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./