Investor Relations

News Release Details

Home Investor Relations News Releases News Release Details
//
Pentair's First Quarter 2004 EPS Rises 43% to $0.80 on 20% Sales Gain
04.26.2004

GOLDEN VALLEY, Minn., April 26 /PRNewswire-FirstCall/ -- Pentair (NYSE: PNR) announced that its first quarter 2004 earnings per share (EPS) of $0.80 increased 43 percent over EPS of $0.56 in the same period last year. Pentair's first quarter 2004 net sales totaled $767.1 million, up 20 percent from $637.5 million in the same period a year ago. Removing the effects of an acquisition, favorable currency translation, and four additional days in the first quarter 2004, sales were up approximately 11 percent over the first quarter 2003. Operating income for the first quarter 2004 totaled $73.0 million, 40 percent greater than the $52.2 million reported in the first quarter of 2003. First quarter 2004 free cash flow of negative $4 million was a $6 million improvement compared to the same period last year. Pentair expects to generate free cash flow in excess of $200 million in 2004.

"The value of our strategic initiatives and efforts to drive growth paid off well in the first quarter, with our water, enclosures, and tools businesses all delivering strong organic growth," said Pentair chairman and chief executive officer, Randall J. Hogan. "The strength of our first quarter performance demonstrates our ability to translate substantial sales gains into exceptional income improvements."

In the Water Technologies Group, first quarter 2004 sales of $314.0 million were 27 percent higher than the $246.4 million recorded in the same period last year. Growth across all of the water businesses, both domestic and international, contributed to the Group's improved performance. On an organic basis, after excluding sales from the Everpure acquisition, favorable currency translation, and the extra days in the quarter, the Group's first quarter growth rate was about 13 percent.

First quarter 2004 operating income totaled $41.5 million in Water Technologies, a 41 percent gain over the same period last year. Higher volumes, on-going productivity improvements driven by the Pentair Integrated Management System (PIMS), and supply management savings contributed to the excellent performance. All businesses contributed to a 120 basis point margin improvement, which boosted first quarter margins from 12.0 percent to 13.2 percent. The newly acquired Everpure commercial filtration business was accretive to earnings in the first quarter of Pentair's ownership.

Pentair's Enclosures Group delivered 25 percent sales growth with first quarter 2004 sales totaling $174.8 million compared to a year-earlier total of $139.5 million. Excluding favorable currency translation and after adjusting for the extra days in the quarter, the Group's first quarter sales improved about 15 percent over the same period last year. Strong industrial demand and a rebound in telecom markets combined with the results of growth initiatives targeting medical, security, defense, and food & beverage markets to drive increased sales activity in the quarter.

First quarter operating income in the Enclosures Group increased 96 percent from the same period last year, totaling $19.4 million in 2004 versus $9.9 million in 2003. Margins improved 400 basis points to 11.1 percent on the same comparison. The first quarter of 2004 marked the ninth consecutive quarter of sequential margin improvement for the Enclosures Group. The increased margins benefited from higher volume and productivity resulting from the successful implementation of PIMS and supply management initiatives.

In the Tools Group, the first quarter marked the second consecutive quarter of year-over-year sales gains and set a new all-time record for first quarter sales. Sales increased some 11 percent to $278.7 million versus $251.8 million in the same period last year, largely because of demand for pneumatic and other portable power tools and pressure washers. Excluding favorable currency translation and after adjusting for the extra days in the quarter, the Group's first quarter sales improved about seven percent over the same period last year.

Operating income for the Tools Group totaled $20.8 million, a 17 percent gain over the same period last year driven by higher sales volume and cost savings generated by the Group's PIMS and supply management programs. Margins gained 50 basis points in the first quarter versus both the first quarter of 2003 and the fourth quarter of 2003.

In early April 2004, Pentair completed the purchase of its Asian Tools joint venture business. Pentair had acquired an initial 40 percent ownership stake in the joint venture in 2001 and subsequently increased its ownership to 49 percent in 2003.

Pentair noted that the Federal Trade Commission is reviewing the proposed acquisition of WICOR Industries. Pentair expects to complete the WICOR transaction in the second or third quarter of this year. Similarly, Pentair's review of strategic alternatives for its Tools Group continues on-schedule.

"All of our businesses did a great job of managing the materials cost increases that we experienced during the first quarter, and several of our units set new performance records," Hogan said. "These strong results lend confidence to our expectations for the second quarter and full year 2004. Based on current economic conditions and our successful growth activities, we expect organic sales growth in the mid- to high-single digits for the remainder of the year. Before any impact from WICOR, we now anticipate second quarter EPS of between $1.00 and $1.05 and full year EPS of between $3.45 and $3.60."

A Pentair conference call scheduled for 11:00 a.m. CDT today will be webcast live via http://www.pentair.com. A link to the conference call is posted on the site's "Financial Information" page and will be archived at the same location.

                        Pentair, Inc. and Subsidiaries
           Condensed Consolidated Statements of Income (Unaudited)

                                                       Three months ended
                                                     April 3       March 29
    In thousands, except per-share data               2004           2003
    Net sales                                    $   767,141       $637,516
    Cost of goods sold                               565,483        482,225
    Gross profit                                     201,658        155,291
      % of net sales                                    26.3%          24.4%
    Selling, general and administrative              116,695         92,982
      % of net sales                                    15.2%          14.6%
    Research and development                          11,927         10,121
      % of net sales                                     1.6%           1.6%
    Operating income                                  73,036         52,188
      % of net sales                                     9.5%           8.2%
    Net interest expense                              11,174          9,993
      % of net sales                                     1.5%           1.6%
    Income before income taxes                        61,862         42,195
      % of net sales                                     8.1%           6.6%
    Provision for income taxes                        21,652         14,346
      Effective tax rate                                35.0%          34.0%
    Net income                                       $40,210        $27,849

    Earnings per common share
    Basic                                        $      0.82          $0.56
    Diluted                                      $      0.80          $0.56

    Weighted average common shares outstanding
    Basic                                             49,214         49,348
    Diluted                                           50,265         49,617

    Cash dividends declared per common share     $      0.21          $0.19


                        Pentair, Inc. and Subsidiaries
              Condensed Consolidated Balance Sheets (Unaudited)

                                        April 3        December 31    March 29
    In thousands                          2004            2003          2003
    Assets
    Current assets
    Cash and cash equivalents      $    63,247   $      47,989    $    44,604
    Accounts and notes
     receivable, net                   496,548         420,403        438,642
    Inventories                        309,728         285,577        309,969
    Deferred tax assets                 49,746          50,989         55,157
    Prepaid expenses and
     other current assets               30,952          24,493         21,303
    Total current assets               950,221         829,451        869,675

    Property, plant and
     equipment, net                    332,926         343,550        344,734

    Other assets
    Goodwill                         1,373,575       1,373,549      1,233,918
    Intangibles, net                   107,003         108,118         19,042
    Other                              125,472         126,009        110,818
    Total other assets               1,606,050       1,607,676      1,363,778
    Total assets                   $ 2,889,197     $ 2,780,677    $ 2,578,187

    Liabilities and
     Shareholders' Equity
    Current liabilities
    Current maturities of
     long-term debt                $     4,884     $    73,631    $    58,038
    Accounts payable                   213,164         170,077        182,360
    Employee compensation
     and benefits                       74,177          84,587         66,190
    Accrued product claims
     and warranties                     39,480          37,148         38,195
    Income taxes                        28,989          13,198         23,757
    Other current liabilities          116,126         118,810        104,721
    Total current liabilities          476,820         497,451        473,261

    Long-term debt                     829,135         732,862        719,770
    Pension and other
     retirement compensation           101,250         101,704        126,073
    Post-retirement medical
     and other benefits                 41,922          42,134         42,417
    Deferred tax liabilities            78,580          78,532         32,741
    Other noncurrent liabilities        61,541          66,516         57,943
    Total liabilities                1,589,248       1,519,199      1,452,205

    Shareholders' equity             1,299,949       1,261,478      1,125,982
    Total liabilities and
     shareholders' equity          $ 2,889,197     $ 2,780,677    $ 2,578,187

    Days sales in accounts
     receivable (13 month
     moving average)                        55              56             59
    Days inventory on hand
     (13 month moving average)              61              63             63
    Days in accounts payable
     (13 month moving average)              51              51             53
    Debt/total capital                    39.1%           39.0%          40.9%


                        Pentair, Inc. and Subsidiaries
         Condensed Consolidated Statements of Cash Flows (Unaudited)

                                                       Three months ended
                                                     April 3       March 29
    In thousands                                      2004           2003
    Operating activities
    Net income                                   $    40,210        $27,849
    Depreciation                                      15,557         15,609
    Other amortization                                 3,258          1,281
    Deferred income taxes                              1,606          1,056
    Stock compensation                                    --            208
    Changes in assets and liabilities,
     net of effects of business acquisitions
     and dispositions
      Accounts and notes receivable                  (76,607)       (33,032)
      Inventories                                    (25,742)       (13,436)
      Prepaid expenses and other current assets      (18,298)        (2,009)
      Accounts payable                                 43,408         9,747
      Employee compensation and benefits             (11,086)       (18,066)
      Accrued product claims and warranties            2,380            647
      Income taxes                                    15,874         11,381
      Other current liabilities                       11,818         (6,284)
      Pension and post-retirement benefits                98            580
      Other assets and liabilities                       780          2,186
        Net cash provided by (used for)
         continuing operations                         3,256         (2,283)
        Net cash used for discontinued operations       (331)          (118)
          Net cash provided by (used for)
           operating activities                        2,925         (2,401)

    Investing activities
    Capital expenditures                              (6,955)        (7,711)
    Payments from sale of businesses                      --         (2,400)
    Acquisitions, net of cash acquired                (2,296)       (14,579)
    Equity investments                                    --            142
        Net cash used for investing activities        (9,251)       (24,548)

    Financing activities
    Net short-term repayments                             --           (705)
    Proceeds from long-term debt                      85,816        204,558
    Repayment of long-term debt                      (62,485)      (160,642)
    Proceeds from exercise of stock options            9,344             59
    Dividends paid                                   (10,457)        (9,376)
        Net cash provided by financing activities     22,218         33,894

    Effect of exchange rate changes on cash             (634)        (1,989)
    Change in cash and cash equivalents               15,258          4,956
    Cash and cash equivalents, beginning of period    47,989         39,648
    Cash and cash equivalents, end of period         $63,247        $44,604

    Free cash flow
    Net cash provided by operating activities        $ 2,925        $(2,401)
    Less capital expenditures                         (6,955)        (7,711)
    Free cash flow                                   $(4,030)      $(10,112)


                        Pentair, Inc. and Subsidiaries
      Supplemental Financial Information by Reportable Business Segment
                                 (Unaudited)

                                                    First Qtr      First Qtr
    In thousands                                      2004           2003

    Net sales to external customers
    Water                                           $314,002       $246,440
    Enclosures                                       174,803        139,453
    Tools                                            278,688        251,765
    Intersegment sales elimination                      (352)          (142)
    Consolidated                                    $767,141       $637,516

    Operating income (loss)
    Water                                            $41,547        $29,504
    Enclosures                                        19,354          9,865
    Tools                                             20,763         17,686
    Other                                             (8,628)        (4,867)
    Consolidated                                     $73,036        $52,188

    Operating income as a percent of net sales
    Water                                               13.2%          12.0%
    Enclosures                                          11.1%           7.1%
    Tools                                                7.5%           7.0%
    Consolidated                                         9.5%           8.2%

About Pentair, Inc.

Pentair (www.pentair.com) is a diversified operating company headquartered in Minnesota. Its Water Technologies Group is a global leader in providing innovative products and systems used worldwide in the movement, treatment, storage and enjoyment of water. Pentair's Enclosures group is a leader in the global enclosures market, serving industrial and electronic customers, and its Tools Group markets innovative products under established brand names to professionals and do-it-yourself users. Pentair's 2003 revenues totaled $2.7 billion. The company employs 12,500 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 such as continued economic growth; foreign currency effects; 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.

Contact
Pentair: Mark Cain
Tel.: (763) 656-5278
E-mail: mark.cain@pentair.com

SOURCE Pentair

Categories: Press Releases