- Second quarter sales of $1.06 billion.
- Second quarter GAAP EPS of $0.92 and adjusted EPS of
$1.02.
- The company updates its full year 2022 GAAP EPS guidance to
approximately $3.40 to $3.45 and on an adjusted basis to
approximately $3.70 to $3.75.
Reconciliations of GAAP to Non-GAAP measures are in the attached
financial tables.
Pentair plc (NYSE: PNR) today announced second quarter 2022
sales of $1.06 billion. Sales were up 13 percent compared to sales
for the same period last year. Excluding currency translation,
acquisitions and divestitures, core sales grew 12 percent in the
second quarter. Second quarter 2022 earnings per diluted share from
continuing operations (“EPS”) were $0.92 compared to $0.79 in the
second quarter of 2021. On an adjusted basis, the company reported
EPS of $1.02 compared to $0.84 in the second quarter of 2021.
Segment income, adjusted net income, free cash flow and adjusted
EPS are described in the attached schedules.
John L. Stauch, Pentair’s President and Chief Executive Officer,
commented: “We reported strong second quarter results with double
digit growth in sales, segment income, and adjusted EPS. We were
particularly encouraged with our strong margin expansion, both
sequentially and year-over-year, as price read out and more than
offset continued inflationary headwinds. While ongoing supply chain
inefficiencies remain, our teams continue to deliver for our
customers and we are seeing improvement in our lead times.”
Second quarter 2022 operating income was $191 million, up 18
percent compared to operating income for the second quarter of
2021, and return on sales (“ROS”) was 17.9 percent, an increase of
70 basis points when compared to the second quarter of 2021. On an
adjusted basis, the company reported segment income of $206 million
for the second quarter of 2022, up 18 percent compared to segment
income for the second quarter of 2021, and ROS was 19.3 percent, an
increase of 70 basis points when compared to the second quarter of
2021.
Consumer Solutions sales were up 19 percent compared to sales
for the same period last year. Excluding currency translation,
acquisitions and divestitures, core sales grew 15 percent in the
second quarter. Segment income of $169 million was up 18 percent
compared to the second quarter of 2021, and ROS was 24.7 percent, a
decrease of 20 basis points when compared to the second quarter of
2021 and up significantly from the first quarter of 2022.
Industrial & Flow Technologies sales were up 4 percent
compared to sales for the same period last year. Excluding currency
translation, acquisitions and divestitures, core sales grew 7
percent in the second quarter. Segment income of $59 million was up
4 percent compared to the second quarter of 2021, and ROS was 15.7
percent, flat when compared to the second quarter of 2021.
Net cash provided by operating activities of continuing
operations was $308 million for the quarter compared to $380
million in the second quarter of 2021 and free cash flow provided
by continuing operations for the quarter was $288 million compared
to $369 million in the second quarter of 2021.
Pentair paid a regular cash dividend of $0.21 per share in the
second quarter of 2022. Pentair previously announced on May 16,
2022 that it will pay a regular quarterly cash dividend of $0.21
per share on August 5, 2022 to shareholders of record at the close
of business on July 22, 2022. This year marks the 46th consecutive
year that Pentair has increased its dividend.
Mr. Stauch continued, “We are also excited to have received all
of the necessary regulatory approvals related to our acquisition of
Manitowoc Ice, and are expecting to close on or around July 28,
subject to closing conditions. With the significant growth of our
Pool business since 2019 and our Water Solutions business expected
to exceed $1 billion in sales on a pro forma basis including
Manitowoc Ice, we will be moving to three reporting segments
starting January 1, 2023: Pool, Water Solutions, and Industrial
& Flow Technologies.
“We believe this new segment structure will help us accelerate
our efforts to improve customer experiences, differentiate our
products, and drive profitability for our shareholders. We remain
excited about Pentair’s long-term prospects and we look forward to
building on our success of the past few years.”
Effective January 1, 2023, Pentair will move to three reporting
segments: Pool, Water Solutions, and Industrial & Flow
Technologies. The following leadership changes will be effective
upon the move to three segments.
- Our Pool business, currently part of Consumer Solutions, is a
leader in North America pool equipment. Our new Pool segment will
be led by Jerome Pedretti, who joined Pentair in 2005. Currently
Mr. Pedretti is EVP and President of the Industrial & Flow
Technologies segment.
- Our new Water Solutions segment will include Manitowoc Ice,
which we expect to acquire on or around July 28, subject to closing
conditions. Water Solutions will be led by Adrian Chiu, who joined
Pentair in 2011. Currently Mr. Chiu is EVP, Chief Transformation
Officer and Chief Human Resources Officer.
- The Industrial & Flow Technologies segment will remain the
same. The segment will be led by De’Mon Wiggins, who joined Pentair
in 2010 and who is currently the President of the Pool
business.
- In connection with these changes, Steve Pilla will assume the
role of Chief Transformation Officer, in addition to his current
role of EVP, Chief Supply Chain Officer, and the company will begin
a search for a new Chief Human Resources Officer.
The company plans to provide historical financials reflecting
this realignment when it reports its fourth quarter 2022 earnings
in early 2023.
OUTLOOK
The company updates its estimated 2022 GAAP EPS from continuing
operations to approximately $3.40 to $3.45 and on an adjusted EPS
basis to approximately $3.70 to $3.75. The company updates full
year 2022 sales guidance to be up approximately 8 to 10 percent on
a reported basis. The updated guidance primarily reflects the
negative impacts of foreign exchange and higher interest rates in
addition to further margin expansion. The company’s outlook for
2022 does not include the anticipated Manitowoc Ice
acquisition.
In addition, the company introduces third quarter 2022 GAAP EPS
from continuing operations guidance of approximately $0.90 to $0.92
and on an adjusted EPS basis of approximately $0.93 to $0.95. The
company expects third quarter sales to be up approximately 3 to 5
percent on a reported basis compared to the third quarter of
2021.
“I am proud of the resiliency of our manufacturing teams and I
am excited about our continued growth prospects across our diverse
portfolio despite near term external challenges. We believe the
addition of Manitowoc Ice to our commercial platform, combined with
our new segmentation and focused transformation efforts, will
continue to drive value for our shareholders,” added Mr.
Stauch.
EARNINGS CONFERENCE CALL
Pentair President and Chief Executive Officer John L. Stauch and
Chief Financial Officer Robert P. Fishman will discuss the
company’s second quarter 2022 results on a two-way conference call
with investors at 9:00 a.m. Eastern Daylight Time today. A live
audio webcast of the call, along with the related presentation, can
be accessed in the Investor Relations section of the company’s
website, www.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, each 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 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,” “could,” “positioned,” “strategy,”
“future” or words, phrases or terms of similar substance or the
negative thereof, are forward-looking statements. All statements
made about the anticipated Manitowoc Ice acquisition and statements
about our expected 2022 financial results 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 our ability to close the Manitowoc Ice
acquisition on the expected terms and time schedule, including
satisfying closing conditions; our ability to integrate the
Manitowoc Ice acquisition successfully; our ability to retain
customers and employees of Manitowoc Ice; the overall impact of the
COVID-19 pandemic on our and the Manitowoc Ice business; the
duration and severity of the COVID-19 pandemic, the impact of virus
variants and the effectiveness of vaccinations; actions that may be
taken by us, other businesses and governments to address or
otherwise mitigate the impact of the COVID-19 pandemic, including
those that may impact our ability to operate our facilities, meet
production demands, and deliver products to our customers; the
impacts of the COVID-19 pandemic on the global economy, our
workforce, customers and suppliers, and customer demand; overall
global economic and business conditions impacting our business,
including the strength of housing and related markets and
conditions relating to the conflict between Russia and Ukraine and
related sanctions; supply, demand, logistics, competition and
pricing pressures related to and in the markets we serve;
volatility in currency exchange rates; failure of markets to accept
new product introductions and enhancements; the ability to
successfully identify, finance, complete and integrate
acquisitions; the ability to achieve the benefits of our
restructuring plans, cost reduction initiatives and transformation
program; risks associated with operating foreign businesses and
foreign supply chains; the impact of raw material, logistics and
labor costs and other inflation; the impact of seasonality of sales
and weather conditions; our ability to comply with laws and
regulations; the impact of changes in laws, regulations and
administrative policy, including those that limit U.S. tax benefits
or impact trade agreements and tariffs; the outcome of litigation
and governmental proceedings; and the ability to achieve our
long-term strategic operating and ESG goals. Additional information
concerning these and other factors is contained in our filings with
the U.S. Securities and Exchange Commission, including our Annual
Report on Form 10-K for the year ended December 31, 2021 and our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.
All forward-looking statements, including all financial forecasts,
speak only as of the date of this release. Pentair assumes no
obligation, and disclaims any obligation, to update the information
contained in this release.
ABOUT PENTAIR PLC
At Pentair, we inspire people to move, improve and enjoy life’s
essential resources for happier, healthier lives. From our
residential and business water solutions, to our sustainable
innovations and applications, we deliver smart, sustainable
solutions for life.
Pentair had revenue in 2021 of approximately $3.8 billion, and
trades under the ticker symbol PNR. With approximately 11,250
global employees serving customers in more than 150 countries, we
work to help improve lives and the environment around the world. To
learn more, visit Pentair.com.
Pentair plc and
Subsidiaries
Condensed Consolidated
Statements of Operations (Unaudited)
Three months ended
Six months ended
In millions, except per-share data
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Net sales
$
1,064.2
$
941.1
$
2,063.8
$
1,807.0
Cost of goods sold
704.7
600.1
1,372.1
1,150.8
Gross profit
359.5
341.0
691.7
656.2
% of net sales
33.8
%
36.2
%
33.5
%
36.3
%
Selling, general and administrative
145.6
158.2
309.7
294.8
% of net sales
13.7
%
16.8
%
15.0
%
16.3
%
Research and development
23.1
21.0
45.4
42.5
% of net sales
2.2
%
2.2
%
2.2
%
2.4
%
Operating income
190.8
161.8
336.6
318.9
% of net sales
17.9
%
17.2
%
16.3
%
17.6
%
Other expense:
Other expense
0.1
0.3
0.2
0.7
Net interest expense
9.2
3.8
14.9
8.9
% of net sales
0.9
%
0.4
%
0.7
%
0.5
%
Income from continuing operations before
income taxes
181.5
157.7
321.5
309.3
Provision for income taxes
28.5
25.1
50.0
45.6
Effective tax rate
15.7
%
15.9
%
15.6
%
14.7
%
Net income from continuing
operations
153.0
132.6
271.5
263.7
Loss from discontinued operations, net of
tax
(0.1
)
(0.5
)
(1.0
)
(3.0
)
Net income
$
152.9
$
132.1
$
270.5
$
260.7
Earnings (loss) per ordinary
share
Basic
Continuing operations
$
0.93
$
0.80
$
1.65
$
1.59
Discontinued operations
—
—
(0.01
)
(0.02
)
Basic earnings per ordinary share
$
0.93
$
0.80
$
1.64
$
1.57
Diluted
Continuing operations
$
0.92
$
0.79
$
1.64
$
1.57
Discontinued operations
—
—
(0.01
)
(0.02
)
Diluted earnings per ordinary share
$
0.92
$
0.79
$
1.63
$
1.55
Weighted average ordinary shares
outstanding
Basic
164.8
166.0
165.0
166.1
Diluted
165.5
167.8
166.0
167.7
Cash dividends paid per ordinary
share
$
0.21
$
0.20
$
0.42
$
0.40
Pentair plc and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
June 30, 2022
December 31,
2021
In millions
Assets
Current assets
Cash and cash equivalents
$
135.1
$
94.5
Accounts and notes receivable, net
493.2
534.3
Inventories
695.0
562.9
Other current assets
139.3
112.3
Total current assets
1,462.6
1,304.0
Property, plant and equipment,
net
318.4
310.0
Other assets
Goodwill
2,454.8
2,504.5
Intangibles, net
407.8
428.0
Other non-current assets
228.6
207.1
Total other assets
3,091.2
3,139.6
Total assets
$
4,872.2
$
4,753.6
Liabilities and Equity
Current liabilities
Accounts payable
$
372.5
$
385.7
Employee compensation and benefits
101.5
140.1
Other current liabilities
582.1
525.9
Total current liabilities
1,056.1
1,051.7
Other liabilities
Long-term debt
911.5
894.1
Pension and other post-retirement
compensation and benefits
90.3
93.2
Deferred tax liabilities
69.9
89.8
Other non-current liabilities
181.4
202.9
Total liabilities
2,309.2
2,331.7
Equity
2,563.0
2,421.9
Total liabilities and equity
$
4,872.2
$
4,753.6
Pentair plc and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Six months ended
In millions
June 30, 2022
June 30, 2021
Operating activities
Net income
$
270.5
$
260.7
Loss from discontinued operations, net of
tax
1.0
3.0
Adjustments to reconcile net income
from continuing operations to net cash provided by (used for)
operating activities of continuing operations
Equity income of unconsolidated
subsidiaries
(0.9
)
(0.1
)
Depreciation
26.5
25.5
Amortization
12.9
13.4
Deferred income taxes
(16.9
)
(4.3
)
Share-based compensation
13.2
16.6
Amortization of bridge financing fees
7.7
—
(Gain) loss on sale of assets
(2.3
)
0.5
Changes in assets and liabilities, net
of effects of business acquisitions
Accounts receivable
31.4
(49.8
)
Inventories
(144.1
)
(31.9
)
Other current assets
(31.7
)
(10.5
)
Accounts payable
(10.0
)
51.3
Employee compensation and benefits
(35.7
)
9.4
Other current liabilities
60.4
78.7
Other non-current assets and
liabilities
(5.7
)
(1.5
)
Net cash provided by operating activities
of continuing operations
176.3
361.0
Net cash used for operating activities of
discontinued operations
(1.0
)
(0.2
)
Net cash provided by operating
activities
175.3
360.8
Investing activities
Capital expenditures
(40.1
)
(24.3
)
Proceeds from sale of property and
equipment
2.9
3.5
Acquisitions, net of cash acquired
(1.4
)
(82.8
)
Settlement of net investment hedges
8.8
—
Other
—
2.7
Net cash used for investing activities
(29.8
)
(100.9
)
Financing activities
Net borrowings of revolving long-term
debt
19.8
(20.0
)
Repayments of long-term debt
—
(103.8
)
Debt issuance costs
(8.9
)
—
Shares issued to employees, net of shares
withheld
(5.4
)
4.0
Repurchases of ordinary shares
(50.0
)
(50.0
)
Dividends paid
(69.5
)
(66.7
)
Receipts (payments) upon the maturity of
cross currency swaps
0.2
(14.7
)
Net cash used for financing activities
(113.8
)
(251.2
)
Effect of exchange rate changes on cash
and cash equivalents
8.9
5.1
Change in cash and cash
equivalents
40.6
13.8
Cash and cash equivalents, beginning of
period
94.5
82.1
Cash and cash equivalents, end of
period
$
135.1
$
95.9
Pentair plc and
Subsidiaries
Reconciliation of the GAAP
Operating Activities Cash Flow to the Non-GAAP Free Cash Flow
(Unaudited)
Three months ended
Three months ended
Six months ended
In millions
March 31, 2022
June 30, 2022
June 30, 2022
Net cash (used for) provided by operating
activities of continuing operations
$
(131.5
)
$
307.8
$
176.3
Capital expenditures
(17.7
)
(22.4
)
(40.1
)
Proceeds from sale of property and
equipment
—
2.9
2.9
Free cash flow from continuing
operations
$
(149.2
)
$
288.3
$
139.1
Net cash used for discontinued
operations
—
(1.0
)
(1.0
)
Free cash flow
$
(149.2
)
$
287.3
$
138.1
Three months ended
Three months ended
Six months ended
In millions
March 31, 2021
June 30, 2021
June 30, 2021
Net cash (used for) provided by operating
activities of continuing operations
$
(18.8
)
$
379.8
$
361.0
Capital expenditures
(13.2
)
(11.1
)
(24.3
)
Proceeds from sale of property and
equipment
3.4
0.1
3.5
Free cash flow from continuing
operations
$
(28.6
)
$
368.8
$
340.2
Net cash used for discontinued
operations
(0.2
)
—
(0.2
)
Free cash flow
$
(28.8
)
$
368.8
$
340.0
Pentair plc and
Subsidiaries
Supplemental Financial
Information by Reportable Segment (Unaudited)
2022
2021
In millions
First Quarter
Second Quarter
Six Months
First Quarter
Second Quarter
Six Months
Net sales
Consumer Solutions
$
641.2
$
686.2
$
1,327.4
$
521.4
$
576.9
$
1,098.3
Industrial & Flow Technologies
358.1
377.4
735.5
344.1
363.9
708.0
Other
0.3
0.6
0.9
0.4
0.3
0.7
Consolidated
$
999.6
$
1,064.2
$
2,063.8
$
865.9
$
941.1
$
1,807.0
Segment income (loss)
Consumer Solutions
$
138.5
$
169.2
$
307.7
$
131.0
$
143.4
$
274.4
Industrial & Flow Technologies
52.2
59.1
111.3
50.0
57.1
107.1
Other
(18.6
)
(22.4
)
(41.0
)
(16.6
)
(25.6
)
(42.2
)
Consolidated
$
172.1
$
205.9
$
378.0
$
164.4
$
174.9
$
339.3
Return on sales
Consumer Solutions
21.6
%
24.7
%
23.2
%
25.1
%
24.9
%
25.0
%
Industrial & Flow Technologies
14.6
%
15.7
%
15.1
%
14.5
%
15.7
%
15.1
%
Consolidated
17.2
%
19.3
%
18.3
%
19.0
%
18.6
%
18.8
%
Pentair plc and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Financial Measures for the Year Ending December 31,
2022
Excluding the Effect of
Adjustments (Unaudited)
Actual
Forecast
In millions, except per-share data
First
Quarter
Second
Quarter
Third
Quarter
Full
Year
Net sales
$
999.6
$
1,064.2
approx
Up 3% - 5%
approx
Up 8% - 10%
Operating income
145.8
190.8
approx
Up 9% - 11%
approx
Up 9% - 11%
% of net sales
14.6
%
17.9
%
Adjustments:
Restructuring and other
2.1
$
1.1
approx
$
—
approx
$
3
Transformation costs
5.5
5.2
approx
—
approx
11
Intangible amortization
6.6
6.3
approx
5
approx
23
Legal accrual adjustments and
settlements
(0.7
)
0.5
approx
—
approx
—
Deal-related costs and expenses
6.4
1.6
approx
—
approx
8
Russia business exit costs
5.9
—
approx
—
approx
6
Equity income of unconsolidated
subsidiaries
0.5
0.4
approx
1
approx
3
Segment income
172.1
205.9
approx
Up 5% - 7%
approx
Up 9% - 11%
Return on sales
17.2
%
19.3
%
Net income from continuing operations—as
reported
118.5
153.0
approx
$149 - $152
approx
$563 - $572
Amortization of bridge financing fees
2.6
5.1
approx
1
approx
9
Adjustments to operating income
25.8
14.7
approx
5
approx
51
Income tax adjustments
(5.4
)
(3.8
)
approx
(1
)
approx
(11
)
Net income from continuing operations—as
adjusted
$
141.5
$
169.0
approx
$154 - $157
approx
$612 - $621
Continuing earnings per ordinary
share—diluted
Diluted earnings per ordinary share—as
reported
$
0.71
$
0.92
approx
$0.90 - $0.92
approx
$3.40 - $3.45
Adjustments
0.14
0.10
approx
0.03
approx
0.30
Diluted earnings per ordinary share—as
adjusted
$
0.85
$
1.02
approx
$0.93 - $0.95
approx
$3.70 - $3.75
Pentair plc and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Financial Measures for the Year Ended December 31,
2021
Excluding the Effect of
Adjustments (Unaudited)
In millions, except per-share data
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
Net sales
$
865.9
$
941.1
$
969.2
$
988.6
$
3,764.8
Operating income
157.1
161.8
167.3
150.7
636.9
% of net sales
18.1
%
17.2
%
17.3
%
15.2
%
16.9
%
Adjustments:
Restructuring and other
1.5
3.9
0.1
2.0
7.5
Transformation costs
—
1.9
4.0
5.8
11.7
Intangible amortization
7.1
6.3
6.0
6.9
26.3
COVID-19 related costs and expenses
0.2
0.1
0.1
0.2
0.6
Legal accrual adjustments and
settlements
(2.4
)
—
—
(5.2
)
(7.6
)
Inventory step-up
—
—
—
2.3
2.3
Deal-related costs and expenses
0.7
1.0
2.1
4.1
7.9
Equity income (loss) of unconsolidated
subsidiaries
0.2
(0.1
)
0.1
0.1
0.3
Segment income
164.4
174.9
179.7
166.9
685.9
Return on sales
19.0
%
18.6
%
18.5
%
16.9
%
18.2
%
Net income from continuing operations—as
reported
131.1
132.6
143.7
148.6
556.0
Gain on sale of businesses
—
—
(1.4
)
—
(1.4
)
Pension and other post-retirement
mark-to-market gain
—
—
—
(2.4
)
(2.4
)
Other income
—
(0.3
)
—
—
(0.3
)
Adjustments to operating income
7.1
13.2
12.3
16.1
48.7
Income tax adjustments
(2.4
)
(4.6
)
(6.2
)
(17.0
)
(30.2
)
Net income from continuing operations—as
adjusted
$
135.8
$
140.9
$
148.4
$
145.3
$
570.4
Continuing earnings per ordinary
share—diluted
Diluted earnings per ordinary share—as
reported
$
0.78
$
0.79
$
0.86
$
0.89
$
3.32
Adjustments
0.03
0.05
0.03
(0.02
)
0.08
Diluted earnings per ordinary share—as
adjusted
$
0.81
$
0.84
$
0.89
$
0.87
$
3.40
Pentair plc and
Subsidiaries
Reconciliation of Net Sales
Growth to Core Net Sales Growth by Segment
For the Quarter Ended June 30,
2022 (Unaudited)
Q2 Net Sales Growth
Core
Currency
Acq. / Div.
Total
Total Pentair
12.3
%
(2.2
) %
3.0
%
13.1
%
Consumer Solutions
15.4
%
(1.2
) %
4.7
%
18.9
%
Industrial & Flow Technologies
7.4
%
(4.1
) %
0.4
%
3.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726005363/en/
Jim Lucas SVP, Treasurer, FP&A, and 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
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