Pentair (NYSE:PNR)
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Pentair's First Quarter 2004 EPS Rises 43% to $0.80 on 20% Sales
Gain
GOLDEN VALLEY, Minn., April 26 /PRNewswire-FirstCall/ -- Pentair 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 (http://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:
DATASOURCE: Pentair
CONTACT: Mark Cain of Pentair, Inc., +1-763-656-5278, or
Web site: http://www.pentair.com/