Investor Relations

News Release Details

Home Investor Relations News Releases News Release Details
Pentair 2nd Quarter Revenues, Operating Income Rise 50%, EPS Up 14% to $.75; Turnaround Strategies for Tools and Equipment Businesses Proceed on Track
07.20.2000

MINNEAPOLIS, July 20 /PRNewswire/ -- Pentair, Inc. (NYSE: PNR) reported today that earnings per share (EPS) for the second quarter of 2000 totaled $.75, a 14 percent increase from 1999 second quarter of $.66 and in-line with new guidance the company gave to securities analysts and investors on July 11.

Both revenues and operating income showed more than 50 percent improvements in the second quarter as market fundamentals remain strong across all of the company's businesses. For the three months ended July 1, 2000, net sales totaled $781.9 million, versus $507.2 million in the year-earlier quarter, while operating income totaled $77.6 million, versus $51.6 million. Free cash flow in the second quarter was $132 million.

For the six months ended July 1, 2000, revenues reached $1,494.2 million, up 53 percent from the first half of 1999, and pre-charge operating income totaled $152.4 million, a 55 percent gain from prior-year levels. Pre-charge EPS for the first half of 2000 was $1.45, a 14 percent improvement from the first six months a year earlier.

"Excellent results by our Water and Enclosures groups partially offset the lower-than-expected performance of the Tools and Equipment groups. We still have work to do as we revitalize the tools and equipment businesses, but we have identified the problems that caused the operating shortfall," said Randall Hogan, president and chief operating officer. "We are taking immediate remedial actions. Market demand for our tools and equipment products remains good, and we see a continuation of core growth even as we proceed in the implementation of aggressive actions to return the businesses to their traditional high levels of performance."

Hogan said the company had put into effect a number of measures designed to return Pentair's tools and equipment businesses to their previous standard of operating performance. These include strengthening leadership, tightening controls, and reducing costs, particularly in distribution, selling, and materials.

During the second quarter, Pentair reorganized the tools businesses into a Tools Group (Porter-Cable/Delta, DeVilbiss Air Power) and an Equipment Group (Century, Lincoln Automotive, and the Lincoln Industrial operation that was transferred from the Water Technologies Group). Hogan said the new alignment allows management to better focus on opportunities and issues unique to each of the segments.

The company's Water Technologies Group revenues increased 110 percent and operating income gained 136 percent in the second quarter of 2000, with strong performances recorded in the pump, water storage, and pool and spa sectors of the business, both in North America and abroad. In the Enclosures Group, revenues grew 22 percent and operating income improved by 71 percent (all organic growth), with steady gains reported by Hoffman, improved results from Schroff and the European businesses, and significant achievement by the electronic enclosures units, including significant new contracts from Lucent, Motorola, and other leading technology companies. Second quarter margins improved in both the Water Technologies and Enclosures groups.

Second-quarter revenues grew 80 percent in the new Tools Group while operating income gained 3 percent, in spite of the start-up difficulties at the company's new distribution center in Tennessee and a longer than expected recovery in generator orders following the substantial sales demand generated by the Y2K situation. Other adverse factors identified in the analysis of the Tool Group's second quarter results included special pricing and promotional programs, and raw material costs. Equipment segment revenues and operating income declined, with the group's performance affected by delays in closing a manufacturing plant, difficulties related to sourcing of product from Asia, and inefficiencies associated with the consolidation of Century and Lincoln Automotive.

"The actions taken to turn around our underperforming tools and equipment businesses are proceeding with intensity. Steady improvement will be reflected in the company's operating results in the ensuing quarters," Winslow H. Buxton, chairman and chief executive officer, said. "The situation will be resolved in 2001 as Pentair returns to its traditionally strong growth pattern in revenues, operating income, and EPS. In addition to our improved tools and equipment performance, we are focused on continuing to improve our cash flow which will contribute to our results in 2001."

In commenting on results for the second quarter of 2000, Pentair's Chief Financial Officer Dave Harrison, noted that the company's efforts to better manage working capital showed a substantial reduction of $86 million from the first quarter of 2000. Harrison said: "The progress in working capital in the second quarter gives greater assurance in meeting our free cash flow target of $150 million for the year."

Pentair (www.pentair.com) is a diversified manufacturer operating in tools, equipment, water technologies, and enclosures markets. The company employs 14,000 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 those described in the company's Annual Report on Form 10K for the year ended December 31, 1999. Actual results could differ materially from anticipated results.

                                PENTAIR, INC.
                Consolidated Statements of Income (Unaudited)

                             Three Months Ended          Six Months Ended
                           July 1       June 26       July 1       June 26
    In thousands, except
     per-share data         2000          1999         2000          1999

    Net sales             $781,886      $507,225   $1,494,164      $977,718
    Cost of goods sold     554,500       347,215    1,048,572       667,874
    Gross profit           227,386       160,010      445,592       309,844
    Selling, general
     and administrative    140,912       102,323      274,280       199,679
    Research and
     development             8,869         6,062       18,865        12,102
    Restructuring charge       --            --           200        38,000
    Operating income        77,605        51,625      152,247        60,063
    Net interest expense    20,005         7,082       40,410        11,992
    Income before
     income taxes           57,600        44,543      111,837        48,071
    Income taxes            21,041        16,258       41,379        17,546
    Net income             $36,559       $28,285      $70,458       $30,525

    Earnings per
     common share
      Basic                  $0.75         $0.67        $1.45         $0.72
      Diluted                $0.75         $0.66        $1.45         $0.71

    Weighted average common
     shares outstanding
      Basic                 48,516        42,642       48,485        42,433
      Diluted               48,741        43,038       48,658        43,056


                                  PENTAIR, INC.
         Financial Information By Reportable Business Segment (Unaudited)

                               Six        Second        First
                            Months       Quarter      Quarter          Year
    In thousands              2000          2000         2000          1999

    Net Sales
    Tools                 $505,748      $269,053     $236,695      $852,869
    Equipment              139,623        67,406       72,217       308,954
    Water                  481,607       255,627      225,980       572,259
    Enclosures             367,186       189,800      177,386       633,671
    Other                       --            --           --            --
    Consolidated        $1,494,164      $781,886     $712,278    $2,367,753

    Operating Income (Loss) Before Restructuring Charge
    Tools                  $39,904       $16,032      $23,872      $106,987
    Equipment                1,857         (776)        2,633        27,555
    Water                   72,196        41,448       30,748        73,362
    Enclosures              47,901        24,692       23,209        63,089
    Other                  (9,411)       (3,791)      (5,620)      (18,662)
    Consolidated          $152,447       $77,605      $74,842      $252,331

    Operating Income (Loss) Before Restructuring Charge
     as a Percent of Net Sales
    Tools                     7.9%          6.0%        10.1%         12.5%
    Equipment                 1.3%        (1.2%)         3.6%          8.9%
    Water                    15.0%         16.2%        13.6%         12.8%
    Enclosures               13.0%         13.0%        13.1%         10.0%
    Consolidated             10.2%          9.9%        10.5%         10.7%

    Restructuring Charge (Income) Expense
    Tools                 $(1,171)           $--     $(1,171)        $6,305
    Equipment                2,668            --        2,668        14,952
    Water                       --            --           --            --
    Enclosures             (1,297)            --      (1,297)        16,743
    Consolidated              $200           $--         $200       $38,000

    Operating Income (Loss) After Restructuring Charge
    Tools                  $41,075       $16,032      $25,043      $100,682
    Equipment                (811)         (776)         (35)        12,603
    Water                   72,196        41,448       30,748        73,362
    Enclosures              49,198        24,692       24,506        46,346
    Other                  (9,411)       (3,791)      (5,620)      (18,662)
    Consolidated          $152,247       $77,605      $74,642      $214,331


                   Fourth        Third          Six       Second       First
                  Quarter      Quarter      Quarter      Quarter     Quarter
    In thousands     1999         1999         1999         1999        1999
     Net Sales
     Tools       $344,125     $209,255     $299,489     $149,423    $150,066
     Equipment     82,804       73,115      153,035       79,594      73,441
     Water        185,824      160,865      225,570      121,937     103,633
     Enclosures   172,364      161,683      299,624      156,271     143,353
     Other             --           --           --           --          --
     Consoli-
      dated      $785,117     $604,918     $977,718     $507,225    $470,493

    Operating Income (Loss) Before Restructuring Charge
     Tools        $47,859      $24,702      $34,426      $15,611     $18,815
     Equipment      6,896        6,482       14,177        8,338       5,839
     Water         21,602       20,113       31,647       17,595      14,052
     Enclosures    19,885       16,406       26,798       14,405      12,393
     Other        (4,626)        (5,051)     (8,985)      (4,324)     (4,661)
     Consolidated $91,616      $62,652      $98,063      $51,625     $46,438

    Operating Income (Loss) Before Restructuring Charge
     as a Percent of Net Sales
      Tools         13.9%        11.8%        11.5%        10.4%       12.5%
      Equipment      8.3%         8.9%         9.3%        10.5%        8.0%
      Water         11.6%        12.5%        14.0%        14.4%       13.6%
      Enclosures    11.5%        10.1%         8.9%         9.2%        8.6%
      Consolidated  11.7%        10.4%        10.0%        10.2%        9.9%

    Restructuring Charge (Income) Expense
     Tools            $--          $--       $6,305          $--      $6,305
     Equipment         --           --       14,952           --      14,952
     Water             --           --           --           --          --
     Enclosures        --           --       16,743           --      16,743
     Consolidated     $--          $--      $38,000          $--     $38,000

    Operating Income (Loss) After Restructuring Charge
     Tools        $47,859      $24,702      $28,121      $15,611     $12,510
     Equipment      6,896        6,482         (775)       8,338      (9,113)
     Water         21,602       20,113       31,647       17,595      14,052
     Enclosures    19,885       16,406       10,055       14,405      (4,350)
     Other        (4,626)        (5,051)     (8,985)      (4,324)     (4,661)
     Consolidated $91,616      $62,652      $60,063      $51,625      $8,438

In the second quarter of 2000, we reorganized our management reporting structure into four segments, from the three segments reported in the first quarter of 2000. Prior period amounts have been restated for this change. In 1999, we recorded an initial restructuring charge of $38.0 million ($24.1 million after-tax) and in the first quarter of 2000 recorded an additional net restructuring charge of $0.2 million ($0.1 million after-tax). The status and progress of the projects implemented in 1999 were re-evaluated in the first quarter and a reduction for a change in the original estimate of $6.3 million was recorded. Three new related projects were determined as restructuring items and an additional $6.5 million charge was recorded.

CONTACT: Mark Cain, 612-486-2761, for Pentair, Inc.

SOURCE Pentair, Inc.

CONTACT: Mark Cain, 612-486-2761, for Pentair, Inc./

Categories: Press Releases