Pentair Reports 58% Operating Income Gain, 50% Sales Growth in Fourth Quarter;
1999 EPS of $2.89 Beats Consensus Estimate by 3 Cents
ST. PAUL, Minn., Jan. 31 /PRNewswire/ -- Pentair (NYSE: PNR) today reported its fourth quarter 1999 operating income increased 58 percent over 1998 levels, while sales increased 50 percent quarter over quarter.
Operating income in the fourth quarter of 1999 totaled $91.6 million compared to $57.9 million in the same period last year. Fourth quarter net sales were $785.1 million versus $524.0 million in the previous year, while EPS was $.90 per share on a diluted basis versus $.76 per diluted share in 1998. These results include the full impact of contributions from DeVilbiss Air Power Company (air compressors, pressure washers, and generators) and Essef (pressure vessels and pool and spa equipment). Even without acquisitions, Pentair's fourth quarter operating income growth exceeded 30 percent on 9 percent sales growth. The fourth quarter of 1999 was Pentair's 25th consecutive quarter in which pre-charge EPS improved by double digits over the same quarter in prior years.
For the full year 1999, Pentair achieved record sales and pre-charge earnings from continuing businesses for the eighth consecutive year. Operating margins improved for the year by 70 basis points, while margins excluding the impact of acquisitions improved by 160 basis points. Sales in 1999 were up 22 percent to $2.37 billion from $1.94 billion in 1998, while pre-charge operating income was up 31 percent to $252.3 million from $193.2 million in the previous year. Pre-charge earnings per share (EPS) for 1999 was $2.89 -- three cents higher than consensus estimates and 18 percent ahead of 1998 EPS. "Cash EPS" -- defined as regular EPS plus the after-tax impact of goodwill amortization -- was $3.38 in 1999 versus $2.75 in 1998, an improvement of 23 percent.
In announcing the results, Pentair Chairman and CEO Winslow H. Buxton said the Company's record performance underscores the ongoing success of management's strategic plan to profitably grow its business through increased market penetration, attractive acquisitions, and continued focus on cost productivity across the enterprise.
"We had an excellent year in 1999, making real progress on several fronts: we completed our two largest acquisitions, implemented new business systems and enterprise services, achieved significant cost reductions, orchestrated several business consolidations, and turned in some terrific financial results," Buxton said. "We also progressed toward our aggressive free cash flow target with yet another record cash flow in 1999. We also recorded our eighth consecutive quarter of same store margin improvement over the same quarter of the prior year."
Pentair President and Chief Operating Officer Randy Hogan said that each of Pentair's three core businesses -- Tools, Water, and Enclosures --performed well in 1999.
"We hold either number one or two market positions in each of our segments, we continue to attract new, prestigious customers to our expanding range of products, and we are driving down the costs of doing business while enhancing our level of service and quality standards," Hogan said.
Hogan stated that Pentair's proven acquisition performance remains on track as the company's integration of DeVilbiss Air Power Company and Essef exceeded expectations in the fourth quarter. Hogan noted that Pentair brought its debt to total capital back into the 50 percent range following the recent major acquisitions.
"As expected, the DeVilbiss acquisition was strongly accretive in the fourth quarter while the performance of the pool and spa equipment portion of the Essef business was much better than expected," Hogan said. "We continue to look for strategic acquisitions that will further build value for Pentair shareholders."
Sales in the Professional Tools and Equipment Group totaled $1.074 billion in 1999, a 26 percent gain over the previous year. Operating income for the Group was $122.2 million, up 23 percent from 1998. These results continue a performance record that includes four consecutive years of double-digit sales growth and six consecutive years of double-digit operating income growth. Porter-Cable's new 19.2-Volt cordless drill and circular saw -- which feature the interchangeable "Network" battery system -- sold particularly well during the holiday season.
The Water and Fluid Technologies Group reported 1999 sales of $669.6 million, a 25 percent gain over 1998. Operating income for the Group totaled $85.7 million, up 30 percent from 1998. The Group's performance benefited from supply management initiatives, higher labor productivity, and continued good sales in municipal water treatment markets. The pump business introduced a new pump for water treatment applications and new pool and spa lighting products in the fourth quarter.
The Electrical and Electronic Enclosures Group's sales totaled $633.7 million in 1999, a 12 percent gain over 1998 levels, while operating income totaled $63.1 million, a 37 percent improvement over the previous year. Return on sales for the Group was 11.5 percent for the fourth quarter of 1999 and 10 percent for full year 1999. The results of growth initiatives in industrial, data communications, and telecommunications markets, and restructuring of the European enclosure operations contributed to the Group's much-improved performance in 1999. New products supporting enclosure group growth initiatives include an outdoor telecom cabinet, networking cabinets, and integrated telecom subracks.
"We're on track to deliver another record year in 2000," Buxton said. "Our recent major acquisitions will both be accretive in 2000; we'll benefit from the numerous company-wide initiatives related to e-business, supply management, and other enterprise services; we'll continue to improve margins; we'll pursue attractive opportunities in growing business-to-business markets; and we will take full advantage of the positive trend in business activity in Europe and Asia. We have out-performed our competition over the last decade, and I fully expect to do the same in 2000."
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.
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, 1998. Actual results may differ materially from anticipated results.
PENTAIR, INC.
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED (000s)
Full Year Ended Quarter Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
Net sales $2,367,753 $1,937,578 $785,117 $524,043
Operating costs:
Cost of goods sold 1,632,723 1,330,310 546,365 355,581
Selling, general and
administrative 482,699 414,076 147,137 110,518
Restructuring charge* 38,000 0 0 0
Total operating costs 2,153,422 1,744,386 693,502 466,099
Operating Income 214,331 193,192 91,615 57,944
Interest expense - net 47,802 22,248 21,620 5,683
Income before income taxes 166,529 170,944 69,995 52,261
Provision for income taxes 63,220 64,104 27,020 19,340
Net income 103,309 106,840 42,975 32,921
Preferred dividend requirements 0 4,267 0 734
Income available to common
shareholders $103,309 $102,573 $42,975 $32,187
Basic Earnings per Common Share** $2.36 $2.67 $0.90 $0.84
Diluted Earnings per
Common Share** $2.33 $2.46 $0.90 $0.76
Weighted Average Common
Shares Outstanding 43,803 38,444 47,663 38,452
Outstanding Assuming Dilution 44,287 43,149 47,885 42,908
* 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 full year would have been
$127.4 Million or $2.89 per share.
** For 1999, due to the issuance of Equity in the Fourth Quarter, the sum
of the four quarters' Earnings per Share does not equal the Total Year
Earnings per Share.
Segment Information
Change in Segment Reporting of Operating Income
Beginning in 1999, the cost of certain administrative support services provided by the corporate office are no longer in the "Other" segment and have been allocated to the operating segments. As a result, the 1998 segment information has been restated to conform to the 1999 presentation with no effect on previously reported total operating income, net income, or shareholders' equity.
(in millions)
PTE WFT EEE Other Total
1999 Full Year
Net Sales $1,073.8 $669.6 $633.7 $(9.3) $2,367.8
Operating Income:
OI Before Restructuring 122.2 85.7 63.1 (18.7) 252.3
Return On Sales 11.4% 12.8% 10.0% -- 10.7%
Restructuring Charge (16.8) (4.5) (16.7) (0.0) (38.0)
Operating Income 105.4 81.2 46.4 (18.7) 214.3
1998 Full Year
Net Sales $849.3 $537.9 $564.0 $(13.6) $1,937.6
Operating Income:
Before Reclassification 108.2 71.4 51.8 (38.2) 193.2
Reclassification (8.6) (5.4) (5.8) 19.8 0.0
Operating Income 99.6 66.0 46.0 (18.4) 193.2
Return On Sales 11.7% 12.3% 8.2% -- 10.0%
PTE WFT EEE Other Total
1999 Fourth Quarter
Net Sales $404.6 $210.8 $172.4 $(2.7) $785.1
Operating Income:
Operating Income 50.8 25.5 19.9 (4.6) 91.6
Return On Sales 12.6% 12.1% 11.5% -- 11.7%
1998 Fourth Quarter
Net Sales $257.9 $128.6 $141.3 $(3.8) $524.0
Operating Income:
Before Reclassification 40.8 18.3 9.4 (10.6) 57.9
Reclassification (2.6) (1.3) (1.4) 5.3 0.0
Operating Income 38.2 17.0 8.0 (5.3) 57.9
Return On Sales 14.8% 13.2% 5.6% -- 11.0%
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.
For more information contact Mark Cain of Pentair, Inc., 651-639-5278.
SOURCE Pentair, Inc.
CONTACT: Mark Cain of Pentair, Inc., 651-639-5278/