ST. PAUL, Minn., Apr 16, 2002 /PRNewswire-FirstCall via COMTEX/ -- Pentair
(NYSE: PNR) today announced that its first quarter 2002 earnings per share (EPS)
of $0.43 exceeded analysts' consensus earnings estimates by $0.05 or 13 percent,
while free cash flow in the first quarter of 2002 reached $15 million -- a $68
million gain over year-ago levels. In addition, Pentair said it has raised its
expectations for second quarter 2002 EPS to a range of between $0.75 and $0.80,
while FY2002 EPS is anticipated in the range of between $2.75 and $2.90.
"Our Tools business performed well in the first quarter, our Water Technologies
businesses realized improvements in some key markets, and the restructuring of
our Enclosures business is proceeding as expected," said Randall J. Hogan,
president and CEO, who will succeed Winslow H. Buxton as Pentair chairman
effective May 1, 2002. "The first quarter provided ample evidence that our
supply management and lean enterprise initiatives have taken root, and that our
action plans are beginning to drive growth as evidenced by higher backlogs in
the Tools and Water businesses. Our businesses are committed to return to -- and
exceed -- their previously high levels of performance."
Pentair's continuing EPS for the first quarter of 2002 was $0.43, compared to
continuing EPS of $0.42 in the previous year, or $0.58 excluding 2001 goodwill
amortization. [Due to the cessation of goodwill amortization on January 1, 2002,
all references to 2001 operating results in this narrative exclude the impact of
2001 goodwill amortization.] First quarter operating income margins were 7.5
percent, as compared to 7.3 percent in the fourth quarter of 2001. First quarter
2002 operating income was $45.7 million, compared to $61.9 million in the first
quarter of 2001. First quarter net sales totaled $613.4 million, versus $671.4
million in the year earlier period. At $15 million, free cash flow was the
highest first-quarter free cash flow that Pentair has generated in the last
decade.
In the Tools Group, first quarter 2002 sales were nine percent higher than in
the same period last year, while operating income improved 64 percent on the
same comparison. First quarter operating income margins gained 220 basis points
over the first quarter 2001. Sell-through in most channels improved during the
first quarter, and higher order rates resulted in increased backlogs. Higher
profits were driven by higher volume, improved cost productivity, and results
generated by the Group's supply chain and lean enterprise practices.
In the Water Technologies Group, the strongest pump sales in more than a year
partially offset the impact of flat-water treatment markets and seasonal
weakness in pool and spa equipment markets, netting a four percent decline in
first quarter 2002 sales. First quarter 2002 operating income declined nine
percent from the same period last year. First quarter operating income margins
were 14 percent, a 260 basis point gain over the fourth quarter of last year.
In the Enclosures segment, sales in the first quarter of 2002 declined 34
percent from the record levels of a year ago. North American industrial orders
and sales have stabilized from the fourth quarter, while European and Asian
markets remain weak. Operating income for the Group was down compared to the
first quarter of 2001 due to significant industry-wide sales declines, but
operating income margins rose 90 basis points over the fourth quarter 2001
levels as the benefits of cost productivity and restructuring initiatives began
to read out in the Group's results. Pentair said it had closed four of five
enclosures manufacturing facilities scheduled for shut-down. Four support
facilities also were closed. The group's workforce was reduced by another 400
employees during the first quarter.
"We've made progress in restoring the tools business and in reducing costs
across the board, but we're also pursuing new growth opportunities," Hogan said.
"Certainly, we are in a very good position to take advantage of further
strengthening in our markets. Our progress on growth actions, coupled with the
increasing impact of our cost productivity activities, makes us confident that
Pentair's performance should continue to trend upward through 2002. Just how
steep that upward trend runs will be largely determined by the pace of economic
recovery."
A Pentair conference call scheduled for 9:00 a.m. CDT today will be webcast live
via http://www.pentair.com. The conference call, which can be found on the
site's "Financial Information" page, will be archived at the same location.
Pentair is a St. Paul-based manufacturer whose core businesses compete in tools,
water technologies, and enclosures markets. The company employs 11,500 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. Forward-looking
statements included herein are made as of the date hereof and the company
undertakes no obligation to update publicly such statements to reflect
subsequent events or circumstances. Actual results could differ materially from
anticipated results.
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
Three months ended
March 30 March 31
In thousands, except per-share data 2002 2001
Net sales $613,435 $671,383
Cost of goods sold 466,052 507,396
Gross profit 147,383 163,987
% of net sales 24.0% 24.4%
Selling, general and administrative (1) 93,292 103,392
% of net sales 15.2% 15.4%
Research and development 8,364 7,739
% of net sales 1.4% 1.2%
Operating income 45,727 52,856
% of net sales 7.5% 7.9%
Net interest expense 13,730 17,716
% of net sales 2.2% 2.6%
Other expense, write-off of investment -- 2,500
% of net sales n/a 0.4%
Income before income taxes 31,997 32,640
% of net sales 5.2% 4.9%
Provision for income taxes 10,559 12,077
Effective tax rate 33.0% 37.0%
Net income $21,438 $20,563
% of net sales 3.5% 3.1%
Earnings per common share
Basic $0.44 $0.42
Diluted $0.43 $0.42
Weighted average common shares outstanding
Basic 49,173 49,006
Diluted 49,584 49,127
Cash dividends declared per common share $0.18 $0.17
Goodwill amortization disclosure
Reported net income $21,438 $20,563
Add back goodwill amortization, net of tax -- 8,000
Adjusted net income $21,438 $28,563
Reported earnings per share -- basic $0.44 $0.42
Goodwill amortization -- 0.16
Adjusted net earnings per share -- basic $0.44 $0.58
Reported earnings per share -- diluted $0.43 $0.42
Goodwill amortization -- 0.16
Adjusted net earnings per share -- diluted $0.43 $0.58
(1) During the first quarter of 2002, we adopted SFAS 142 which requires
that goodwill no longer be amortized. First quarter 2001 selling,
general and administrative (SG&A) expense includes $9,014 of goodwill
amortization ($8,000 net of tax, or $0.16 per diluted share). SG&A
expense in 2001 excluding the impact of goodwill amortization was
$94,378, or 14.1% of sales.
Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
March 30 December 31 March 31
In thousands 2002 2001 2001
Assets
Current assets
Cash and cash equivalents $20,946 $39,844 $33,003
Accounts and notes receivable,
net 447,483 398,579 508,344
Inventories 295,391 300,923 383,194
Other current assets 87,211 90,932 94,547
Net assets of discontinued
operations 3,613 5,325 106,633
Total current assets 854,644 835,603 1,125,721
Property, plant and equipment,
net 318,758 329,500 346,820
Goodwill, net 1,085,463 1,088,206 1,132,070
Other assets 116,833 118,889 66,373
Total assets $2,375,698 $2,372,198 $2,670,984
Liabilities and Shareholders' Equity
Current liabilities
Short-term borrowings $-- $-- $170,111
Current maturities of
long-term debt 5,972 8,729 24,569
Accounts and notes payable 197,407 179,149 224,293
Accrued expenses and other
current liabilities 240,767 240,555 243,982
Total current liabilities 444,146 428,433 662,955
Long-term debt 689,136 714,977 782,173
Other noncurrent liabilities 214,929 213,786 202,421
Total liabilities 1,348,211 1,357,196 1,647,549
Shareholders' equity 1,027,487 1,015,002 1,023,435
Total liabilities and
shareholders' equity $2,375,698 $2,372,198 $2,670,984
Days sales in accounts receivable
(13 month moving average) 64 64 68
Days inventory on hand
(13 month moving average) 72 75 80
Days in accounts payable
(13 month moving average) 58 59 61
Debt/total capital 40.4% 41.6% 48.8%
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended
March 30 March 31
In thousands 2002 2001
Operating activities
Net income $21,438 $20,563
Depreciation 15,035 16,854
Amortization of intangibles and unearned
compensation 864 9,884
Deferred income taxes 2,089 (880)
Other expense, write-off of investment -- 2,500
Changes in assets and liabilities, net of
effects of business acquisitions
Accounts and notes receivable (48,583) (45,438)
Inventories 3,255 6,615
Prepaid expenses and other current assets 1,146 (3,969)
Accounts payable 21,318 (22,866)
Employee compensation and benefits (13,768) (16,832)
Accrued product claims and warranties 287 (552)
Income taxes 9,295 6,791
Other current liabilities 8,051 (3,425)
Pension and post-retirement benefits 2,506 2,930
Other assets and liabilities (2,879) (2,378)
Net cash provided by (used for)
continuing operations 20,054 (30,203)
Net cash provided by (used for)
discontinued operations 1,712 (9,894)
Net cash provided by (used for)
operating activities 21,766 (40,097)
Investing activities
Capital expenditures (6,980) (12,859)
Proceeds from sale of businesses 1,138 --
Acquisitions, net of cash acquired -- (6,937)
Equity investments (2,081) --
Other (165) --
Net cash used for investing activities (8,088) (19,796)
Financing activities
Net short-term borrowings (repayments) -- 62,016
Proceeds from long-term debt 45 2,413
Repayment of long-term debt (27,736) (1,189)
Proceeds from exercise of stock options 1,490 251
Dividends paid (8,851) (8,331)
Net cash provided by (used for)
financing activities (35,052) 55,160
Effect of exchange rate changes on cash 2,476 2,792
Change in cash and cash equivalents (18,898) (1,941)
Cash and cash equivalents, beginning of period 39,844 34,944
Cash and cash equivalents, end of period $20,946 $33,003
Free cash flow
Net cash provided by (used for)
operating activities $21,766 $(40,097)
Less capital expenditures (6,980) (12,859)
Free cash flow $14,786 $(52,956)
Weighted average common shares outstanding --
diluted 49,584 49,127
Free cash flow per share $0.30 $(1.08)
Pentair, Inc. and Subsidiaries
Supplemental Condensed Consolidated Statements of Income (Unaudited)
In thousands, Three months ended
except per-share data March 31 June 30 September 29
2001 2001 2001
Net sales $671,383 $702,076 $646,559
Cost of goods sold 507,396 531,294 487,033
Gross profit 163,987 170,782 159,526
% of net sales 24.4% 24.3% 24.7%
Selling, general and
administrative 103,392 103,183 100,537
% of net sales 15.4% 14.7% 15.5%
Research and development 7,739 7,250 7,805
% of net sales 1.2% 1.0% 1.2%
Restructuring charge -- -- --
% of net sales n/a n/a n/a
Operating income (loss) 52,856 60,349 51,184
% of net sales 7.9% 8.6% 7.9%
Net interest expense 17,716 16,241 14,409
% of net sales 2.6% 2.3% 2.2%
Other expense, write-off of
investment 2,500 -- --
% of net sales 0.4% n/a n/a
Income (loss) from continuing
operations before
income taxes 32,640 44,108 36,775
% of net sales 4.9% 6.3% 5.7%
Provision for income taxes 12,077 15,552 12,104
Effective tax rate 37.0% 35.3% 32.9%
Income (loss) from continuing
operations 20,563 28,556 24,671
% of net sales 3.1% 4.1% 3.8%
Loss on disposal of discontinued
operations, net of tax -- -- --
Net income (loss) $20,563 $28,556 $24,671
Earnings per common share
Basic
Continuing operations $0.42 $0.58 $0.50
Discontinued operations -- -- --
Basic earnings per common share $0.42 $0.58 $0.50
Diluted
Continuing operations $0.42 $0.58 $0.50
Discontinued operations -- -- --
Diluted earnings per common
share $0.42 $0.58 $0.50
Weighted average common shares outstanding
Basic 49,006 49,032 49,082
Diluted 49,127 49,274 49,410
Cash dividends declared per
common share $0.17 $0.17 $0.18
Goodwill amortization disclosure
(continuing operations)
Reported net income $20,563 $28,556 $24,671
Add back goodwill amortization,
net of tax 8,000 8,200 7,953
Adjusted net income $28,563 $36,756 $32,624
Reported earnings per share --
basic $0.42 $0.58 $0.50
Goodwill amortization 0.16 0.17 0.16
Adjusted net earnings per share --
basic $0.58 $0.75 $0.66
Reported earnings per share --
diluted $0.42 $0.58 $0.50
Goodwill amortization 0.16 0.17 0.16
Adjusted net earnings per share --
diluted $0.58 $0.75 $0.66
In thousands, except per-share data Three months ended
December 31 Year
2001 2001
Net sales $595,926 $2,615,944
Cost of goods sold 442,222 1,967,945
Gross profit 153,704 647,999
% of net sales 25.8% 24.8%
Selling, general and administrative 111,850 418,962
% of net sales 18.8% 16.0%
Research and development 8,377 31,171
% of net sales 1.4% 1.2%
Restructuring charge 40,105 40,105
% of net sales 6.7% 1.5%
Operating income (loss) (6,628) 157,761
% of net sales (1.1%) 6.0%
Net interest expense 13,122 61,488
% of net sales 2.2% 2.4%
Other expense, write-off of investment 485 2,985
% of net sales 0.1% 0.1%
Income (loss) from continuing operations
before income taxes (20,235) 93,288
% of net sales (3.4%) 3.6%
Provision for income taxes (3,961) 35,772
Effective tax rate 19.6% 38.3%
Income (loss) from continuing operations (16,274) 57,516
% of net sales (2.7%) 2.2%
Loss on disposal of discontinued operations,
net of tax (24,647) (24,647)
Net income (loss) $(40,921) $32,869
Earnings per common share
Basic
Continuing operations $(0.33) $1.17
Discontinued operations (0.50) (0.50)
Basic earnings per common share $(0.83) $0.67
Diluted
Continuing operations $(0.33) $1.17
Discontinued operations (0.50) (0.50)
Diluted earnings per common share $(0.83) $0.67
Weighted average common shares outstanding
Basic 49,070 49,047
Diluted 49,376 49,297
Cash dividends declared per common share $0.18 $0.70
Goodwill amortization disclosure
(continuing operations)
Reported net income $(16,274) $57,516
Add back goodwill amortization, net of tax 7,890 32,043
Adjusted net income $(8,384) $89,559
Reported earnings per share -- basic $(0.33) $1.17
Goodwill amortization 0.16 0.65
Adjusted net earnings per share -- basic $(0.17) $1.82
Reported earnings per share -- diluted $(0.33) $1.17
Goodwill amortization 0.16 0.65
Adjusted net earnings per share -- diluted $(0.17) $1.82
Pentair, Inc. and Subsidiaries Supplemental Financial Information by Reportable
Business Segment (Unaudited)
2002
In thousands First First Second
Net sales to external customers
Tools $261,069 $240,392 $285,905
Water 212,806 220,852 241,017
Enclosures 139,560 210,139 175,154
Consolidated $613,435 $671,383 $702,076
Operating income (loss) as reported
Tools $16,686 $7,863 $18,218
Water 29,747 28,193 35,650
Enclosures 4,608 21,237 9,834
Other (5,314) (4,437) (3,353)
Consolidated $45,727 $52,856 $60,349
Restructuring charge (income)
Tools $-- $-- $--
Water -- -- --
Enclosures -- -- --
Other -- -- --
Consolidated (1) $-- $-- $--
Goodwill amortization
Tools $-- $2,319 $2,319
Water -- 4,549 4,859
Enclosures -- 2,146 2,060
Total goodwill amortization -- 9,014 9,238
Amortization of unearned
compensation 864 870 1,443
Total amortization $864 $9,884 $10,681
Operating income (loss) excluding restructuring
charge and goodwill amortization
Tools $16,686 $10,182 $20,537
Water 29,747 32,742 40,509
Enclosures 4,608 23,383 11,894
Other (5,314) (4,437) (3,353)
Consolidated $45,727 $61,870 $69,587
Operating income (loss) before restructuring charge
and goodwill amortization as a percent of net sales
Tools 6.4% 4.2% 7.2%
Water 14.0% 14.8% 16.8%
Enclosures 3.3% 11.1% 6.8%
Consolidated 7.5% 9.2% 9.9%
2001
In thousands Third Fourth Year
Net sales to external customers
Tools $250,677 $261,632 $1,038,606
Water 231,565 194,084 887,518
Enclosures 164,317 140,210 689,820
Consolidated $646,559 $595,926 $2,615,944
Operating income (loss) as reported
Tools $17,524 $19,627 $63,232
Water 28,427 17,522 109,792
Enclosures 8,740 (37,954) 1,857
Other (3,507) (5,823) (17,120)
Consolidated $51,184 $(6,628) $157,761
Restructuring charge (income)
Tools $-- $-- $--
Water -- -- --
Enclosures -- 39,382 39,382
Other -- 1,678 1,678
Consolidated (1) $-- $41,060 $41,060
Goodwill amortization
Tools $2,318 $2,318 $9,274
Water 4,575 4,577 18,560
Enclosures 2,066 2,001 8,273
Total goodwill amortization 8,959 8,896 36,107
Amortization of unearned
compensation 1,442 1,813 5,568
Total amortization $10,401 $10,709 $41,675
Operating income (loss) excluding restructuring
charge and goodwill amortization
Tools $19,842 $21,945 $72,506
Water 33,002 22,099 128,352
Enclosures 10,806 3,429 49,512
Other (3,507) (4,145) (15,442)
Consolidated $60,143 $43,328 $234,928
Operating income (loss) before restructuring charge
and goodwill amortization as a percent of net sales
Tools 7.9% 8.4% 7.0%
Water 14.3% 11.4% 14.5%
Enclosures 6.6% 2.4% 7.2%
Consolidated 9.3% 7.3% 9.0%
(1) $955 thousand of the fourth quarter 2001 restructuring charge is
included in cost of goods sold on the consolidated income statements
for the write-down of inventory on certain product lines that were
discontinued as a result of plant closures.
SOURCE Pentair
CONTACT: Mark Cain of Pentair, +1-651-639-5278