GOLDEN VALLEY, Minn., April 26 /PRNewswire-FirstCall/ -- Pentair
(NYSE: PNR) today announced its first quarter 2005 results, highlighting a
50 percent year-over-year increase in earnings per share (EPS) from continuing
operations driven chiefly by share gains in robust Enclosures markets,
stronger margins in Enclosures and in Pentair's heritage water businesses, and
the contributions of the new water businesses.
Pentair's first quarter 2005 net sales totaled $709.6 million, up
45 percent from $488.5 million in the same period a year ago. Organic sales
-- removing the effects of acquisitions and excluding favorable foreign
currency exchange -- grew approximately five percent. Operating income for
the first quarter totaled $76.4 million, 52 percent greater than the
$50.1 million reported in the same period last year. First quarter 2005 EPS
of $0.42 compares to first quarter 2004 EPS from continuing operations of
$0.28. The $0.42 EPS includes a benefit of approximately one cent from a
favorable settlement of a routine IRS exam for prior years resulting in a
release of tax contingency reserves.
"We rate the first quarter of 2005 a solid success on the basis of a
45 percent gain in sales, a 52 percent improvement in operating income, a
50 percent increase in EPS, and a 50 basis point expansion in margins," said
Randall J. Hogan, Pentair chairman and chief executive officer. "Organic
growth of five percent was driven principally by nearly seven percent growth
in North America and strong growth in China, offset somewhat by lower sales in
Europe."
During the first quarter, Pentair used a net $98 million of cash to
support the combined seasonality of the Sta-Rite and Pentair Pool operations
as well as working capital requirements to facilitate the rationalization of
Water operations and cash payments for various customer rebates and employee
bonus plans. Capital expenditures were also higher due to construction of
facilities in Mexico and China that will improve Pentair's cost structure and
accommodate future growth. Pentair anticipates that cash flow for the first
half of 2005 will be positive due to reductions in working capital projected
in the second quarter. Pentair expects to exceed $200 million of free cash
flow in 2005.
In the Water Group, first quarter 2005 sales of $512.1 million were
63 percent higher than the $314.0 million recorded in the same period last
year. Strong Asian sales and improved North American sales of pumps, and
foodservice, marine and recreational vehicle filtration sales drove organic
growth. This growth was somewhat offset by the contraction of sales in
Europe, resulting in organic growth for the Water Group in the low single
digits.
First quarter 2005 operating income in the Water Group totaled
$61.8 million, up from $41.5 million for the same period last year. Operating
income margins of 12.1 percent in the first quarter reflect the lower initial
margins of the former WICOR businesses. Pentair said the Water Group showed
significant progress in closing the gap on the margin differential between the
new Water Group and Pentair's heritage Water Group, from a gap of 230 basis
points in the fourth quarter of 2004 to a gap of only 110 basis points in the
first quarter of 2005.
Integration of the former WICOR businesses proceeded as expected during
the quarter with 10 facilities closed or consolidated to date, and another
five closings or consolidations in progress. In February, Pentair completed
construction of a water products manufacturing facility near the campus of
Pentair's existing operations in Reynosa, Mexico, and production began in
March. Operations at the new facility will continue to ramp-up throughout
2005.
Pentair's Enclosures Group delivered 13 percent sales growth with first
quarter 2005 sales totaling $197.9 million compared to a year-earlier total of
$174.8 million. Sales in North America were very strong, offset by a small
reduction in European sales. Pentair attributed the overall increase to
market share gains driven by continued wins in targeted growth markets, the
impact of new product introductions, and improved service and delivery,
coupled with strong demand from North American industrial, commercial and
technology markets.
First quarter operating income in the Enclosures Group increased
34 percent from the same period last year, totaling $25.9 million in 2005
versus $19.4 million in 2004. Margins reached 13.1 percent, expanding by
200 basis points over the first quarter 2004, and delivering the Enclosures
Group's 13th consecutive quarter of sequential margin improvement. This
performance was driven by higher volume in North America and productivity
gains from the Pentair Integrated Management System and supply management
initiatives.
"In both our Water and Enclosures businesses, we are capturing solid
organic growth in those markets where we have executed our growth initiatives;
now we need to replicate those successes, particularly in Europe. In
operations, we continue to more than offset material cost inflation with
pricing and productivity, the integration of the former WICOR businesses is
progressing smoothly, and we continue to pursue acquisition opportunities in
both Water and Enclosures," Hogan said. "Looking ahead to our second quarter
results, we reiterate our expectation of EPS between $0.61 and $0.65, which is
at minimum 45 percent higher than the same period in 2004. In addition, we
are raising the low end of our previous 2005 EPS guidance from $1.95 to $2.00,
while maintaining the high end of the range at $2.10."
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 2 April 3
In thousands, except per-share data 2005 2004
Net sales $709,635 $488,453
Cost of goods sold 505,497 348,380
Gross profit 204,138 140,073
% of net sales 28.8% 28.7%
Selling, general and administrative 116,338 83,652
% of net sales 16.4% 17.1%
Research and development 11,427 6,311
% of net sales 1.6% 1.3%
Operating income 76,373 50,110
% of net sales 10.8% 10.3%
Net interest expense 11,276 7,645
% of net sales 1.6% 1.6%
Income from continuing operations
before income taxes 65,097 42,465
% of net sales 9.2% 8.7%
Provision for income taxes 21,792 14,223
Effective tax rate 33.5% 33.5%
Income from continuing operations 43,305 28,242
Income from discontinued operations, net of tax - 11,968
Net income $43,305 $40,210
Earnings per common share
Basic
Continuing operations $0.43 $0.29
Discontinued operations - 0.12
Basic earnings per common share $0.43 $0.41
Diluted
Continuing operations $0.42 $0.28
Discontinued operations - 0.12
Diluted earnings per common share $0.42 $0.40
Weighted average common shares outstanding
Basic 100,363 98,428
Diluted 102,742 100,531
Cash dividends declared per common share $ 0.130 $ 0.105
Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
April 2 December 31 April 3
In thousands 2005 2004 2004
Assets
Current assets
Cash and cash equivalents $43,839 $31,495 $63,246
Accounts and notes receivable,
net 475,603 396,459 313,016
Inventories 339,910 323,676 175,511
Current assets of
discontinued operations - - 343,343
Deferred tax assets 49,913 49,074 30,242
Prepaid expenses and other
current assets 27,838 24,433 24,863
Total current assets 937,103 825,137 950,221
Property, plant and
equipment, net 335,063 336,302 226,523
Other assets
Non-current assets of
discontinued operations - 393 534,830
Goodwill 1,620,719 1,620,404 997,283
Intangibles, net 255,028 258,126 97,487
Other 81,009 80,213 83,173
Total other assets 1,956,756 1,959,136 1,712,773
Total assets $3,228,922 $3,120,575 $2,889,517
Liabilities and
Shareholders' Equity
Current liabilities
Current maturities of
long-term debt $17,423 $11,957 $4,884
Accounts payable 185,138 195,289 122,861
Employee compensation
and benefits 76,873 104,821 54,405
Accrued product claims
and warranties 44,297 42,524 25,670
Current liabilities of
discontinued operations 192 192 167,253
Income taxes 25,446 27,395 24,842
Accrued rebates and sales
incentives 26,352 41,618 14,076
Other current liabilities 104,588 103,083 64,646
Total current liabilities 480,309 526,879 478,637
Long-term debt 848,006 724,148 829,135
Pension and other
retirement compensation 138,524 135,356 99,804
Post-retirement medical
and other benefits 70,013 69,667 25,888
Deferred tax liabilities 145,294 142,873 60,664
Other non-current liabilities 72,431 70,804 55,639
Non-current liabilities of
discontinued operations 2,866 3,054 39,801
Total liabilities 1,757,443 1,672,781 1,589,568
Shareholders' equity 1,471,479 1,447,794 1,299,949
Total liabilities and
shareholders' equity $3,228,922 $3,120,575 $2,889,517
Days sales in accounts
receivable (13 month
moving average) 54 52 53
Days inventory on hand
(13 month moving average) 65 62 57
Days in accounts payable
(13 month moving average) 57 57 54
Debt/total capital 37.0% 33.7% 39.1%
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended
April 2 April 3
In thousands 2005 2004
Operating activities
Net income $43,305 $40,210
Adjustments to reconcile net income to net
cash provided by operating activities
Net income from discontinued operations - (11,968)
Depreciation 14,463 10,441
Amortization 5,868 3,144
Deferred income taxes 2,391 643
Changes in assets and liabilities, net
of effects of business acquisitions and
dispositions
Accounts and notes receivable (85,608) 61,765)
Inventories (19,489) (9,959)
Prepaid expenses and other current assets (4,331) (5,792)
Accounts payable (7,382) 30,013
Employee compensation and benefits (27,416) (7,526)
Accrued product claims and warranties 1,544 1,265
Income taxes (1,681) 9,975
Other current liabilities (605) 4,660
Pension and post-retirement benefits 3,646 1,955
Other assets and liabilities (1,250) (2,242)
Net cash (used for) provided by
continuing operations (76,545) 3,054
Net cash provided by (used for)
discontinued operations 205 (130)
Net cash (used for) provided by
operating activities (76,340) 2,924
Investing activities
Capital expenditures (21,289) (6,955)
Acquisitions, net of cash acquired (10,301) (2,296)
Divestitures (1,190) -
Other 17 -
Net cash used for investing activities (32,763) (9,251)
Financing activities
Proceeds from long-term debt 120,000 85,816
Repayment of long-term debt 12,490 (62,485)
Proceeds from exercise of stock options 2,599 9,344
Dividends paid (13,428) (10,457)
Net cash provided by financing activities 121,661 22,218
Effect of exchange rate changes on cash (214) (634)
Change in cash and cash equivalents 12,344 15,257
Cash and cash equivalents, beginning of period 31,495 47,989
Cash and cash equivalents, end of period $43,839 $63,246
Free cash flow
Net cash (used for) provided by
operating activities $(76,340) $2,924
Less capital expenditures continuing operations (21,289) (5,480)
Less capital expenditures discontinued
operations - (1,475)
Free cash flow $(97,629) $(4,031)
Pentair, Inc. and Subsidiaries
Supplemental Financial Information by Reportable Business Segment (Unaudited)
First Qtr First Qtr
In thousands 2005 2004
Net sales to external customers
Water $512,110 $314,002
Enclosures 197,949 174,803
Intersegment sales elimination (424) (352)
Consolidated $709,635 $488,453
Operating income (loss)
Water $61,803 $41,547
Enclosures 25,926 19,354
Other (11,356) (10,791)
Consolidated $76,373 $50,110
Operating income as a percent of net sales
Water 12.1% 13.2%
Enclosures 13.1% 11.1%
Consolidated 10.8% 10.3%
About Pentair, Inc.
Pentair ( http://www.pentair.com ) is a diversified operating company
headquartered in Minnesota. Its Water 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, designing and manufacturing standard, modified and
custom enclosures that house and protect sensitive electronics and electrical
components. With 2004 revenues of $2.28 billion, or $2.76 billion on a pro
forma basis, Pentair has approximately 13,000 employees worldwide.
Any statements made about the company's anticipated financial results are
forward-looking statements subject to risks and uncertainties such as
continued economic growth; the ability to integrate the WICOR acquisition
successfully and the risk that expected synergies may not be fully realized or
may take longer to realize than expected; 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.
SOURCE Pentair
Pentair Contacts:
Rachael Jarosh
Communications
+1-763-656-5280
rachael.jarosh@pentair.com
or
Mark Cain
Investor Relations
+1-763-656-5278
mark.cain@pentair.com
both of Pentair