Pentair’s Net Sales Increased by 13%
Pentair announced that its second quarter 2004 earnings per share (EPS) of $0.55 increased 25 percent over second quarter 2003 EPS of $0.44 (adjusted to reflect the impact of a two-for-one stock split effective June 8, 2004). Pentair's second quarter 2004 net sales totaled $813.9 million, up 13 percent from $719.0 million in the same period a year ago.
Removing the effects of an acquisition and favorable currency translation, sales were up 10 percent over the second quarter 2003. Operating income for the second quarter 2004 totaled $96.5 million, 26 percent greater than the $76.3 million reported in the second quarter of 2003. Pentair's operating income margin in the second quarter improved 130 basis points to 11.9 percent. Second quarter 2004 free cash flow was $98.8 million, bringing the first half total to $94.7 million, a $36 million improvement compared to the first half of last year.
"We continued to deliver on our performance commitments, with the water and enclosures businesses generating double digit sales growth and expanded margins," said Randall J. Hogan, Pentair chairman and chief executive officer. "In addition, the strategic repositioning of Pentair made another leap forward with our recent announcements concerning the FTC clearance of the WICOR acquisition and the pending sale of the Tools business."
In the Water Technologies Group, second quarter 2004 sales of $353.3 million were 22 percent higher than the $290.7 million recorded in the same period last year, reflecting broad-based growth in all of the water businesses. Sales of residential sump pump and effluent pump lines, pool and spa equipment, and residential water conditioning valves were particularly strong in the quarter. After excluding sales from the Everpure acquisition and the impact of favorable currency translation, the Group's second quarter growth rate was 15 percent.
Second quarter 2004 operating income totaled $59.3 million in Water Technologies, a 29 percent gain over the same period last year. Increased volume and continued progress on the Pentair Integrated Management System (PIMS) and supply management initiatives contributed to a 100 basis point margin improvement, boosting second quarter margins to 16.8 percent. The second quarter 2004 was the third consecutive quarter in which margins grew by at least 100 basis points on a quarter-over-quarter basis.
On July 6, 2004, Pentair announced it has received clearance from the Federal Trade Commission for its acquisition of WICOR Industries, a unit of Wisconsin Energy Corporation, Milwaukee. In addition, the Public Service Commission of Wisconsin approved the corporate restructuring of WICOR required to facilitate this transaction. Pentair said it expects to complete the transaction at the end of July.
"The third transformation of Pentair is nearing completion," Hogan said. "Looking to the future on a continuing operation basis, we expect third quarter EPS of between $0.29 and $0.34 and full year EPS of between $1.28 and $1.38. This is in line with our prior guidance. Further, we expect 2005 EPS of $1.95 to $2.10, which reflects 50 percent EPS growth from continuing operations. By then, we expect to have swapped the earnings of our Tools business, and the dynamics of the tools market, for the earnings of WICOR, and the prospects of our water business, for a net cash outlay of roughly $100 million -- with no dilution from prior expectations of $1.99."
Source: Pentair plc.