ST. PAUL, Minn., Apr 17, 2003 /PRNewswire-FirstCall via COMTEX/ -- Pentair (NYSE: PNR)
today announced that its first quarter 2003 earnings per share (EPS) of $0.56
gained 30 percent over EPS of $0.43 in the same period last year. This
performance exceeded analysts' EPS expectations by $0.02. Pentair's first
quarter net sales totaled $637.5 million, up six percent from $603.1 million
in the same period a year ago. Excluding recent acquisitions, sales were flat
compared to the first quarter of 2002. Operating income for the first quarter
2003 totaled $52.2 million, 14 percent greater than the $45.7 million reported
in the first quarter of 2002.
"Pentair turned a six percent sales gain into a 30 percent EPS improvement
during the first quarter and recorded its fourth consecutive favorable
quarter-over-quarter comparison," said Randall J. Hogan, Pentair chairman and
CEO. "These results demonstrate that we continue to improve our performance in
the midst of difficult market conditions."
In the Tools Group, first quarter 2003 sales of $251.8 million were flat
compared to the same period last year and down in the mid single digits,
excluding the recent acquisition. These results reflect weak consumer
confidence and reduced spending in the quarter, both of which were aggravated
by concerns over the war in Iraq. The soft market led to increased price
pressure and higher promotional costs. In addition, the loss of some air
compressor placements in the home center channel unfavorably affected the
first quarter; however, compressor sales are expected to rebound in subsequent
quarters. Operating income of $17.7 million was six percent ahead of the same
period last year, and margins of seven percent were 40 basis points higher on
the same comparison due primarily to supply chain, lean enterprise, and cost
reduction initiatives. The Tools Group announced plans to close its Tupelo,
Mississippi operation and consolidate the manufacture of Delta woodworking
products into its Jackson, Tennessee, and Asian joint venture facilities. The
consolidation, scheduled to be complete in 2004, is expected to generate
annual savings of more than $3 million.
In the Water Technologies Group, first quarter 2003 sales of
$246.4 million increased 17 percent versus the same period last year and were
up in the mid single digits excluding the Plymouth Products acquisition. These
results were driven by growth in retail pumps, pool products, and our
international businesses, which more than offset the effects of continued
weakness in commercial and industrial pumps, and water treatment markets. The
Group's operating income of $29.5 million was down slightly compared to the
same period last year due to sales mix, expenses related to workforce
reductions, and strategic investments to drive growth. Margin improvement
efforts are focused on continued productivity improvements in the pump
business, headcount reductions, and product line rationalization and pruning.
In the Enclosures Group, sales of $139.3 million in the first quarter of
2003 were flat compared to the same period in 2002, as sales in new markets
offset continued weakness in base markets. First quarter operating income of
$9.9 million was more than double that of the previous year's first quarter,
again reflecting the benefits of ongoing restructuring, lean enterprise
practices, and supply chain management. The first quarter was the Enclosure
Group's fifth consecutive quarter of margin improvement on flat sales, gaining
20 basis points over fourth quarter 2002 margins.
"Our short-term targets are to reinforce sales in the Tools Group and
increase margins in Water Technologies, while continuing to invest in growth
initiatives," Hogan said. "With progress in these areas, we are reaffirming
our EPS guidance for 2003 of between $2.90 and $3.05, and are targeting second
quarter 2003 EPS of between $0.85 and $0.95."
A Pentair conference call scheduled for 11:00 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
12,000 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
continued economic growth; retail and industrial demand; product
introductions; and pricing and other competitive pressures. 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)
First quarter
March 29 March 30
In thousands, except per-share data 2003 2002
Net sales $637,516 $603,063
Cost of goods sold 482,225 466,052
Gross profit 155,291 137,011
% of net sales 24.4% 22.7%
Selling, general and administrative 92,982 82,920
% of net sales 14.6% 13.7%
Research and development 10,121 8,364
% of net sales 1.6% 1.4%
Operating income 52,188 45,727
% of net sales 8.2% 7.6%
Net interest expense 9,993 13,730
% of net sales 1.6% 2.3%
Income before income taxes 42,195 31,997
% of net sales 6.6% 5.3%
Provision for income taxes 14,346 10,559
Effective tax rate 34.0% 33.0%
Net income (loss) $27,849 $21,438
Earnings per common share
Basic $0.56 $0.44
Diluted $0.56 $0.43
Weighted average common shares outstanding
Basic 49,348 49,173
Diluted 49,617 49,584
Cash dividends declared per common share $0.19 $0.18
Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
March 29 December 31 March 30
In thousands 2003 2002 2002
Assets
Current assets
Cash and cash equivalents $44,604 $39,648 $20,946
Accounts and notes receivable,
net 438,642 403,793 447,483
Inventories 309,969 293,202 295,391
Deferred income taxes 55,157 55,234 67,871
Prepaid expenses and other
current assets 19,386 17,132 19,340
Net assets of discontinued
operations 1,917 1,799 3,613
Total current assets 869,675 810,808 854,644
Property, plant and equipment,
net 344,734 351,316 318,758
Goodwill and other assets 1,363,778 1,352,326 1,202,296
Total assets $2,578,187 $2,514,450 $2,375,698
Liabilities and Shareholders'
Equity
Current liabilities
Short-term borrowings $-- $686 $--
Current maturities of long-term
debt 58,038 60,488 5,972
Accounts and notes payable 182,360 171,709 197,407
Employee compensation and
benefits 66,190 84,965 59,930
Accrued product claims and
warranties 38,195 36,855 37,825
Income taxes 23,757 12,071 15,501
Other current liabilities 104,721 109,426 127,511
Total current liabilities 473,261 476,200 444,146
Long-term debt 719,770 673,911 689,136
Pension and other retirement
compensation 126,073 124,301 75,858
Post-retirement medical and
other benefits 42,417 42,815 43,367
Deferred income taxes 32,741 31,728 34,040
Other noncurrent liabilities 57,943 59,771 61,664
Total liabilities 1,452,205 1,408,726 1,348,211
Shareholders' equity 1,125,982 1,105,724 1,027,487
Total liabilities and
shareholders' equity $2,578,187 $2,514,450 $2,375,698
Days sales in accounts
receivable
(13 month moving average) 59 59 65
Days inventory on hand
(13 month moving average) 63 63 72
Days in accounts payable
(13 month moving average) 53 53 57
Debt/total capital 40.9% 39.9% 40.4%
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
First quarter
March 29 March 30
In thousands 2003 2002
Operating activities
Net income $27,849 $21,438
Depreciation 15,609 15,035
Other amortization 1,281 864
Deferred income taxes 1,056 2,089
Stock compensation 208 --
Changes in assets and liabilities, net of effects
of business acquisitions
Accounts and notes receivable (33,032) (48,403)
Inventories (13,436) 3,255
Prepaid expenses and other current assets (2,009) 1,148
Accounts payable 9,747 21,137
Employee compensation and benefits (18,068) (13,768)
Accrued product claims and warranties 647 287
Income taxes 11,381 9,295
Other current liabilities (6,284) 8,056
Pension and post-retirement benefits 580 2,506
Other assets and liabilities 2,186 (2,880)
Net cash provided by (used for)
continuing operations (2,285) 20,059
Net cash provided by (used for)
discontinued operations (118) 1,712
Net cash provided by (used for)
operating activities (2,403) 21,771
Investing activities
Capital expenditures (7,711) (6,980)
Proceeds (payments) from sale of businesses (2,400) 1,138
Acquisitions, net of cash acquired (14,510) --
Equity investments 142 (2,081)
Other -- (165)
Net cash used for investing activities (24,479) (8,088)
Financing activities
Net borrowings (repayments) of debt 43,211 (27,813)
Proceeds from exercise of stock options 53 1,490
Dividends paid (9,376) (8,851)
Net cash provided by (used for)
financing activities 33,888 (35,174)
Effect of exchange rate changes on cash (2,050) 2,593
Change in cash and cash equivalents 4,956 (18,898)
Cash and cash equivalents, beginning of period 39,648 39,844
Cash and cash equivalents, end of period $44,604 $20,946
Pentair, Inc. and Subsidiaries
Supplemental Financial Information by Reportable Business Segment
(Unaudited)
First Qtr First Qtr
In thousands 2003 2002
Net sales
Tools $251,765 $252,092
Water 246,440 211,411
Enclosures 139,311 139,560
Consolidated $637,516 $603,063
Operating income (loss)
Tools $17,686 $16,686
Water 29,504 29,747
Enclosures 9,865 4,608
Other (4,867) (5,314)
Consolidated $52,188 $45,727
Operating income as a percent of net sales
Tools 7.0% 6.6%
Water 12.0% 14.1%
Enclosures 7.1% 3.3%
Consolidated 8.2% 7.6%
Contact: Mark Cain, 651-639-5278
SOURCE Pentair
Mark Cain of Pentair, +1-651-639-5278