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Pentair Operating Income, Sales Grow More Than 50% in First Quarter; EPS Increases 15%, Margins Improve, Order Backlog Increases
04.18.2000

ST. PAUL, Minn., April 18 /PRNewswire/ -- Pentair (NYSE: PNR) reported today that both sales and operating income improved more than 50 percent in the first quarter of 2000, while earnings per share (EPS) rose 15 percent.

For the three months ended April 1, 2000, pre-charge operating income was $74.8 million, compared to $46.4 million in the first quarter of 1999. First quarter net sales totaled $712.3 million, versus $470.5 million in the year earlier period. EPS for the first quarter of 2000 was 70 cents, compared to pre-charge EPS of 61 cents in the previous year. Cash EPS in the first quarter of 2000 was 86 cents, versus 69 cents in the same period last year. Operating margins gained 60 basis points for the quarter.

"Each of our three business sectors contributed to the positive first quarter performance, and particularly strong results were achieved by our Water Technologies and Electrical and Electronic Enclosures groups," said Winslow H. Buxton, chairman and chief executive officer. "With solid order backlogs in each of our businesses and strong growth momentum in our global markets, we are optimistic that Pentair's outstanding results will continue throughout the year."

The record first quarter 2000 results marked the 26th consecutive quarter in which Pentair's EPS from operations improved by double digits over the corresponding quarter in the prior year. In the same six and one-half year period, the company's annual revenues have increased from less than $1 billion to more than $3 billion projected in 2000.

Two significant 1999 acquisitions -- DeVilbiss Air Power Company and Essef

-- are included in the first quarter 2000 results. Buxton said that the integration of these companies into the Pentair organization is on track and, as expected, the acquisitions will be accretive to earnings within the first 12 months of Pentair ownership.

In the Enclosures Group, first quarter sales rose 24 percent from year-earlier levels. Operating profits rose 87 percent, enhanced by the benefits achieved in a 1999 restructuring, new marketing initiatives, and international economic improvement. Substantial gains were recorded by both the electronic and electrical sectors of the business, with noteworthy increases attained by custom enclosure contracts with major electronics OEMs like Motorola, Nortel, Dell, and Lucent. Total North American enclosure orders and sales increased dramatically.

"The restructured European enclosures business has been turned around, with sales growth in the mid-teens in local currencies," said Randall Hogan, Pentair president and chief operating officer. "Meanwhile, the Asian enclosure markets are benefiting from improved economic conditions."

The Professional Tools and Equipment Group showed a 42 percent sales increase, with operating profits up three percent over prior-year levels. Consumer demand in the first quarter continued strong for both Porter-Cable and Delta power tools. A new 675,000-square-foot distribution facility for the combined tool businesses came on-line in the first quarter. Although the new facility experienced start-up challenges, these were typical of projects in which large-volume distribution operations are consolidated. In the equipment area, an expected decline in sales of generators after unusually high demand created by Y2K concerns resulted in above normal distributor inventories that affected orders and shipments in the first quarter.

Professional tool dealers, catalogue merchandisers, and mega-stores, like Home Depot, Sears and Lowes, continued to provide highly successful marketing channels in an ever-changing retail world. Additional impetus is being provided by e-commerce. In the third quarter of 1999, Amazon.com acquired one of Pentair's long-time catalogue customers and, as a result, Pentair tools are now displayed prominently on the new home improvement site of the world's largest Internet marketer.

Sales in the Water Group increased 96 percent in the first quarter of 2000 versus the 1999 period, while operating earnings rose 109 percent. The improvement reflects the solid double-digit gains delivered by the existing pump and water treatment businesses, and the impact of the Essef acquisition.

"Organic growth in the water group was in the double-digits, spurred by demand from the retail, municipal, and commercial sectors," Hogan said. "Operating income was enhanced by a range of productivity improvements implemented in the quarter, as well as synergies achieved in the cross-marketing of products, such as valves and tanks."

The first quarter was highlighted by better-than-anticipated strengthening of pool and spa equipment markets, in which Pentair is now a major player. Internationally, the water group saw significant improvements in European and Asian markets with more than 30 percent growth.

Buxton said that Pentair will deliver excellent results in 2000, with anticipated record sales, operating income and EPS in the next three quarters reflecting continued strong contributions from the water and enclosures groups, and an improved performance by the tool group.

"Our excellent first quarter results illustrate the benefit of Pentair's presence in three distinct business sectors," Buxton said. "We will continue to strive for operating efficiencies, manufacturing productivity, the innovative development and marketing of high-end products, and the increased application of technologies to deliver strong sales and earnings improvement. We are confident that Pentair's consolidated sales, operating profits and EPS for the next three quarters and the full year will be in line with consensus estimates."

Pentair ( http://www.pentair.com ) is a diversified manufacturer operating in three principal markets: professional tools and equipment, water and fluid technologies, and electrical and electronic enclosures. The company employs 14,000 people in more than 50 locations around the world. Pentair's first quarter conference call, scheduled for 9:00 a.m. CDT on April 18, 2000, will be broadcast live via the Internet at http://www.streetevents.com .

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 may differ materially from anticipated results.

                                PENTAIR, INC.
                       CONSOLIDATED STATEMENT OF INCOME
                               UNAUDITED (000s)

                                                       First Quarter Ended

                                                       April 1,      March 27,
                                                        2000           1999

    Net sales                                         $712,278       $470,493
    Operating costs:
     Cost of goods sold                                494,072        320,659
     Selling, general and administrative               143,364        103,396
     Restructuring charge *                                200         38,000
      Total operating costs                            637,636        462,055

    Operating Income                                    74,642          8,438

    Interest expense -- net                             20,405          4,910

    Income before income taxes                          54,237          3,528

    Provision for income taxes                          20,338          1,288

    Net income                                         $33,899         $2,240

    Basic Earnings per Common Share                      $0.70          $0.05
    Diluted Earnings per Common Share                    $0.70          $0.05

    Weighted Average Common Shares
     Outstanding                                        48,454         42,225
     Outstanding Assuming Dilution                      48,575         43,074

  • In the First Quarter of 1999, the Company recorded a Restructuring Charge of $38.0 Million, or $0.56 per share. Excluding the Restructuring Charge, Net Income for the quarter would have been $26.4 Million or $0.61 per share.

Segment Information:

(in millions)

                     PTE          WFT          EEE       Other        Total
    2000 First Quarter

    Net Sales      $285.0       $252.2       $177.4      $(2.3)       $712.3

    Operating
     Income:
    OI Before
     Restructuring   22.8         34.5         23.2       (5.7)         74.8
    Return
     On Sales         8.0%        13.7%        13.1%        --          10.5%
    Restructuring
     Charge          (2.3)         0.8          1.3         --          (0.2)
    Operating
     Income          20.5         35.3         24.5       (5.7)         74.6

    1999 First Quarter

    Net Sales      $200.5       $128.5       $143.4       $(1.9)      $470.5

    Operating
     Income:
    OI Before
     Restructuring   22.2         16.5         12.4       (4.7)         46.4
    Return
     On Sales        11.1%        12.8%         8.7%        --           9.9%
    Restructuring
     Charge         (16.8)        (4.5)       (16.7)        --         (38.0)
    Operating
     Income           5.4         12.0         (4.3)      (4.7)          8.4

PTE = Professional Tools and Equipment

WFT = Water and Fluid Technologies

EEE = Electrical and Electronic Enclosures

Other = Corporate leadership expenses, captive insurance company,

            intermediate financial companies, charges that do not relate to
            current operations and intercompany eliminations.

SOURCE Pentair, Inc.

CONTACT: Mark Cain of Pentair, Inc., 651-639-5278/

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