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Pentair's First Quarter 2003 EPS Rises 30% on 6% Sales Gain
04.17.2003

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
Categories: Press Releases