $37,403 $110,111 $101,817
Earnings per common share
Basic $0.78 $0.76 $2.23 $2.07
Diluted $0.77 $0.75 $2.21 $2.04
Weighted average common
shares outstanding
Basic 49,484 49,235 49,404 49,212
Diluted 50,043 49,804 49,824 49,809
Cash dividends declared per
common share $0.21 $0.19 $0.61 $0.55
Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
September 27 December 31 September 28
In thousands 2003 2002 2002
Assets
Current assets
Cash and cash equivalents $50,381 $ 39,648 $39,591
Accounts and notes receivable,
net 420,267 403,793 415,019
Inventories 308,150 293,202 291,308
Deferred income taxes 57,416 55,234 66,527
Prepaid expenses and other current
assets 21,523 17,132 20,735
Net assets of discontinued
operations 2,379 1,799 1,771
Total current assets 860,116 810,808 834,951
Property, plant and equipment,
net 340,131 351,316 306,102
Goodwill 1,250,621 1,218,341 1,098,141
Other assets 136,620 133,985 115,704
Total assets $2,587,488 $2,514,450 $2,354,898
Liabilities and Shareholders' Equity
Current liabilities
Short-term borrowings $102 $686 $-
Current maturities of long-term
debt 57,499 60,488 7,284
Accounts and notes payable 180,147 171,709 188,872
Employee compensation and benefits 80,952 84,965 81,530
Accrued product claims and
warranties 36,704 36,855 37,632
Income taxes 30,938 12,071 30,790
Other current liabilities 124,046 109,426 124,039
Total current liabilities 510,388 476,200 470,147
Long-term debt 605,131 673,911 559,218
Pension and other retirement
compensation 135,607 124,301 82,683
Post-retirement medical and
other benefits 42,162 42,815 42,762
Deferred income taxes 34,110 31,728 35,390
Other noncurrent liabilities 63,786 59,771 64,423
Total liabilities 1,391,184 1,408,726 1,254,623
Shareholders' equity 1,196,304 1,105,724 1,100,275
Total liabilities and
shareholders' equity $2,587,488 $2,514,450 $2,354,898
Days sales in accounts receivable
(13 month moving average) 57 59 62
Days inventory on hand (13 month
moving average) 64 63 66
Days in accounts payable (13 month
moving average) 52 53 55
Debt/total capital 35.6% 39.9% 34.0%
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended
September 27 September 28
In thousands 2003 2002
Operating activities
Net income $110,111 $101,817
Depreciation 47,366 44,499
Other amortization 3,905 2,592
Deferred income taxes (272) 4,263
Stock compensation 306 -
Changes in assets and liabilities, net of
effects of business acquisitions
Accounts and notes receivable (7,458) (9,236)
Inventories (7,640) 11,777
Prepaid expenses and other current assets (3,608) 2,103
Accounts payable 3,925 8,813
Employee compensation and benefits (5,356) 6,230
Accrued product claims and warranties (1,109) (601)
Income taxes 17,640 24,104
Other current liabilities 10,624 4,187
Pension and post-retirement benefits 7,445 5,664
Other assets and liabilities 3,031 11,141
Net cash provided by continuing operations 178,910 217,353
Net cash (used for) provided by discontinued
operations (581) 3,555
Net cash provided by operating
activities 178,329 220,908
Investing activities
Capital expenditures (29,720) (23,674)
Proceeds from sale of businesses - 1,744
Acquisitions, net of cash acquired (19,409) -
Divestitures (2,400) -
Equity investments (5,426) (9,448)
Other 48 (165)
Net cash used for investing activities (56,907) (31,543)
Financing activities
Net short-term (repayments) borrowings (771) 665
Proceeds from long-term debt 486,657 194,987
Repayment of long-term debt (558,816) (363,960)
Proceeds from exercise of stock options 510 2,683
Dividends paid (30,106) (27,067)
Net cash used for financing activities (102,526) (192,692)
Effect of exchange rate changes on cash (8,163) 3,074
Change in cash and cash equivalents 10,733 (253)
Cash and cash equivalents, beginning of period 39,648 39,844
Cash and cash equivalents, end of period $50,381 $39,591
Free cash flow
Net cash provided by operating activities $178,329 $220,908
Less capital expenditures (including buyout
of synthetic lease) (29,720) (23,674)
Free cash flow $148,609 $197,234
Pentair, Inc. and Subsidiaries
Supplemental Financial Information by Reportable Business Segment (Unaudited)
First Qtr Second Qtr Third Qtr Nine Months
In thousands 2003 2003 2003 2003
Net sales to external customers
Tools $251,765 $283,416 $268,028 $803,209
Water 246,440 290,692 270,901 808,033
Enclosures 139,453 145,236 146,233 430,922
Intersegment sales
elimination (142) (355) (148) (645)
Consolidated $637,516 $718,989 $685,014 $2,041,519
Operating income (loss)
Tools $17,686 $23,148 $21,440 $62,274
Water 29,504 46,002 36,197 111,703
Enclosures 9,865 11,703 13,555 35,123
Other (4,867) (4,521) (3,447) (12,835)
Consolidated $52,188 $76,332 $67,745 $196,265
Operating income as a percent
of net sales
Tools 7.0% 8.2% 8.0% 7.8%
Water 12.0% 15.8% 13.4% 13.8%
Enclosures 7.1% 8.1% 9.3% 8.2%
Consolidated 8.2% 10.6% 9.9% 9.6%
First Qtr Second Qtr Third Qtr Nine Months
In thousands 2002 2002 2002 2002
Net sales to external customers
Tools $252,092 $303,771 $265,732 $821,595
Water 211,411 265,531 223,637 700,579
Enclosures 139,560 138,814 139,932 418,306
Intersegment sales
elimination - - - -
Consolidated $603,063 $708,116 $629,301 $1,940,480
Operating income (loss)
Tools $16,686 $30,837 $25,479 $73,002
Water 29,747 43,708 29,969 103,424
Enclosures 4,608 6,995 8,884 20,487
Other (5,314) (6,948) (2,510) (14,772)
Consolidated $45,727 $74,592 $61,822 $182,141
Operating income as a percent
of net sales
Tools 6.6% 10.2% 9.6% 8.9%
Water 14.1% 16.5% 13.4% 14.8%
Enclosures 3.3% 5.0% 6.3% 4.9%
Consolidated 7.6% 10.5% 9.8% 9.4%
SOURCE Pentair
Mark Cain of Pentair +1-763-656-5278