Manufacturers

Pentair Reports Second Quarter Sales of $1.7 Billion

MANCHESTER, U.K. — Pentair announced second quarter 2016 sales of $1.7 billion. Sales were up 4 percent compared to sales for the same period last year. Excluding the unfavorable impact of currency translation (“FX”) and the positive contribution from acquisitions, core sales declined 3 percent in the second quarter.  Second quarter 2016 earnings per diluted share from continuing operations (“EPS”) were $0.78 compared to $0.84 in the second quarter of 2015. On an adjusted basis, the company reported EPS of $1.11 compared to $1.08 in the second quarter of 2015.  Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.

Second quarter 2016 operating income was $217 million, down 1 percent compared to operating income for second quarter of 2015, and return on sales (“ROS”) was 12.5 percent, a decrease of 60 basis points when compared to the second quarter of 2015. On an adjusted basis, the company reported segment income of $291 million for the second quarter, up 7 percent compared to segment income for the second quarter of 2015, and ROS was 16.8 percent, an increase of 30 basis points when compared to the second quarter of 2015.

Net cash provided by operating activities was $385 million and free cash flow was $351 million for the quarter.  The company continues to expect to deliver full year free cash flow of approximately 100 percent of adjusted net income.

Pentair paid dividends of $0.33 per share in the second quarter of 2016. Pentair previously announced on December 8, 2015 that its Board of Directors approved a 5 percent increase in the company’s regular annual cash dividend rate for 2016 to $1.34 from $1.28.  2016 marks the 40th consecutive year that Pentair has increased its dividend.

“We are pleased with our second quarter performance, which came in at the high end of our expectations as we once again executed against our commitments,” said Randall J. Hogan, Pentair Chairman and Chief Executive Officer.  “We continue to be encouraged by the strength in our Residential & Commercial and Infrastructure verticals. We have narrowed our full year outlook reflecting further signs of stabilization in our Industrial business and what we believe is sequential flattening in our Energy business. Our cash flow remains strong and we remain focused on further strengthening our balance sheet.”

Hogan continued, the “Integration of ERICO is meeting our expectations. We remain on track to meet or exceed the $10 million in synergies we targeted.”

Outlook

The company updates its 2016 GAAP EPS to a range of $3.23 – $3.38 and on an adjusted basis to a range of $4.05 – $4.20.  The company anticipates full year 2016 sales of $6.7 billion, or up approximately 4 percent on a reported basis and down approximately 1 percent on a core basis.  The company still expects to deliver full year free cash flow of approximately 100 percent of adjusted net income.

In addition, the company introduced third quarter 2016 GAAP EPS guidance of $0.86 – $0.92 and on an adjusted basis $1.02 – $1.08, up approximately 8 percent on an adjusted basis versus the same quarter last year.  The company expects third quarter revenue to be approximately $1.66 billion, which would be up approximately 7 percent on a reported basis and flat on a core basis compared to third quarter 2015 revenue.

 

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