MINNEAPOLIS, July 11 /PRNewswire/ -- Pentair, Inc. (NYSE: PNR - news) reported today that sustained strong performances by its water and enclosures businesses in the second quarter are expected to largely offset near-term delays in achieving the benefits of cost initiatives in its tool and service equipment businesses. Pentair also is establishing a reserve to cover the deterioration in credit quality of a significant customer.
Earnings per share (EPS) for the quarter will be up 14 percent over the same period last year, but will be below the consensus of analyst estimates. The Year 2000 second quarter, however, is expected to reflect a 50 percent sales and operating income gain, marking Pentair's 27th consecutive quarter of double-digit earnings improvement.
``With the delay of our initiatives in the tools and equipment businesses, we are now looking at about $.75 in second quarter EPS and roughly $3.25 in EPS for the full year 2000, versus the $.90 and $3.66 consensus estimate of analysts,'' said Winslow H. Buxton, Pentair chairman and chief executive officer. ``We are also taking a prudent look at Year 2001 and now estimate EPS of about $4.00, which would be in line with our long-time standard of delivering 20 per cent EPS improvement, although below the $4.28 consensus of analyst estimates.
``The delay in benefits is isolated to a single operating group,'' Buxton said. ``It is largely a product of our ongoing efforts to consolidate the tools and equipment businesses into more efficient units and to expand and add to their capability. It does not reflect any overall market weakness or the potential of our businesses to meet our expectations for long-term growth and viability. There is significant strength in all of our core markets. We simply underestimated the time required to implement a complex program of strategic initiatives.''
The Professional Tools and Equipment Segment is being reorganized to separate the tools business (Delta, Porter-Cable, and DeVilbiss Air Power Company) from the service equipment businesses (Century and Lincoln Automotive). Lincoln Industrial, currently part of the Water and Fluid Technologies Group, is being realigned with the service equipment businesses to form a new ``Equipment'' segment. ``This realignment allows management to better focus on issues that are unique to each of the new segments and to ensure resolution of the current initiatives,'' Buxton said.
``Overall, our business fundamentals are very strong,'' Buxton said. ``Aside from the challenges encountered by our tools and equipment businesses, all of our operations are performing at excellent levels. Margins are up, cash flow is very positive, and with our acquisitions and internal initiatives, we have established many opportunities for long-term growth and success.
``In correcting the situation in our tools and equipment businesses, we are calling on the extensive turnaround skills that Pentair has demonstrated in both our acquisitions and in the revitalization of other operations that had not met our expectations. Our remedial strategy is well underway. The situation, however, will not be resolved overnight, but we are confident that the tools business will return to their traditionally strong performance levels within the next year.''
Pentair ( http://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.
Contact: Mark Cain of Pentair, Inc., 612-486-2761.