-
First quarter sales of $1.2 billion.
-
First quarter GAAP EPS of $0.44 and adjusted EPS
of $0.65.
-
Net cash used for operating activities of
continuing operations of $89 million and free cash flow usage from
continuing operations of $112 million. The company expects to
deliver full year free cash flow of 100 percent of adjusted net
income.
-
The company updates its 2017 GAAP EPS guidance
to a range of $2.95 to $3.05 and maintains its adjusted EPS range
of $3.45 to $3.55.
-
Pentair previously announced that it entered
into a Share Purchase Agreement to sell its Valves & Controls
business to Emerson Electric Co. for a purchase price of $3.15
billion in cash, subject to certain customary adjustments.
The results of the Valves & Controls business, which was
previously disclosed as a stand-alone reporting segment, have been
presented as discontinued operations for all periods
presented.
Reconciliations of GAAP to
Non-GAAP measures are in the attached financial tables.
LONDON, United Kingdom - April 25, 2017-
Pentair plc (NYSE: PNR) today announced first quarter 2017 sales of
$1.2 billion. Sales were down 1 percent compared to sales for the
same period last year. Excluding currency translation and
acquisitions, core sales declined 1 percent in the first
quarter. First quarter 2017 earnings per diluted share from
continuing operations ("EPS") were $0.44 compared to $0.50 in the
first quarter of 2016. On an adjusted basis, the company reported
EPS of $0.65 compared to $0.61 in the first quarter of 2016.
Segment income, adjusted net income, free cash flow, and adjusted
EPS are described in the attached schedules.
First quarter 2017 operating income was $138
million, down 9 percent compared to operating income for first
quarter of 2016, and return on sales ("ROS") was 11.7 percent, a
decrease of 110 basis points when compared to the first quarter of
2016. On an adjusted basis, the company reported segment income of
$184 million for the first quarter, up 3 percent compared to
segment income for the first quarter of 2016, and ROS was 15.5
percent, an increase of 50 basis points when compared to the first
quarter of 2016.
Net cash used for operating activities of
continuing operations was $89 million and free cash flow usage from
continuing operations was $112 million for the quarter. The
company expects to deliver full year free cash flow of 100 percent
of adjusted net income.
Pentair paid dividends of $0.345 per share in the
first quarter of 2017. Pentair previously announced on December 8,
2016 that its Board of Directors approved a 3 percent increase in
the company's regular annual cash dividend rate for 2017 to $1.38
from $1.34. 2017 marks the 41st consecutive year that Pentair
has increased its dividend.
"We had a solid start to 2017 as both of our
segments delivered ahead of their commitments and our adjusted EPS
exceeded our prior guidance," said Randall J. Hogan, Pentair
Chairman and Chief Executive Officer. "While we continue to feel
good about the progress we are making on our productivity actions,
we will monitor the important second quarter to see if the sales
momentum experienced in the first quarter is sustainable. We
expect the previously announced sale of our Valves & Controls
business to close in the coming days at which point we will gain
balance sheet optionality, and of course, we will be disciplined in
our capital allocation strategy. Finally, we are even more
confident that we can deliver double-digit adjusted EPS growth for
the full year."
OUTLOOK
The company updates its 2017 GAAP EPS to a range
of $2.95 to $3.05 and maintains its adjusted EPS range of $3.45 to
$3.55 and anticipates full year 2017 sales of $4.8 billion, or down
approximately 2 percent on a reported and core basis. The
company expects to deliver full year free cash flow of
approximately 100 percent of adjusted net income.
In addition, the company introduces second quarter
2017 GAAP EPS guidance range of $0.87 to $0.89 and, on an adjusted
EPS basis, a range of $0.97 to $0.99, up approximately 11% on an
adjusted EPS basis versus the same quarter last year. The
company expects second quarter revenue to be approximately $1.24
billion, which would be down approximately 5 percent on a reported
basis and down approximately 4 percent on a core basis compared to
second quarter 2016 revenue.
EARNINGS CONFERENCE CALL
Pentair Chairman and CEO Randall J. Hogan and
Chief Financial Officer John L. Stauch will discuss the company's
performance, first quarter 2017 results on a two-way conference
call with investors at 8:00 a.m. Eastern today. A live audio
webcast of the call, along with the related presentation, can be
accessed in the Investors section of the company's website,
pentair.com, shortly before the call begins. Reconciliations of
non-GAAP financial measures are set forth in the attachments to
this release and in the presentation, both of which can be found on
Pentair's website. The webcast and presentation will be archived at
the company's website following the conclusion of the event.
CAUTION CONCERNING
FORWARD-LOOKING STATEMENTS
This press release contains statements that we
believe to be "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical fact are
forward-looking statements. Without limitation, any statements
preceded or followed by or that include the words "targets,"
"plans," "believes," "expects," "intends," "will," "likely," "may,"
"anticipates," "estimates," "projects," "should," "would,"
"positioned," "strategy," "future" or words, phrases or terms of
similar substance or the negative thereof, are forward-looking
statements. These forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties,
assumptions and other factors, some of which are beyond our
control, which could cause actual results to differ materially from
those expressed or implied by such forward-looking statements.
These factors include the company's ability to complete the sale of
the Valves & Controls business on anticipated terms and
timetable; overall global economic and business conditions,
including worldwide demand for oil and gas; the ability to achieve
the benefits of our restructuring plans; the ability to
successfully identify, finance, complete and integrate
acquisitions; competition and pricing pressures in the markets we
serve; the strength of housing and related markets; volatility in
currency exchange rates and commodity prices; inability to generate
savings from excellence in operations initiatives consisting of
lean enterprise, supply management and cash flow practices;
increased risks associated with operating foreign businesses; the
ability to deliver backlog and win future project work; failure of
markets to accept new product introductions and enhancements; the
impact of changes in laws and regulations, including those that
limit U.S. tax benefits; the outcome of litigation and governmental
proceedings; and the ability to achieve our long-term strategic
operating goals. Additional information concerning these and other
factors is contained in our filings with the U.S. Securities and
Exchange Commission, including in our 2016 Annual Report on Form
10-K. All forward-looking statements speak only as of the date of
this report. We assume no obligation, and disclaim any obligation,
to update the information contained in this report.
ABOUT PENTAIR PLC
Pentair plc (NYSE: PNR) is a global company
dedicated to building a safer, more sustainable world. Pentair
delivers industry leading products, services and solutions that
help people make the best use of the resources they rely on most.
Its technology moves the world forward by ensuring that water is
plentiful, useful and pure, and that critical equipment and those
near it are protected. With 2016 revenues of $4.9 billion, Pentair
employs approximately 19,000 people worldwide. To learn more, visit
pentair.com.
PENTAIR CONTACTS:
Jim Lucas
Vice President, Investor Relations
Direct: 763-656-5575
Email: jim.lucas@pentair.com
Rebecca Osborn
Senior Manager, External Communications
Direct: 763-656-5589
Email: rebecca.osborn@pentair.com
|
|
|
|
|
|
|
|
|
Pentair plc and Subsidiaries |
|
|
Condensed Consolidated Statements of
Operations (Unaudited) |
|
|
|
|
|
|
Three months
ended |
In millions, except per-share
data |
March 31,
2017 |
March 31,
2016 |
Net sales |
$ |
1,183.5 |
|
$ |
1,190.0 |
|
Cost
of goods sold |
761.2 |
|
758.7 |
|
Gross profit |
422.3 |
|
431.3 |
|
% of net sales |
35.7 |
% |
36.2 |
% |
Selling, general and administrative |
253.9 |
|
250.1 |
|
% of net sales |
21.5 |
% |
21.0 |
% |
Research and development |
30.0 |
|
28.5 |
|
% of net sales |
2.5 |
% |
2.4 |
% |
Operating income |
138.4 |
|
152.7 |
|
% of net sales |
11.7 |
% |
12.8 |
% |
Other (income) expense: |
|
|
Equity
income of unconsolidated subsidiaries |
(0.2 |
) |
(0.4 |
) |
Net interest expense |
35.0 |
|
36.2 |
|
% of net sales |
3.0 |
% |
3.0 |
% |
Income from continuing operations before income
taxes |
103.6 |
|
116.9 |
|
Provision for income taxes |
22.9 |
|
25.1 |
|
Effective tax rate |
22.1 |
% |
21.5 |
% |
Net income from continuing operations |
80.7 |
|
91.8 |
|
Income from discontinued operations, net of
tax |
7.1 |
|
15.6 |
|
Net income |
$ |
87.8 |
|
$ |
107.4 |
|
Earnings per ordinary
share |
|
|
Basic |
|
|
Continuing operations |
$ |
0.44 |
|
$ |
0.50 |
|
Discontinued operations |
0.04 |
|
0.09 |
|
Basic earnings per ordinary share |
$ |
0.48 |
|
$ |
0.59 |
|
Diluted |
|
|
Continuing operations |
$ |
0.44 |
|
$ |
0.50 |
|
Discontinued operations |
0.04 |
|
0.09 |
|
Diluted earnings per ordinary share |
$ |
0.48 |
|
$ |
0.59 |
|
Weighted average ordinary shares
outstanding |
|
|
Basic |
182.0 |
|
180.7 |
|
Diluted |
184.0 |
|
182.4 |
|
Cash dividends paid per ordinary
share |
$ |
0.345 |
|
$ |
0.33 |
|
|
|
|
|
|
|
Pentair plc
and Subsidiaries |
|
Condensed
Consolidated Balance Sheets (Unaudited) |
|
|
|
|
|
|
March 31,
2017 |
December 31,
2016 |
|
In millions |
|
Assets |
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
238.1 |
|
$ |
238.5 |
|
|
Accounts and notes receivable, net |
914.4 |
|
764.0 |
|
|
Inventories |
546.0 |
|
524.2 |
|
|
Other
current assets |
264.8 |
|
253.4 |
|
|
Current assets held for sale |
877.8 |
|
891.9 |
|
|
Total current assets |
2,841.1 |
|
2,672.0 |
|
|
Property, plant and equipment,
net |
551.9 |
|
538.6 |
|
|
Other assets |
|
|
|
Goodwill |
4,295.3 |
|
4,217.4 |
|
|
Intangibles, net |
1,622.5 |
|
1,631.8 |
|
|
Other non-current assets |
195.3 |
|
182.1 |
|
|
Non-current assets held for sale |
2,311.9 |
|
2,292.9 |
|
|
Total other assets |
8,425.0 |
|
8,324.2 |
|
|
Total assets |
$ |
11,818.0 |
|
$ |
11,534.8 |
|
|
Liabilities and Equity |
|
Current liabilities |
|
|
|
Current maturities of long-term debt and short-term
borrowings |
$ |
0.7 |
|
$ |
0.8 |
|
|
Accounts payable |
387.3 |
|
436.6 |
|
|
Employee compensation and benefits |
148.0 |
|
166.1 |
|
|
Other
current liabilities |
558.6 |
|
511.5 |
|
|
Current liabilities held for sale |
303.0 |
|
356.2 |
|
|
Total current liabilities |
1,397.6 |
|
1,471.2 |
|
|
Other liabilities |
|
|
|
Long-term debt |
4,528.9 |
|
4,278.4 |
|
|
Pension and other post-retirement compensation and
benefits |
258.6 |
|
253.4 |
|
|
Deferred tax liabilities |
602.2 |
|
609.5 |
|
|
Other non-current liabilities |
149.2 |
|
162.0 |
|
|
Non-current liabilities held for sale |
506.7 |
|
505.9 |
|
|
Total liabilities |
7,443.2 |
|
7,280.4 |
|
|
Equity |
4,374.8 |
|
4,254.4 |
|
|
Total liabilities and
equity |
$ |
11,818.0 |
|
$ |
11,534.8 |
|
|
|
|
|
Pentair plc
and Subsidiaries |
Condensed
Consolidated Statements of Cash Flows (Unaudited) |
|
|
Three months
ended |
In millions |
March 31,
2017 |
March 31,
2016 |
Operating activities |
|
|
Net
income |
$ |
87.8 |
|
$ |
107.4 |
|
Income from discontinued operations, net of
tax |
(7.1 |
) |
(15.6 |
) |
Adjustments to reconcile net income (loss) from
continuing operations to net cash provided by (used for) operating
activities of continuing operations |
|
|
Equity income of unconsolidated subsidiaries |
(0.2 |
) |
(0.4 |
) |
Depreciation |
21.4 |
|
20.9 |
|
Amortization |
24.0 |
|
24.2 |
|
Deferred income taxes |
(4.7 |
) |
(13.6 |
) |
Share-based compensation |
16.4 |
|
16.1 |
|
Excess
tax benefits from share-based compensation |
- |
|
(0.5 |
) |
Gain on sale of assets |
- |
|
(2.3 |
) |
Changes in assets and liabilities, net of effects
of business acquisitions |
|
|
Accounts and notes receivable |
(130.6 |
) |
(97.5 |
) |
Inventories |
(8.6 |
) |
(9.4 |
) |
Other current assets |
(18.0 |
) |
(42.6 |
) |
Accounts payable |
(55.9 |
) |
(1.3 |
) |
Employee compensation and benefits |
(23.9 |
) |
(16.8 |
) |
Other
current liabilities |
15.8 |
|
21.3 |
|
Other non-current assets and liabilities |
(5.1 |
) |
(7.6 |
) |
Net cash provided by (used for) operating activities of
continuing operations |
(88.7 |
) |
(17.7 |
) |
Net cash provided by (used for) operating activities of
discontinued operations |
(17.3 |
) |
2.7 |
|
Net
cash provided by (used for) operating activities |
(106.0 |
) |
(15.0 |
) |
Investing activities |
|
|
Capital expenditures |
(23.6 |
) |
(32.8 |
) |
Proceeds from sale of property and equipment |
- |
|
5.4 |
|
Acquisitions, net of cash acquired |
(56.7 |
) |
(0.1 |
) |
Other |
- |
|
(0.2 |
) |
Net cash provided by (used for) investing activities of
continuing operations |
(80.3 |
) |
(27.7 |
) |
Net cash provided by (used for) investing activities of
discontinued operations |
(3.7 |
) |
(4.3 |
) |
Net
cash provided by (used for) investing activities |
(84.0 |
) |
(32.0 |
) |
Financing activities |
|
|
Net
(repayments) receipts of short-term borrowings |
(0.1 |
) |
0.7 |
|
Net receipts of commercial paper and revolving
long-term debt |
229.1 |
|
138.4 |
|
Repayment of long-term debt |
- |
|
(0.7 |
) |
Excess tax benefits from share-based
compensation |
- |
|
0.5 |
|
Shares
issued to employees, net of shares withheld |
2.8 |
|
(1.6 |
) |
Dividends paid |
(62.8 |
) |
(60.1 |
) |
Net cash provided by (used for) financing activities |
169.0 |
|
77.2 |
|
Effect of exchange rate changes on
cash and cash equivalents |
20.6 |
|
1.6 |
|
Change in cash and cash
equivalents |
(0.4 |
) |
31.8 |
|
Cash and cash equivalents, beginning of year |
238.5 |
|
126.3 |
|
Cash and cash equivalents, end of
year |
$ |
238.1 |
|
$ |
158.1 |
|
|
|
|
|
|
|
Pentair plc
and Subsidiaries |
Reconciliation of the GAAP operating activities cash flow
to the non-GAAP free cash flow (Unaudited) |
|
|
Three months
ended |
In millions |
March 31,
2017 |
March 31,
2016 |
Net cash
provided by (used for) operating activities of continuing
operations |
$ |
(88.7 |
) |
$ |
(17.7 |
) |
Capital expenditures |
(23.6 |
) |
(32.8 |
) |
Proceeds
from sale of property and equipment |
- |
|
5.4 |
|
Free cash flow from continuing
operations |
$ |
(112.3 |
) |
$ |
(45.1 |
) |
Net cash
provided by (used for) operating activities of discontinued
operations |
(17.3 |
) |
2.7 |
|
Capital expenditures of discontinued operations |
(3.9 |
) |
(5.4 |
) |
Proceeds
from sale of property and equipment of discontinued operations |
0.2 |
|
1.0 |
|
Free cash flow |
$ |
(133.3 |
) |
$ |
(46.8 |
) |
|
|
|
Pentair plc
and Subsidiaries |
Supplemental
Financial Information by Reportable Segment (Unaudited) |
|
|
|
|
|
2017 |
|
2016 |
In millions |
First
Quarter |
|
First
Quarter |
Net sales |
|
|
|
Water |
$ |
682.9 |
|
|
$ |
665.7 |
|
Electrical |
502.2 |
|
|
524.6 |
|
Other |
(1.6 |
) |
|
(0.3 |
) |
Consolidated |
$ |
1,183.5 |
|
|
$ |
1,190.0 |
|
Segment income (loss) |
|
|
|
Water |
$ |
116.0 |
|
|
$ |
101.2 |
|
Electrical |
103.5 |
|
|
112.8 |
|
Other |
(36.0 |
) |
|
(36.1 |
) |
Consolidated |
$ |
183.5 |
|
|
$ |
177.9 |
|
Return on sales |
|
|
|
Water |
17.0 |
% |
|
15.2 |
% |
Electrical |
20.6 |
% |
|
21.5 |
% |
Consolidated |
15.5 |
% |
|
14.9 |
% |
|
|
|
Pentair plc
and Subsidiaries |
Reconciliation of the GAAP year ended December 31, 2017 to
the non-GAAP |
excluding the
effect of 2017 adjustments (Unaudited) |
|
|
|
|
|
|
|
|
Actual |
|
Forecast |
In millions, except per-share
data |
First
Quarter |
|
Second
Quarter |
Full
Year |
Total Pentair |
|
|
|
|
|
|
Net sales |
$ |
1,183.5 |
|
|
approx |
$ |
1,240 |
|
approx |
$ |
4,800 |
|
Operating income |
138.4 |
|
|
approx |
227 |
|
approx |
765 |
|
% of net sales |
11.7 |
% |
|
approx |
18 |
% |
approx |
16 |
% |
Adjustments: |
|
|
|
|
|
|
Restructuring and other |
20.9 |
|
|
approx |
- |
|
approx |
21 |
|
Intangible amortization |
24.0 |
|
|
approx |
23 |
|
approx |
93 |
|
Equity
income of unconsolidated subsidiaries |
0.2 |
|
|
approx |
- |
|
approx |
1 |
|
Segment income |
183.5 |
|
|
approx |
250 |
|
approx |
880 |
|
% of net sales |
15.5 |
% |
|
approx |
20 |
% |
approx |
18 |
% |
Net income from continuing operations-as
reported |
80.7 |
|
|
approx |
165 |
|
approx |
548 |
|
Adjustments to operating income |
44.9 |
|
|
approx |
23 |
|
approx |
114 |
|
Income tax adjustments |
(6.9 |
) |
|
approx |
(5 |
) |
approx |
(23 |
) |
Net income from continuing operations-as
adjusted |
$ |
118.7 |
|
|
approx |
$ |
183 |
|
approx |
$ |
639 |
|
Continuing earnings per ordinary
share-diluted |
|
|
|
|
|
|
Diluted earnings per ordinary share-as reported |
$ |
0.44 |
|
|
approx |
$0.87 - $0.89 |
approx |
$2.95 - $3.05 |
Adjustments |
0.21 |
|
|
approx |
0.10 |
|
approx |
0.50 |
|
Diluted earnings per ordinary share-as
adjusted |
$ |
0.65 |
|
|
approx |
$0.97 - $0.99 |
approx |
$3.45 - $3.55 |
|
|
|
Pentair plc
and Subsidiaries |
Reconciliation of Net Sales Growth to Core Net Sales Growth
by Strategic Business Group |
For the
Quarter Ending March 31, 2017 |
|
|
Q1 Net Sales
Growth |
|
Core |
Currency |
Acq. / Div. |
Total |
Water |
2.4 |
% |
(0.3 |
)% |
0.5 |
% |
2.6 |
% |
Filtration & Process |
0.4 |
% |
(0.8 |
)% |
1.9 |
% |
1.5 |
% |
Flow Technologies |
(2.7 |
)% |
(0.3 |
)% |
- |
% |
(3.0 |
)% |
Aquatic & Environmental Systems |
13.1 |
% |
0.3 |
% |
(0.6 |
)% |
12.8 |
% |
Electrical |
(4.5 |
)% |
(0.4 |
)% |
0.6 |
% |
(4.3 |
)% |
Enclosures |
1.3 |
% |
(0.8 |
)% |
- |
% |
0.5 |
% |
Thermal Management |
(16.8 |
)% |
0.6 |
% |
- |
% |
(16.2 |
)% |
Electrical & Fastening Solutions |
7.0 |
% |
(0.8 |
)% |
2.6 |
% |
8.8 |
% |
Total Pentair |
(0.8 |
)% |
(0.3 |
)% |
0.5 |
% |
(0.6 |
)% |
|
|
|
Pentair plc
and Subsidiaries |
Reconciliation of the GAAP year ended December 31,
2016 to the non-GAAP |
excluding the
effect of 2016 adjustments (Unaudited) |
|
|
|
|
|
|
|
In millions, except per-share
data |
First
Quarter |
Second
Quarter |
Third
Quarter |
Fourth
Quarter |
|
Full
Year |
Total Pentair |
|
|
|
|
|
|
Net sales |
$ |
1,190.0 |
|
$ |
1,301.2 |
|
$ |
1,210.7 |
|
$ |
1,188.1 |
|
|
$ |
4,890.0 |
|
Operating income |
152.7 |
|
203.4 |
|
182.8 |
|
161.8 |
|
|
700.7 |
|
% of net sales |
12.8 |
% |
15.6 |
% |
15.1 |
% |
13.6 |
% |
|
14.3 |
% |
Adjustments: |
|
|
|
|
|
|
Restructuring and other |
0.6 |
|
12.2 |
|
8.1 |
|
(0.3 |
) |
|
20.6 |
|
Pension and other post-retirement mark-to-market
loss |
- |
|
- |
|
- |
|
4.2 |
|
|
4.2 |
|
Intangible amortization |
24.2 |
|
24.3 |
|
24.1 |
|
23.8 |
|
|
96.4 |
|
Tradename impairment |
- |
|
- |
|
- |
|
13.3 |
|
|
13.3 |
|
Equity
income of unconsolidated subsidiaries |
0.4 |
|
1.1 |
|
1.2 |
|
1.6 |
|
|
4.3 |
|
Segment income |
177.9 |
|
241.0 |
|
216.2 |
|
204.4 |
|
|
839.5 |
|
% of net sales |
15.0 |
% |
18.5 |
% |
17.9 |
% |
17.2 |
% |
|
17.2 |
% |
Net income from continuing operations-as
reported |
91.8 |
|
132.7 |
|
117.5 |
|
109.6 |
|
|
451.6 |
|
Loss
on sale of businesses |
- |
|
- |
|
- |
|
3.9 |
|
|
3.9 |
|
Adjustments to operating income |
24.8 |
|
36.5 |
|
32.2 |
|
41.0 |
|
|
134.5 |
|
Income
tax adjustments |
(5.4 |
) |
(7.9 |
) |
(7.0 |
) |
(10.7 |
) |
|
(31.0 |
) |
Net income from continuing operations-as
adjusted |
$ |
111.2 |
|
$ |
161.3 |
|
$ |
142.7 |
|
$ |
143.8 |
|
|
$ |
559.0 |
|
Continuing earnings per ordinary
share-diluted |
|
|
|
|
|
|
Diluted earnings per ordinary share-as
reported |
$ |
0.50 |
|
$ |
0.73 |
|
$ |
0.64 |
|
$ |
0.60 |
|
|
$ |
2.47 |
|
Adjustments |
0.11 |
|
0.15 |
|
0.14 |
|
0.18 |
|
|
0.58 |
|
Diluted earnings per ordinary share-as
adjusted |
$ |
0.61 |
|
$ |
0.88 |
|
$ |
0.78 |
|
$ |
0.78 |
|
|
$ |
3.05 |
|
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of Nasdaq Corporate Solutions clients.
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information contained therein.
Source: Pentair plc via Globenewswire
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