Company Raises Low End of Full Year Guidance Range to $2.30 to $2.40, an Increase of 10 to 14 Percent
-- Reports first quarter sales of $840 million, up 6 percent versus
the first quarter 2007
-- Delivers earnings per share from continuing operations (EPS) of
$0.53, up 26 percent; income from continuing operations of $53
million, up 23 percent
-- Introduces second quarter 2008 EPS guidance range of $0.64 to $0.67,
up 5 to 10 percent versus the second quarter 2007
-- Updates full-year 2008 EPS guidance to $2.30 to $2.40
MINNEAPOLIS, Minn., May 12 /Xinhua-PRNewswire/ -- Pentair, Inc.
(NYSE: PNR) today announced first quarter 2008 earnings per share from continuing operations (EPS) of $0.53. This represents an increase of 26 percent as compared to the $0.42 of EPS in the first quarter last year.
* All financial information and period-to-period references are on a
continuing operations basis unless otherwise noted. Reconciliations
to discontinued operations as well as GAAP and Non-GAAP
reconciliations are in the attached financial tables.
Total sales increased 6 percent to $840 million as compared with $793 million in the first quarter of 2007. The company delivered operating income for the first quarter of $97 million versus $81 million in the
year-earlier quarter. Overall, operating margins expanded 120 basis points to 11.5 percent driven by a positive 360 basis point improvement from volume, price, mix, acquisitions and productivity. The positive impact from these items more than offset a negative 240 basis point impact related to total inflation.
Company free cash flow was a usage of $78 million for the quarter versus a usage of $75 million for the year-earlier quarter. The company said it remains on track to achieve free cash flow greater than 100 percent conversion of income from continuing operations for 2008.
“We had a strong start to the year and are very pleased with our operating performance in the first quarter of 2008. We continue to leverage the strength of our business diversity and our growing international presence, which has enabled us to navigate the challenging North American residential markets. Strong sales growth and earnings increases in our Technical Products business enabled us to exceed our first quarter earnings guidance. In our Water businesses, we continue to drive solid growth in our industrial, commercial and municipal Water markets globally,” said Randall J. Hogan, chairman and chief executive officer.
First Quarter Business Highlights
The Water Group delivered $555 million in sales or 3 percent
year-over-year sales growth. Organic sales were flat excluding acquisitions and down 4 percent excluding foreign exchange. The decline in organic growth was driven by continuing softness in the North American residential markets. Internationally, Water sales increased at a double-digit rate.
-- Global Flow Technologies grew 8 percent or up 5 percent
excluding the 2007 acquisition of Jung Pump. Sales of pump
equipment for global commercial, municipal and agricultural markets
continue to outpace declines in North American residential markets.
-- Global Filtration grew 8 percent as the 2007 acquisition of Porous
Media boosted sales higher than the year-ago period. Excluding this
acquisition, Filtration sales were down 2 percent. Steady gains in
industrial filtration, food service and desalination products did
not offset declines in the North American residential markets.
-- Global Pool and Spa sales were down 10 percent as the prolonged
decline in North American residential pool and spa markets more than
offset continued gains in commercial and international pool
equipment sales.
-- Internationally, Water grew 17 percent in Europe because of the
2007 acquisition of Jung Pump. Sales in Asia-Pacific grew 23
percent driven by strong double-digit growth in China and India.
The Water Group’s first quarter operating income totaled $64 million, up 3 percent as compared to $62 million in the same period last year. Operating margins were flat as benefits from productivity, acquisitions and price offset the negative impact from inflation and decreased volumes.
In the quarter, the company sold its National Pool Tile business (NPT) to Pool Corporation for $30 million in cash. The transaction yielded a negative 8 cent EPS impact from discontinued operations in the first quarter 2008. Of this amount, 7 cents was attributable to a loss on the sale and 1 cent was from operational results in January and February 2008.
Technical Products delivered first quarter 2008 sales of $285 million, an increase of 13 percent versus the year-earlier period. Sales were up approximately 11 percent excluding acquisitions and up 7 percent excluding foreign exchange.
-- Global Electrical sales were up 10 percent, led by strong
double-digit increases in its Thermal applications product line
and natural resource markets (e.g., Oil & Gas, Mining).
The business also benefited from solid growth in the networking and commercial markets.
-- Global Electronic sales were up 18 percent or up 7 percent when
adjusted for acquisitions.
In Asia, electronic sales were up 46 percent while sales in North America were up approximately 7 percent. In Europe, sales were essentially flat in local currencies.
Technical Products’ first quarter operating income totaled $45 million, up 43 percent as compared to $32 million in the same quarter last year. Operating margins were 15.9 percent, up 340 basis points. In the quarter, the benefits from volume, price, productivity and acquisitions more than offset the negative impact from total inflation.
“Our businesses are performing well in their respective markets. Technical Products is firing on all cylinders. Water continues to invest in global expansion, especially in emerging markets, and in high-growth vertical markets while effectively managing the impact of the continued weakness in the North American residential market,” Hogan said. “We continue to hone our portfolio of businesses with the sale of National Pool Tile. We also made tremendous progress advancing our new Global Business Unit structure, which will enable greater growth and productivity in the future,” he added.
Outlook
The company introduces its second quarter 2008 EPS guidance range of $0.64 to $0.67, an increase of 5 to 10 percent versus the second quarter 2007. Additionally, the company raised its full year 2008 EPS guidance range to $2.30 to $2.40, up 10 to 14 percent versus full year 2007. The company’s previous full year guidance was $2.25 to $2.40.
“We expect our positive performance momentum to continue in our international Water and global Technical Products’ businesses, which enables us to update our full year guidance by increasing the low end of the range 5 cents,” Hogan said. “Our second quarter 2008 guidance reflects our expectations for continued difficult residential and pool market environments. Our guidance also takes into account the difficult
year-over-year comparison within the Flow Technologies Global Business Unit which, in the second quarter 2007, delivered $21 million in municipal pumps to New Orleans, adding 4 cents of EPS in that period.”
“For the full year, we continue to focus on delivering productivity by reducing our manufacturing cost structure, executing on previously announced restructuring actions, more aggressively managing our sourcing and reducing our general and administrative structure globally,” said Hogan.
“Further, we are evaluating pricing actions to offset the stubborn rise in some key commodities such as steel, resin, copper and aluminum. We believe these actions, coupled with our ongoing investment in key growth initiatives, will enable us to deliver on our earnings guidance.”
Earnings Conference Call
Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the Company’s performance and Q2 and full year 2008 guidance on a two-way conference call with investors at 12:00 p.m. Eastern today. Reconciliation of any non-GAAP financial measures are set forth in the attachments to this first quarter 2008 earnings release and in the first quarter 2008 earning release conference call presentation, both of which can be found at Pentair’s web site ( http://www.pentair.com ). Related financial charts and certain other information to be discussed on the conference call will be available on the company’s website shortly before the conference call. The web cast and presentation will be archived at the same site following the conclusion of the conference call.
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 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; the ability to successfully limit any judgment arising out of the Horizon litigation; 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 ( 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 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.
