Pentair's First Quarter 2004 EPS Rises 43% to $0.80 on 20% Sales
Gain GOLDEN VALLEY, Minn., April 26 /PRNewswire-FirstCall/ --
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. Pentair, Inc. and
Subsidiaries Condensed Consolidated Statements of Income
(Unaudited) Three months ended April 3 March 29 In thousands,
except per-share data 2004 2003 Net sales $ 767,141 $637,516 Cost
of goods sold 565,483 482,225 Gross profit 201,658 155,291 % of net
sales 26.3% 24.4% Selling, general and administrative 116,695
92,982 % of net sales 15.2% 14.6% Research and development 11,927
10,121 % of net sales 1.6% 1.6% Operating income 73,036 52,188 % of
net sales 9.5% 8.2% Net interest expense 11,174 9,993 % of net
sales 1.5% 1.6% Income before income taxes 61,862 42,195 % of net
sales 8.1% 6.6% Provision for income taxes 21,652 14,346 Effective
tax rate 35.0% 34.0% Net income $40,210 $27,849 Earnings per common
share Basic $ 0.82 $0.56 Diluted $ 0.80 $0.56 Weighted average
common shares outstanding Basic 49,214 49,348 Diluted 50,265 49,617
Cash dividends declared per common share $ 0.21 $0.19 Pentair, Inc.
and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
April 3 December 31 March 29 In thousands 2004 2003 2003 Assets
Current assets Cash and cash equivalents $ 63,247 $ 47,989 $ 44,604
Accounts and notes receivable, net 496,548 420,403 438,642
Inventories 309,728 285,577 309,969 Deferred tax assets 49,746
50,989 55,157 Prepaid expenses and other current assets 30,952
24,493 21,303 Total current assets 950,221 829,451 869,675
Property, plant and equipment, net 332,926 343,550 344,734 Other
assets Goodwill 1,373,575 1,373,549 1,233,918 Intangibles, net
107,003 108,118 19,042 Other 125,472 126,009 110,818 Total other
assets 1,606,050 1,607,676 1,363,778 Total assets $ 2,889,197 $
2,780,677 $ 2,578,187 Liabilities and Shareholders' Equity Current
liabilities Current maturities of long-term debt $ 4,884 $ 73,631 $
58,038 Accounts payable 213,164 170,077 182,360 Employee
compensation and benefits 74,177 84,587 66,190 Accrued product
claims and warranties 39,480 37,148 38,195 Income taxes 28,989
13,198 23,757 Other current liabilities 116,126 118,810 104,721
Total current liabilities 476,820 497,451 473,261 Long-term debt
829,135 732,862 719,770 Pension and other retirement compensation
101,250 101,704 126,073 Post-retirement medical and other benefits
41,922 42,134 42,417 Deferred tax liabilities 78,580 78,532 32,741
Other noncurrent liabilities 61,541 66,516 57,943 Total liabilities
1,589,248 1,519,199 1,452,205 Shareholders' equity 1,299,949
1,261,478 1,125,982 Total liabilities and shareholders' equity $
2,889,197 $ 2,780,677 $ 2,578,187 Days sales in accounts receivable
(13 month moving average) 55 56 59 Days inventory on hand (13 month
moving average) 61 63 63 Days in accounts payable (13 month moving
average) 51 51 53 Debt/total capital 39.1% 39.0% 40.9% Pentair,
Inc. and Subsidiaries Condensed Consolidated Statements of Cash
Flows (Unaudited) Three months ended April 3 March 29 In thousands
2004 2003 Operating activities Net income $ 40,210 $27,849
Depreciation 15,557 15,609 Other amortization 3,258 1,281 Deferred
income taxes 1,606 1,056 Stock compensation -- 208 Changes in
assets and liabilities, net of effects of business acquisitions and
dispositions Accounts and notes receivable (76,607) (33,032)
Inventories (25,742) (13,436) Prepaid expenses and other current
assets (18,298) (2,009) Accounts payable 43,408 9,747 Employee
compensation and benefits (11,086) (18,066) Accrued product claims
and warranties 2,380 647 Income taxes 15,874 11,381 Other current
liabilities 11,818 (6,284) Pension and post-retirement benefits 98
580 Other assets and liabilities 780 2,186 Net cash provided by
(used for) continuing operations 3,256 (2,283) Net cash used for
discontinued operations (331) (118) Net cash provided by (used for)
operating activities 2,925 (2,401) Investing activities Capital
expenditures (6,955) (7,711) Payments from sale of businesses --
(2,400) Acquisitions, net of cash acquired (2,296) (14,579) Equity
investments -- 142 Net cash used for investing activities (9,251)
(24,548) Financing activities Net short-term repayments -- (705)
Proceeds from long-term debt 85,816 204,558 Repayment of long-term
debt (62,485) (160,642) Proceeds from exercise of stock options
9,344 59 Dividends paid (10,457) (9,376) Net cash provided by
financing activities 22,218 33,894 Effect of exchange rate changes
on cash (634) (1,989) Change in cash and cash equivalents 15,258
4,956 Cash and cash equivalents, beginning of period 47,989 39,648
Cash and cash equivalents, end of period $63,247 $44,604 Free cash
flow Net cash provided by operating activities $ 2,925 $(2,401)
Less capital expenditures (6,955) (7,711) Free cash flow $(4,030)
$(10,112) Pentair, Inc. and Subsidiaries Supplemental Financial
Information by Reportable Business Segment (Unaudited) First Qtr
First Qtr In thousands 2004 2003 Net sales to external customers
Water $314,002 $246,440 Enclosures 174,803 139,453 Tools 278,688
251,765 Intersegment sales elimination (352) (142) Consolidated
$767,141 $637,516 Operating income (loss) Water $41,547 $29,504
Enclosures 19,354 9,865 Tools 20,763 17,686 Other (8,628) (4,867)
Consolidated $73,036 $52,188 Operating income as a percent of net
sales Water 13.2% 12.0% Enclosures 11.1% 7.1% Tools 7.5% 7.0%
Consolidated 9.5% 8.2% About Pentair, Inc. Pentair
(http://www.pentair.com/) 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. Contact Pentair: Mark Cain Tel.: (763)
656-5278 E-mail: DATASOURCE: Pentair CONTACT: Mark Cain of Pentair,
Inc., +1-763-656-5278, or Web site: http://www.pentair.com/
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