Company Outlines Actions to Address Uncertain Economic Conditions; Provides 2009 Outlook
MINNEAPOLIS--(BUSINESS WIRE)--Dec. 18, 2008--Pentair, Inc. (NYSE: PNR) today announced that it expects fourth quarter
earnings per share from continuing operations (EPS) will be $0.40 to
$0.42, on an adjusted basis. For the year, the company expects EPS to be
between $2.19 and $2.21, on an adjusted basis. Previously the company
had expected adjusted fourth quarter EPS of $0.52 to $0.55 and adjusted
full year EPS of $2.28 to $2.31. The attached schedule provides a
reconciliation of the adjusted earnings per share measures provided
above to the comparable GAAP measures.
The company expects fourth quarter sales to be approximately $770
million. Previously the company had expected to generate sales of
approximately $840 million in the period. The reduction of $70 million
in sales is due to sharp volume declines in the company's Technical
Products business as well as certain industrial, commercial and
residential Water businesses.
The company started to take aggressive cost actions at the beginning of
the third quarter in preparation for a slowing economy. However, global
economic conditions declined more quickly and intensely than forecasted.
The company is responding by accelerating restructuring actions,
instituting a freeze on hiring and annual salary increases, aggressively
reducing indirect costs and adjusting capital expenditure levels. In
aggregate, the company anticipates the actions taken in 2008 would
result in the reduction of approximately 1,600 positions representing
over ten percent of company headcount and would yield more than $75
million in reduced costs. By the end of 2009, the company is closing
fifteen facilities when compared to year-end 2007.
"The speed and impact of sluggish demand in global markets and consumer
spending has had a deeper impact on our orders and sales volumes than we
previously expected," Randy Hogan, chairman and chief executive officer
said. "Given our experience dealing with difficult residential markets
for two years now, we believe additional actions are necessary to ensure
our operations are realistically preparing for challenging global
industrial, commercial and residential markets in the coming periods."
2009 OUTLOOK
The company introduces 2009 EPS guidance range of $1.70 to $2.00 with
sales expected to decline in the range of eight to ten percent. The
company expects full year 2009 free cash flow to be at least 100 percent
conversion of net income.
"Given the uncertain depth and length of the global recession, our 2009
outlook reflects our expectation that volumes across our four global
business units will decline in the high-single to low-double digit
range," said Hogan. "The actions we are taking reflect our expectation
that the economic environment in 2009 will remain negative - and we'd
rather put volume on the upside than downside. Furthermore, when the
global economy does rebound, we believe our structural cost reductions
will position us for rapid earnings and cash flow growth," Hogan added.
"We expect our quarterly 2009 earnings results will improve sequentially
as we realize the benefits of our cost actions and the benefit of two to
three percent net material deflation," said Hogan. "However, we expect
first quarter results will be down significantly versus the first
quarter 2008, as restructuring related expenses will be at their peak,
volume in our pool business is expected to decline approximately 25
percent year over year, and the expected benefit from materials
deflation will not yet be realized in our operating results. In
conjunction with our full year guidance, first quarter sales are
expected to decline ten percent, with EPS in the range of $0.30 to $0.35
which is down when compared to prior year EPS of $0.53 on a similar
basis," Hogan concluded.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Any statements made about the company's anticipated financial results
are forward-looking statements subject to risks and uncertainties such
as continued economic growth, including the breadth and severity of the
global economic downturn; the strength of housing and related markets;
the ability to integrate acquisitions 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, as well as other risk factors set forth in our SEC filings.
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.
ABOUT PENTAIR, INC.
Pentair (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 Technical Products Group is a leader in the global
enclosures and thermal management markets, designing and manufacturing
thermal management products and standard, modified, and custom
enclosures that house and protect sensitive electronics and electrical
components. With 2007 revenues of $3.30 billion, Pentair employs
approximately 16,000 people worldwide.
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2008
to the "Adjusted" non-GAAP excluding the effect of 2008 adjustments (Unaudited)
Fourth Quarter Year
In thousands, except per-share data 2008 2008
Income from continuing operations - as reported $22M - $25M $259M - $262M
Adjustments - tax affected approx. 17M approx. (41M)
Income from continuing operations - as adjusted $39M - $42M $218M - $221M
Continuing earnings per common share - diluted
Diluted earnings per common share - as reported $0.23 - $0.25 $2.61 - $2.63
Adjustments approx. 0.17 approx. (0.42)
Diluted earnings per common share - as adjusted $0.40 - $0.42 $2.19 - $2.21
Weighted average common shares outstanding - approx. 98,400 approx. 99,200
Diluted
CONTACT: Pentair, Inc.
Todd Gleason, 763-656-5570
Vice President, Investor Relations
[email protected]
or
Rachael Jarosh, 763-656-5280
Vice President, Communications
[email protected]
Source: Pentair, Inc.