Pentair’s First Quarter 2004

28.04.2004

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.

About Pentair, Inc.

Pentair 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.

Source: Pentair plc.

More articles on this topic