GOLDEN VALLEY, Minn.--(BUSINESS WIRE)--Oct. 23, 2007--Pentair,
Inc. (NYSE: PNR):
- Reports strong third quarter sales of $838 million, up 8
percent versus the third quarter 2006
- Delivers third quarter net earnings per share from continuing
operations (EPS) of $0.58 reported and $0.53 on an adjusted
basis(a)
- Generates strong free cash flow of $120 million in the third
quarter and $189 million for the first three quarters of 2007,
up $96 million year-to-date versus 2006
- Updates full year 2007 EPS guidance range of $2.04 to $2.09
reported and $2.03 to $2.07 on an adjusted basis
- Introduces full year 2008 guidance consisting of sales growth
of 4 to 5 percent and net earnings per diluted share from
continuing operations of between $2.25 and $2.40
(a) Adjusted 2007 and 2006 EPS exclude the benefit of
non-recurring tax items as well as the negative impact associated with
restructuring costs and other market related actions in the respective
period. Adjusted 2007 and 2006 Operating Income and Margins exclude
the negative impact associated with restructuring costs and other
market related actions in the respective period (see reconciliation
tables attached to this release).
Pentair, Inc. (NYSE:PNR) today announced third quarter 2007 net
earnings per diluted share from continuing operations (EPS) of $0.58.
This represents an increase of 76 percent as compared to the $0.33 of
reported EPS from continuing operations in the third quarter last
year. Current period results include the favorable impact of $0.11 per
share from one-time net tax benefits and a negative $0.06 per share
impact from restructuring costs and market related items. Adjusting
for these items in both periods, third quarter 2007 EPS from
continuing operations was $0.53, up 29 percent compared to adjusted
earnings per share of $0.41 in the third quarter of 2006.
Total sales increased 8 percent to $838 million as compared with
$778 million in the third quarter of 2006. The company delivered
operating income for the third quarter of $91 million versus $60
million in the year-earlier quarter. On an adjusted basis, the company
delivered operating income of $100 million versus third quarter, 2006
adjusted operating income of $77 million. Overall, operating margins
expanded 320 basis points on a reported basis to 10.9 percent. On an
adjusted basis, operating margins expanded 210 basis points to 12.0
percent, driven by a positive 530 basis point improvement from volume,
price, mix, acquisitions and productivity. The positive impact from
these items more than offset a negative 320 basis point impact related
to total inflation.
Pentair generated free cash flow of $120 million for the quarter,
driven primarily by a lower use of working capital year-over-year.
Year-to-date the company has generated $189 million of free cash flow,
reflecting a $96 million improvement as compared with the first three
quarters of 2006.
"Our performance in the third quarter was first rate as we
leveraged the strength of our business diversity and our growing
international presence. Strong sales growth and earnings in our
Technical Products business enabled us to exceed the third quarter
earnings guidance we provided in July. In our Water businesses, we
continue to navigate the challenging North American residential
markets, which were as tough as we expected, while growing nicely in
our international, industrial, commercial and municipal Water
markets," said Randall J. Hogan, chairman and chief executive officer.
"Our earnings per share reflect effective execution against our
goals as well as the positive impact from a recent change in the
German corporate tax rate. We initiated additional actions in the
third quarter to improve our cost structure and to solidify our
productivity momentum for 2008. Our EPS of $0.53 on an adjusted basis
was up 29 percent year-over-year, a very respectable performance given
the challenges in a few of our key markets."
THIRD QUARTER BUSINESS HIGHLIGHTS
The Water Group delivered $562 million in sales or 6 percent
year-over-year sales growth. Organic sales were down 1 percent
excluding acquisitions or down 2 percent excluding foreign exchange.
The decline in organic growth reflects continuing softness in the
North American residential markets. Internationally, Water sales
increased at a double-digit rate.
- North American pump sales were down 4 percent as growth in
commercial and municipal markets as well as new products and
pricing actions could not overcome residential market
declines.
- North American filtration sales were up 11 percent or down 1
percent when adjusted for the Porous Media acquisition. Solid
sales growth in food service and in other commercial and
industrial markets was muted by declines in the residential
water treatment markets.
- North American pool and spa sales were down 5 percent
organically as new products and price actions somewhat offset
overall declines in the pool and spa markets.
- Sales in Asia-Pacific grew 34 percent driven by strong growth
in Australian sales and continued successful penetration in
China.
- Sales in Europe grew 47 percent or 10 percent excluding the
Jung Pump acquisition. Sales growth outpaced the economy with
particular strength in the industrial and food service
markets.
The Water Group's third quarter operating income totaled $54
million, up 48 percent as compared to $36 million in the same period
last year. On an adjusted basis, operating income was $64 million or
25 percent higher than the $51 million in the year-ago period.
Adjusted operating margins expanded 170 basis points as the benefit
from productivity, acquisitions and positive price more than offset
the negative impact from inflation and decreased volumes.
Technical Products delivered third quarter 2007 sales of $276
million, an increase of 12 percent versus the year-earlier period.
Sales were up approximately 11 percent excluding acquisitions or up 9
percent excluding foreign exchange. Strong sales in international
regions, solid gains in the electrical markets, and a recovering
electronics market combined to drive expanded growth.
- Electrical third quarter sales grew approximately 11 percent
driven by market share gains year-over-year in the industrial,
commercial and networking market segments. New products
contributed significantly to this growth, especially in the
networking segment.
- Global electronic sales were up approximately 13 percent. In
North America, electronic sales declined approximately 2
percent. Electronic sales grew 15 percent in Europe and 83
percent in Asia Pacific, reflecting continuing penetration of
the China market.
Technical Products' third quarter operating income totaled $46
million, up 24 percent as compared to $37 million in the same quarter
last year. Operating margins were 16.8 percent, up 180 basis points.
On an adjusted basis, margins were 16.5 percent, up 150 basis points
versus the year ago period. In the quarter, the benefit from volume,
price, productivity and acquisitions more than offset the negative
impact from total inflation.
"Water and Technical Products performed very well in the quarter
and we continue to see numerous opportunities for growth and
productivity in both businesses," Hogan said. "The 6 cents, or $9.7
million, pre-tax charge represents an acceleration of actions
initiated in the third quarter in light of the deep and extended
downturn in North American residential markets. The benefits
associated with these actions - as well as continued productivity
actions driven by lean - are included in our 2008 outlook," he added.
OUTLOOK
The company introduces fourth quarter 2007 EPS guidance range of
$0.42 to $0.47, which includes a negative EPS impact of $0.03 to $0.04
predominantly related to a new Q4 restructuring action associated with
the recently announced closure of a North American Electronics
facility. On an adjusted basis, the company expects fourth quarter EPS
to be $0.46 to $0.50, an increase of 48 to 61 percent year-over-year.
"With our fourth quarter guidance we now expect full-year EPS in
the range of $2.04 to $2.09 on a reported basis and $2.03 to $2.07 on
an adjusted basis. This represents full year adjusted EPS growth of 18
to 20 percent. We continue to generate tremendous free cash flow which
gives us confidence to increase our full year 2007 free cash flow
range to 230 million to 250 million dollars," Hogan said. "We expect
our positive performance momentum to continue despite North American
residential weakness. We anticipate continued softness in the North
American residential market, which impacts our Water business, and
continued recovery in the electronics markets we serve.
"As we look ahead to 2008, we believe the productivity and growth
actions we're taking in 2007 will help ensure another strong year of
performance for Pentair. We anticipate total revenue growth of 4 to 5
percent, as our global growth initiatives in international,
commercial, industrial and municipal markets should offset the
softness of the North American residential market," said Hogan. "This
sales growth, combined with carry-over 2007 productivity actions, more
aggressive sourcing efforts, reduction in our manufacturing fixed cost
structure, and an emphasis on reducing our general and administrative
structure globally should position us to deliver EPS in the range of
$2.25 to $2.40 in 2008. Furthermore, we continue to drive working
capital performance and expect full year 2008 free cash flow to be at
least 100 percent conversion of net income," he concluded.
EARNINGS CONFERENCE CALL
Pentair Chairman and CEO Randall J. Hogan and Chief Financial
Officer John L. Stauch will discuss the Company's performance and Q4
and 2008 guidance on a two-way conference call with investors at 12:00
p.m. Eastern today. Reconciliation of any non-GAAP financial measures
are set forth in the attachments to this third quarter 2007 earnings
release and in the third quarter 2007 earning release conference call
presentation, both of which can be found at Pentair's web site
(www.pentair.com). Related financial charts and certain other
information to be discussed on the conference call will be available
on the company's website shortly before the conference call. The web
cast and presentation will be archived at the same site following the
conclusion of the conference call.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Any statements made about the company's anticipated financial
results are forward-looking statements subject to risks and
uncertainties such as continued economic growth, including: the
strength of housing and related markets; the ability to integrate
acquisitions successfully and the risk that expected synergies may not
be fully realized or may take longer to realize than expected; the
ability to successfully limit any judgment arising out of the Horizon
litigation; 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.
ABOUT PENTAIR, INC.
Pentair (www.pentair.com) is a diversified operating company
headquartered in Minnesota. Its Water Group is a global leader in
providing innovative products and systems used worldwide in the
movement, treatment, storage and enjoyment of water. Pentair's
Technical Products Group is a leader in the global enclosures and
thermal management markets, designing and manufacturing thermal
management products and standard, modified, and custom enclosures that
house and protect sensitive electronics and electrical components.
With 2006 revenues of $3.15 billion, Pentair employs approximately
15,000 people worldwide.
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
Three months ended Nine months ended
-------------------------- -------------------------
September 29 September 30 September 29 September 30
In thousands,
except per-share
data 2007 2006 2007 2006
----------------------------------------------------------------------
Net sales $837,834 $778,020 $2,568,474 $2,411,431
Cost of goods sold 591,667 565,533 1,801,459 1,713,747
----------------------------------------------------------------------
Gross profit 246,167 212,487 767,015 697,684
% of net sales 29.4% 27.3% 29.8% 28.9%
Selling, general
and
administrative 140,745 137,923 436,837 406,843
% of net sales 16.8% 17.7% 17.0% 16.9%
Research and
development 14,446 14,271 44,204 44,017
% of net sales 1.7% 1.9% 1.7% 1.8%
----------------------------------------------------------------------
Operating income 90,976 60,293 285,974 246,824
% of net sales 10.9% 7.7% 11.1% 10.2%
Gain on sale of
investment -- 167 -- 167
Net interest
expense 18,836 13,024 52,841 38,861
% of net sales 2.2% 1.7% 2.0% 1.6%
----------------------------------------------------------------------
Income from
continuing
operations before
income taxes 72,140 47,436 233,133 208,130
% of net sales 8.7% 6.1% 9.1% 8.6%
Provision for
income taxes 14,096 13,995 70,958 62,985
Effective tax rate 19.5% 29.5% 30.4% 30.3%
----------------------------------------------------------------------
Income from
continuing
operations 58,044 33,441 162,175 145,145
Gain (loss) on
disposal of
discontinued
operations, net
of tax -- 1,400 207 (51)
----------------------------------------------------------------------
Net income $ 58,044 $ 34,841 $ 162,382 $ 145,094
======================================================================
Earnings (loss)
per common share
Basic
Continuing
operations $ 0.59 $ 0.34 $ 1.64 $ 1.45
Discontinued
operations -- 0.01 -- --
----------------------------------------------------------------------
Basic earnings per
common share $ 0.59 $ 0.35 $ 1.64 $ 1.45
======================================================================
Diluted
Continuing
operations $ 0.58 $ 0.33 $ 1.62 $ 1.42
Discontinued
operations -- 0.01 -- --
----------------------------------------------------------------------
Diluted earnings
per common share $ 0.58 $ 0.34 $ 1.62 $ 1.42
======================================================================
Weighted average
common shares
outstanding
Basic 98,747 99,419 98,859 100,133
Diluted 100,365 101,062 100,339 101,998
Cash dividends
declared per
common share $ 0.15 $ 0.14 $ 0.45 $ 0.42
Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
September 29 December 31 September 30
In thousands 2007 2006 2006
----------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 56,555 $ 54,820 $ 45,153
Accounts and notes receivable,
net 479,915 422,134 454,255
Inventories 414,302 398,857 397,637
Deferred tax assets 53,057 50,578 46,040
Prepaid expenses and other
current assets 48,512 31,239 28,736
----------------------------------------------------------------------
Total current assets 1,052,341 957,628 971,821
Property, plant and equipment,
net 358,138 330,372 312,295
Other assets
Goodwill 2,006,426 1,718,771 1,732,410
Intangibles, net 492,882 287,011 261,261
Other 77,084 71,197 77,386
----------------------------------------------------------------------
Total other assets 2,576,392 2,076,979 2,071,057
----------------------------------------------------------------------
Total assets $3,986,871 $3,364,979 $3,355,173
======================================================================
Liabilities and Shareholders'
Equity
Current liabilities
Short-term borrowings $ 4,800 $ 14,563 $ --
Current maturities of long-term
debt 5,099 7,625 6,912
Accounts payable 208,505 206,286 191,206
Employee compensation and
benefits 107,828 88,882 93,431
Current pension and post-
retirement benefits 7,918 7,918 --
Accrued product claims and
warranties 47,719 44,093 44,016
Income taxes 10,439 22,493 --
Accrued rebates and sales
incentives 37,115 39,419 41,982
Other current liabilities 112,673 90,003 95,122
----------------------------------------------------------------------
Total current liabilities 542,096 521,282 472,669
Other liabilities
Long-term debt 1,103,023 721,873 788,066
Pension and other retirement
compensation 222,098 207,676 171,063
Post-retirement medical and
other benefits 46,499 47,842 73,398
Long-term income taxes payable 18,214 -- --
Deferred tax liabilities 136,886 109,781 124,393
Other non-current liabilities 89,898 86,526 84,783
----------------------------------------------------------------------
Total liabilities 2,158,714 1,694,980 1,714,372
Shareholders' equity 1,828,157 1,669,999 1,640,801
----------------------------------------------------------------------
Total liabilities and
shareholders' equity $3,986,871 $3,364,979 $3,355,173
======================================================================
Days sales in accounts
receivable (13 month moving
average) 54 54 54
Days inventory on hand (13 month
moving average) 78 76 73
Days in accounts payable (13
month moving average) 54 56 56
Debt/total capital 37.8% 30.8% 32.6%
NOTE: The Company adopted the provisions of Financial Accounting
Standards Board (FASB) Interpretation No. 48, Accounting for
Uncertainty in Income Taxes - an interpretation of FASB No. 109 ("FIN
48") on January 1, 2007. As a result of adoption of FIN 48, the
Company recorded an adjustment to retained earnings of $2.9 million in
the first quarter of 2007. Additionally, the Company has added the
line "Long-term income taxes payable" to the Company's Condensed
Consolidated Balance Sheets to report its total long-term liability
for unrecognized tax benefits.
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended
-------------------------
September 29 September 30
In thousands 2007 2006
----------------------------------------------------------------------
Operating activities
Net income $ 162,382 $ 145,094
Adjustments to reconcile net income to net
cash provided by operating activities
(Gain) loss on disposal of discontinued
operations (207) 51
Depreciation 45,786 44,762
Amortization 18,665 13,955
Deferred income taxes (18,883) (89)
Stock compensation 17,071 18,058
Excess tax benefits from stock-based
compensation (2,706) (2,677)
Gain on sale of assets (2,195) (167)
Changes in assets and liabilities, net of
effects of business acquisitions and
dispositions
Accounts and notes receivable (27,627) (23,210)
Inventories 10,620 (43,360)
Prepaid expenses and other current assets (8,673) (3,671)
Accounts payable 168 (22,136)
Employee compensation and benefits 2,835 (7,153)
Accrued product claims and warranties 3,199 547
Income taxes (4,813) (14,800)
Other current liabilities 16,634 (2,263)
Pension and post-retirement benefits 7,924 14,365
Other assets and liabilities 9,153 8,546
----------------------------------------------------------------------
Net cash provided by continuing
operations 229,333 125,852
Net cash provided by operating
activities of discontinued operations -- 48
----------------------------------------------------------------------
Net cash provided by operating
activities 229,333 125,900
Investing activities
Capital expenditures (45,163) (33,311)
Proceeds from sale of property and equipment 5,136 497
Acquisitions, net of cash acquired (486,264) (22,879)
Divestitures -- (24,007)
Equity Investments -- 167
Other (4,044) (6,823)
----------------------------------------------------------------------
Net cash used for investing
activities (530,335) (86,356)
Financing activities
Net short-term borrowings (10,378) --
Proceeds from long-term debt 1,147,132 568,996
Repayment of long-term debt (770,822) (526,599)
Debt issuance costs (1,876) --
Excess tax benefits from stock-based
compensation 2,706 2,677
Proceeds from exercise of stock options 5,512 3,126
Repurchases of common stock (27,119) (50,000)
Dividends paid (44,986) (42,616)
----------------------------------------------------------------------
Net cash provided by (used for)
financing activities 300,169 (44,416)
Effect of exchange rate changes on cash and
cash equivalents 2,568 1,525
----------------------------------------------------------------------
Change in cash and cash equivalents 1,735 (3,347)
Cash and cash equivalents, beginning of
period 54,820 48,500
----------------------------------------------------------------------
Cash and cash equivalents, end of period $ 56,555 $ 45,153
======================================================================
Free cash flow
Net cash provided by operating activities $ 229,333 $ 125,900
Less capital expenditures (45,163) (33,311)
Proceeds from sale of property and equipment 5,136 497
----------------------------------------------------------------------
Free cash flow $ 189,306 $ 93,086
======================================================================
Pentair, Inc. and Subsidiaries
Supplemental Financial Information by Reportable Business Segment
(Unaudited)
First Qtr Second Qtr Third Qtr Nine Months
In thousands 2007 2007 2007 2007
----------------------------------------------------------------------
Net sales to external
customers
Water $ 555,412 $ 665,495 $ 562,133 $1,783,040
Technical Products 252,583 257,150 275,701 785,434
----------------------------------------------------------------------
Consolidated $ 807,995 $ 922,645 $ 837,834 $2,568,474
======================================================================
Intersegment sales
Water $ 214 $ 46 $ 207 $ 467
Technical Products 896 1,689 1,526 4,111
Other (1,110) (1,735) (1,733) (4,578)
----------------------------------------------------------------------
Consolidated $ -- $ -- $ -- $ --
======================================================================
Operating income (loss)
Water $ 60,879 $ 90,978 $ 53,685 $ 205,542
Technical Products 31,631 36,140 46,237 114,008
Other (12,357) (12,273) (8,946) (33,576)
----------------------------------------------------------------------
Consolidated $ 80,153 $ 114,845 $ 90,976 $ 285,974
======================================================================
Operating income as a
percent of net sales
Water 11.0% 13.7% 9.6% 11.5%
Technical Products 12.5% 14.1% 16.8% 14.5%
Consolidated 9.9% 12.4% 10.9% 11.1%
First Qtr Second Qtr Third Qtr Nine Months
In thousands 2006 2006 2006 2006
----------------------------------------------------------------------
Net sales to external
customers
Water $ 517,169 $ 605,516 $ 531,703 $1,654,388
Technical Products 254,220 256,506 246,317 757,043
----------------------------------------------------------------------
Consolidated $ 771,389 $ 862,022 $ 778,020 $2,411,431
======================================================================
Intersegment sales
Water $ 50 $ 55 $ 140 $ 245
Technical Products 889 1,312 1,133 3,334
Other (939) (1,367) (1,273) (3,579)
----------------------------------------------------------------------
Consolidated $ -- $ -- $ -- $ --
======================================================================
Operating income (loss)
Water $ 55,587 $ 84,191 $ 36,226 $ 176,004
Technical Products 37,704 39,678 37,050 114,432
Other (14,735) (15,894) (12,983) (43,612)
----------------------------------------------------------------------
Consolidated $ 78,556 $ 107,975 $ 60,293 $ 246,824
======================================================================
Operating income as a
percent of net sales
Water 10.8% 13.9% 6.8% 10.6%
Technical Products 14.8% 15.5% 15.0% 15.1%
Consolidated 10.2% 12.5% 7.7% 10.2%
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2007
to the "Adjusted" non-GAAP
excluding the effect of 2007 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter
In thousands, except per- 2007 2007 2007
share data
----------------------------------------------------------------------
Net sales $807,995 $922,645 $837,834
----------------------------------------------------------------------
Operating income - as
reported 80,153 114,845 90,976
% of net sales 9.9% 12.4% 10.9%
Adjustments -- -- 9,192
----------------------------------------------------------------------
Operating income - as
adjusted 80,153 114,845 100,168
% of net sales 9.9% 12.4% 12.0%
Income from continuing
operations - as reported 42,130 62,001 58,044
Adjustments - tax affected -- -- 6,246
Non-recurring tax items (145) (83) (11,517)
----------------------------------------------------------------------
Income from continuing
operations - as adjusted 41,985 61,918 52,773
======================================================================
Continuing earnings per
common share - diluted
Diluted earnings per common
share - as reported $ 0.42 $ 0.62 $ 0.58
Adjustments -- -- (0.05)
----------------------------------------------------------------------
Diluted earnings per common
share - as adjusted $ 0.42 $ 0.62 $ 0.53
======================================================================
Weighted average common
shares outstanding -
Diluted 100,271 100,371 100,365
Fourth Quarter Year
In thousands, except per-share 2007 forecast 2007 forecast
data
----------------------------------------------------------------------
Net sales $795,000 - $820,000 $3,375M - $3,400M
----------------------------------------------------------------------
Operating income - as reported 83,000 - 90,000 approx. 370M+
% of net sales 10.4% - 11.0% approx. 11.0%
Adjustments approx. 5,000 approx. 15M+
----------------------------------------------------------------------
Operating income - as adjusted 88,000 - 95,000 approx. 385M+
% of net sales 11% - 11.5% approx. 11.5%
Income from continuing
operations - as reported 42,200 - 47,200 205M - 210M
Adjustments - tax affected approx. 3,200 approx. 10M
Non-recurring tax items -- approx. (12M)
----------------------------------------------------------------------
Income from continuing
operations - as adjusted 45,400 - 50,400 203M - 208M
======================================================================
Continuing earnings per common
share - diluted
Diluted earnings per common
share - as reported $ 0.42 - $0.47 $ 2.04 - $2.09
Adjustments 0.03 - 0.04 (0.01) - (0.02)
----------------------------------------------------------------------
Diluted earnings per common
share - as adjusted $ 0.46 - $0.50 $ 2.03 - $2.07
======================================================================
Weighted average common shares
outstanding - Diluted 100,400 100,400
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2006
to the "Adjusted" non-GAAP
excluding the effect of 2006 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter
In thousands, except per-
share data 2006 2006 2006
----------------------------------------------------------------------
Net sales $771,389 $862,022 $778,020
----------------------------------------------------------------------
Operating income - as
reported 78,556 107,975 60,293
% of net sales 10.2% 12.5% 7.7%
Adjustments -- -- 16,949
----------------------------------------------------------------------
Operating income - as
adjusted 78,556 107,975 77,242
% of net sales 10.2% 12.5% 9.9%
Income from continuing
operations - as reported 43,071 68,633 33,441
Adjustments - tax affected -- -- 10,847
Non-recurring tax items (878) (8,023) (3,080)
----------------------------------------------------------------------
Income from continuing
operations - as adjusted 42,193 60,610 41,208
======================================================================
Continuing earnings per
common share - diluted
Diluted earnings per common
share - as reported $ 0.42 $ 0.67 $ 0.33
Adjustments (0.01) (0.08) 0.08
----------------------------------------------------------------------
Diluted earnings per common
share - as adjusted $ 0.41 $ 0.59 $ 0.41
======================================================================
Weighted average common
shares outstanding -
Diluted 102,492 102,429 101,062
Fourth Quarter Year
In thousands, except per-share data 2006 2006
----------------------------------------------------------------------
Net sales $743,038 $3,154,469
----------------------------------------------------------------------
Operating income - as reported 60,162 306,986
% of net sales 8.1% 9.7%
Adjustments -- 16,949
----------------------------------------------------------------------
Operating income - as adjusted 60,162 323,935
% of net sales 8.1% 10.3%
Income from continuing operations - as
reported 38,622 183,767
Adjustments - tax affected -- 10,847
Non-recurring tax items (8,285) (20,266)
----------------------------------------------------------------------
Income from continuing operations - as
adjusted 30,337 174,348
======================================================================
Continuing earnings per common share -
diluted
Diluted earnings per common share - as
reported $ 0.39 $ 1.81
Adjustments (0.08) (0.09)
----------------------------------------------------------------------
Diluted earnings per common share - as
adjusted $ 0.31 $ 1.72
======================================================================
Weighted average common shares outstanding
- Diluted 100,233 101,371
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2007
to the "Adjusted" non-GAAP
excluding the effect of 2007 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter
In thousands 2007 2007 2007
----------------------------------------------------------------------
Water
Net sales $555,412 $665,495 $562,133
----------------------------------------------------------------------
Operating income - as
reported 60,879 90,978 53,685
% of net sales 11.0% 13.7% 9.6%
Adjustments -- -- 9,843
----------------------------------------------------------------------
Operating income - as
adjusted 60,879 90,978 63,528
% of net sales 11.0% 13.7% 11.3%
Technical Products
Net sales $252,583 $257,150 $275,701
----------------------------------------------------------------------
Operating income - as
reported 31,631 36,140 46,237
% of net sales 12.5% 14.1% 16.8%
Adjustments -- -- (652)
----------------------------------------------------------------------
Operating income - as
adjusted 31,631 36,140 45,585
% of net sales 12.5% 14.1% 16.5%
Fourth Quarter Year
In thousands 2007 forecast 2007 forecast
----------------------------------------------------------------------
Water
Net sales $540,000 - $550,000 $2,320M - $2,330M
----------------------------------------------------------------------
Operating income - as reported 59,000 - 61,000 approx. 266M+
% of net sales approx. 11.0% 11.0% - 11.5%
Adjustments -- approx. 10M
----------------------------------------------------------------------
Operating income - as adjusted 59,000 - 61,000 approx. 276M+
% of net sales approx. 11.0% approx. 12.0%
Technical Products
Net sales $260,000 - $265,000 $1,000M - $1,100M
----------------------------------------------------------------------
Operating income - as reported 34,100 - 35,700 approx. 150M+
% of net sales 13.0% - 13.5% 14.0% - 14.5%
Adjustments approx. 5,000 approx. 4.5M
----------------------------------------------------------------------
Operating income - as adjusted 39,100 - 40,700 approx. 155M+
% of net sales 15.0% - 15.5% approx. 14.5%
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2006
to the "Adjusted" non-GAAP
excluding the effect of 2006 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter
In thousands 2006 2006 2006
----------------------------------------------------------------------
Water
Net sales $517,169 $605,516 $531,703
----------------------------------------------------------------------
Operating income - as
reported 55,587 84,191 36,226
% of net sales 10.7% 13.9% 6.8%
Adjustments -- -- 14,906
----------------------------------------------------------------------
Operating income - as
adjusted 55,587 84,191 51,132
% of net sales 10.7% 13.9% 9.6%
Technical Products
Net sales $254,220 $256,506 $246,317
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Operating income - as
reported 37,704 39,678 37,050
% of net sales 14.8% 15.5% 15.0%
Adjustments -- -- --
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Operating income - as
adjusted 37,704 39,678 37,050
% of net sales 14.8% 15.5% 15.0%
Fourth Quarter Year
In thousands 2006 2006
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Water
Net sales $500,837 $2,155,225
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Operating income - as reported 36,494 212,498
% of net sales 7.3% 9.9%
Adjustments -- 14,906
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Operating income - as adjusted 36,494 227,404
% of net sales 7.3% 10.6%
Technical Products
Net sales $242,201 $ 999,244
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Operating income - as reported 34,473 148,905
% of net sales 14.2% 14.9%
Adjustments -- --
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Operating income - as adjusted 34,473 148,905
% of net sales 14.2% 14.9%
CONTACT: Pentair, Inc.
Todd Gleason, 763-656-5570
Vice President, Investor Relations
E-mail: [email protected]
or
Rachael Jarosh, 763-656-5280
Director, Communications
E-mail: [email protected]
SOURCE: Pentair, Inc.