Pentair plc (NYSE: PNR) today announced third quarter 2021 sales
of $969 million. Sales were up 21 percent compared to sales for the
same period last year. Excluding currency translation, acquisitions
and divestitures, core sales grew 18 percent in the third quarter.
Third quarter 2021 earnings per diluted share from continuing
operations (“EPS”) were $0.86 compared to $0.66 in the third
quarter of 2020. On an adjusted basis, the company reported EPS of
$0.89 compared to $0.70 in the third quarter of 2020. Segment
income, adjusted net income, free cash flow and adjusted EPS are
described in the attached schedules.
Third quarter 2021 operating income was $167 million, up 31
percent compared to operating income for the third quarter of 2020,
and return on sales (“ROS”) was 17.3 percent, an increase of 130
basis points when compared to the third quarter of 2020. On an
adjusted basis, the company reported segment income of $180 million
for the third quarter of 2021, up 28 percent compared to segment
income for the third quarter of 2020, and ROS was 18.5 percent, an
increase of 90 basis points when compared to the third quarter of
2020.
Consumer Solutions sales were up 30 percent compared to sales
for the same period last year. Excluding currency translation,
acquisitions and divestitures, core sales grew 26 percent in the
third quarter. Segment income of $144 million was up 27 percent
compared to the third quarter of 2020, and ROS was 23.5 percent, a
decrease of 70 basis points when compared to the third quarter of
2020.
Industrial & Flow Technologies sales were up 8 percent
compared to sales for the same period last year. Excluding currency
translation, core sales grew 8 percent in the third quarter.
Segment income of $52 million was up 23 percent compared to the
third quarter of 2020, and ROS was 14.8 percent, an increase of 180
basis points when compared to the third quarter of 2020.
Net cash provided by operating activities of continuing
operations was $179 million compared to $234 million in the third
quarter of 2020 and free cash flow provided by continuing
operations for the quarter was $165 million compared to $220
million in the third quarter of 2020.
Net cash provided by operating activities of continuing
operations in the nine months ended September 30, 2021 was $540
million compared to $501 million in the first nine months of the
previous year and free cash flow provided by continuing operations
in the nine months ended September 30, 2021 was $506 million
compared to $457 million in the first nine months of the previous
year.
Pentair paid a regular cash dividend of $0.20 per share in the
third quarter of 2021. Pentair previously announced on September
21, 2021 that it will pay a regular quarterly cash dividend of
$0.20 per share on November 5, 2021 to shareholders of record at
the close of business on October 22, 2021. This year marks the 45th
consecutive year that Pentair has increased its dividend.
John L. Stauch, Pentair’s President and Chief Executive Officer
commented: “I would like to thank our Pentair teams for once again
helping us meet our commitments in the face of unprecedented
material shortages and inflation. Pentair delivered another quarter
of strong double digit sales and EPS growth reflecting the demand
across our entire portfolio. Our backlog remains at a record level,
which gives us confidence in our ability to continue our strong
momentum. We have made great strides in increasing our capacity
throughout this period of robust demand, however, we expect
material shortages and logistical constraints to remain a challenge
in the near term.
“We remain focused on driving our strategic growth initiatives
and we have completed two acquisitions this year that accelerate
our Pool and Water Treatment businesses. We continue to believe
that we are in attractive spaces and that the strength of our
portfolio, along with strong cash flow and our healthy balance
sheet, enables us to continue investing in our core business,
pursue strategic acquisitions, drive transformation, deliver for
customers, and create value for our shareholders.”
Outlook
The company updates its estimated 2021 GAAP EPS from continuing
operations to approximately $3.19 to $3.25 and on an adjusted EPS
basis to approximately $3.34 to $3.40. The company updates full
year 2021 sales guidance to be up approximately 22 to 23 percent on
a reported basis. The company expects full year free cash flow of
greater than 100 percent of net income.
In addition, the company introduces fourth quarter 2021 GAAP EPS
from continuing operations guidance of $0.77 to $0.83 and on an
adjusted EPS basis of $0.81 to $0.87. The company expects fourth
quarter sales to be up approximately 15 to 19 percent on a reported
basis compared to the fourth quarter of 2020.
EARNINGS CONFERENCE CALL
Pentair President and Chief Executive Officer John L. Stauch and
Chief Financial Officer Robert P. Fishman will discuss the
company’s third quarter 2021 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. 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
overall impact of the COVID-19 pandemic on our business; the
duration and severity of the COVID-19 pandemic, the impact of virus
variants and the rate and 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 negative 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; 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, including
the Pleatco acquisition; the ability to achieve the benefits of our
restructuring plans, cost reduction initiatives and transformation
program; risks associated with operating foreign businesses; the
impact of raw material costs, 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 goals. Additional
information concerning these and other factors is contained in our
filings with the Securities and Exchange Commission, including our
Annual Report on Form 10-K for the year ended December 31, 2020 and
our quarterly reports on Form 10-Q. All forward-looking statements,
including all financial forecasts, speak only as of the date of
this release. Pentair plc assumes no obligation, and disclaims any
obligation, to update the information contained in this
release.
ABOUT PENTAIR PLC
Pentair makes the most of life’s essential resources. From our
residential and business solutions that help people move, improve
and enjoy their water, to our sustainable innovations and
applications, we deliver smart, sustainable solutions for life.
Pentair had revenue in 2020 of $3 billion, and trades under the
ticker symbol PNR. With approximately 9,750 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 www.pentair.com.
Pentair plc and
Subsidiaries
Condensed Consolidated
Statements of Operations (Unaudited)
Three months ended
Nine months ended
In millions, except per-share data
September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Net sales
$
969.2
$
798.5
$
2,776.2
$
2,221.8
Cost of goods sold
634.4
521.1
1,785.2
1,447.7
Gross profit
334.8
277.4
991.0
774.1
% of net sales
34.5
%
34.7
%
35.7
%
34.8
%
Selling, general and administrative
145.6
130.0
440.4
378.6
% of net sales
15.0
%
16.3
%
15.9
%
17.0
%
Research and development
21.9
19.3
64.4
55.6
% of net sales
2.3
%
2.4
%
2.3
%
2.5
%
Operating income
167.3
128.1
486.2
339.9
% of net sales
17.3
%
16.0
%
17.5
%
15.3
%
Other (income) expense:
(Gain) loss on sale of businesses
(1.4
)
—
(1.4
)
0.1
Other expense (income)
0.3
(2.5
)
1.0
(1.6
)
Net interest expense
2.6
5.4
11.5
20.0
% of net sales
0.3
%
0.7
%
0.4
%
0.9
%
Income from continuing operations before
income taxes
165.8
125.2
475.1
321.4
Provision for income taxes
22.1
14.4
67.7
64.1
Effective tax rate
13.3
%
11.5
%
14.2
%
19.9
%
Net income from continuing
operations
143.7
110.8
407.4
257.3
Loss from discontinued operations, net of
tax
(0.1
)
—
(3.1
)
(1.7
)
Net income
$
143.6
$
110.8
$
404.3
$
255.6
Earnings (loss) per ordinary
share
Basic
Continuing operations
$
0.87
$
0.67
$
2.46
$
1.54
Discontinued operations
—
—
(0.02
)
(0.01
)
Basic earnings per ordinary share
$
0.87
$
0.67
$
2.44
$
1.53
Diluted
Continuing operations
$
0.86
$
0.66
$
2.43
$
1.54
Discontinued operations
—
—
(0.02)
(0.01)
Diluted earnings per ordinary share
$
0.86
$
0.66
$
2.41
$
1.53
Weighted average ordinary shares
outstanding
Basic
165.7
166.1
166.0
166.6
Diluted
167.6
167.1
167.7
167.4
Cash dividends paid per ordinary
share
$
0.20
$
0.19
$
0.60
$
0.57
Pentair plc and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
September 30,
2021
December 31,
2020
In millions
Assets
Current assets
Cash and cash equivalents
$
173.2
$
82.1
Accounts and notes receivable, net
461.0
367.5
Inventories
504.6
420.0
Other current assets
110.7
105.5
Total current assets
1,249.5
975.1
Property, plant and equipment,
net
296.8
301.2
Other assets
Goodwill
2,386.5
2,392.2
Intangibles, net
339.6
325.9
Other non-current assets
200.4
202.8
Total other assets
2,926.5
2,920.9
Total assets
$
4,472.8
$
4,197.2
Liabilities and Equity
Current liabilities
Accounts payable
$
342.5
$
245.1
Employee compensation and benefits
146.3
117.0
Other current liabilities
527.2
410.4
Total current liabilities
1,016.0
772.5
Other liabilities
Long-term debt
700.9
839.6
Pension and other post-retirement
compensation and benefits
97.3
102.0
Deferred tax liabilities
95.7
107.4
Other non-current liabilities
224.8
269.4
Total liabilities
2,134.7
2,090.9
Equity
2,338.1
2,106.3
Total liabilities and equity
$
4,472.8
$
4,197.2
Pentair plc and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Nine months ended
In millions
September 30,
2021
September 30,
2020
Operating activities
Net income
$
404.3
$
255.6
Loss from discontinued operations, net of
tax
3.1
1.7
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
(0.2
)
(1.0
)
Depreciation
38.3
34.4
Amortization
19.4
21.5
Deferred income taxes
(4.8
)
8.5
(Gain) loss on sale of businesses
(1.4
)
0.1
Share-based compensation
20.8
15.2
Changes in assets and liabilities, net
of effects of business acquisitions
Accounts receivable
(78.2
)
147.3
Inventories
(76.1
)
(17.7
)
Other current assets
(9.6
)
(13.4
)
Accounts payable
79.3
(46.7
)
Employee compensation and benefits
30.7
35.0
Other current liabilities
118.2
61.1
Other non-current assets and
liabilities
(3.4
)
(0.8
)
Net cash provided by operating activities
of continuing operations
540.4
500.8
Net cash used for operating activities of
discontinued operations
(0.3
)
(0.5
)
Net cash provided by operating
activities
540.1
500.3
Investing activities
Capital expenditures
(38.6
)
(44.4
)
Proceeds from sale of property and
equipment
3.7
0.1
Proceeds from the sale of businesses,
net
1.4
—
Acquisitions, net of cash acquired
(83.6
)
(28.5
)
Other
2.7
2.2
Net cash used for investing activities
(114.4
)
(70.6
)
Financing activities
Net borrowings of commercial paper and
revolving long-term debt
(36.1
)
(151.3
)
Repayments of long-term debt
(103.8
)
(74.0
)
Shares issued to employees, net of shares
withheld
12.7
21.1
Repurchases of ordinary shares
(100.0
)
(115.2
)
Dividends paid
(99.9
)
(95.4
)
Payments upon the maturity of cross
currency swaps
(14.7
)
—
Net cash used for financing activities
(341.8
)
(414.8
)
Effect of exchange rate changes on cash
and cash equivalents
7.2
(14.8
)
Change in cash and cash
equivalents
91.1
0.1
Cash and cash equivalents, beginning of
period
82.1
82.5
Cash and cash equivalents, end of
period
$
173.2
$
82.6
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
Three months ended
Nine months
ended
In millions
March 31, 2021
June 30, 2021
September 30,
2021
September 30,
2021
Net cash (used for) provided by operating
activities of continuing operations
$
(18.8
)
$
379.8
$
179.4
$
540.4
Capital expenditures
(13.2
)
$
(11.1
)
(14.3
)
(38.6
)
Proceeds from sale of property and
equipment
3.4
$
0.1
0.2
3.7
Free cash flow from continuing
operations
$
(28.6
)
$
368.8
$
165.3
$
505.5
Net cash used for discontinued
operations
(0.2
)
$
—
(0.1
)
(0.3
)
Free cash flow
$
(28.8
)
$
368.8
$
165.2
$
505.2
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
Three months ended
Nine months ended
In millions
March 31, 2020
June 30, 2020
September 30,
2020
September 30,
2020
Net cash (used for) provided by operating
activities of continuing operations
$
(162.4
)
$
428.9
$
234.3
$
500.8
Capital expenditures
(18.7
)
(11.8
)
(13.9
)
(44.4
)
Proceeds from sale of property and
equipment
0.1
—
—
0.1
Free cash flow from continuing
operations
$
(181.0
)
$
417.1
$
220.4
$
456.5
Net cash used for discontinued
operations
—
(0.5
)
$
—
(0.5
)
Free cash flow
$
(181.0
)
$
416.6
$
220.4
$
456.0
Pentair plc and
Subsidiaries
Supplemental Financial
Information by Reportable Segment (Unaudited)
2021
2020
In millions
First Quarter
Second Quarter
Third Quarter
Nine Months
First Quarter
Second Quarter
Third Quarter
Nine Months
Net sales
Consumer Solutions
$
521.4
$
576.9
$
613.6
$
1,711.9
$
388.8
$
401.2
$
470.8
$
1,260.8
Industrial & Flow Technologies
344.1
363.9
355.1
1,063.1
320.9
311.8
327.4
960.1
Other
0.4
0.3
0.5
1.2
0.3
0.3
0.3
0.9
Consolidated
$
865.9
$
941.1
$
969.2
$
2,776.2
$
710.0
$
713.3
$
798.5
$
2,221.8
Segment income (loss)
Consumer Solutions
$
131.0
$
143.4
$
144.2
$
418.6
$
84.8
$
96.7
$
113.8
$
295.3
Industrial & Flow Technologies
50.0
57.1
52.4
159.5
44.7
44.1
42.7
131.5
Other
(16.6
)
(25.6
)
(16.9
)
(59.1
)
(18.0
)
(16.1
)
(16.0
)
(50.1
)
Consolidated
$
164.4
$
174.9
$
179.7
$
519.0
$
111.5
$
124.7
$
140.5
$
376.7
Return on sales
Consumer Solutions
25.1
%
24.9
%
23.5
%
24.5
%
21.8
%
24.1
%
24.2
%
23.4
%
Industrial & Flow Technologies
14.5
%
15.7
%
14.8
%
15.0
%
13.9
%
14.1
%
13.0
%
13.7
%
Consolidated
19.0
%
18.6
%
18.5
%
18.7
%
15.7
%
17.5
%
17.6
%
17.0
%
Pentair plc and
Subsidiaries
Reconciliation of GAAP to
non-GAAP financial measures for the year ending December 31,
2021
excluding the effect of
adjustments (Unaudited)
Actual
Forecast
In millions, except per-share data
First Quarter
Second Quarter
Third Quarter
Nine Months
Fourth Quarter
Full Year
Net sales
$
865.9
$
941.1
$
969.2
$
2,776.2
approx
Up 15% - 19%
approx
Up 22% - 23%
Operating income
157.1
161.8
167.3
486.2
% of net sales
18.1
%
17.2
%
17.3
%
17.5
%
Adjustments:
Restructuring, transformation and other
costs
1.5
5.8
4.1
11.4
approx
$
—
approx
$
11
Intangible amortization
7.1
6.3
6.0
19.4
approx
6
approx
25
COVID-19 related costs and expenses
0.2
0.1
0.1
0.4
approx
—
approx
—
Legal accrual adjustments
(2.4
)
—
—
(2.4
)
approx
—
approx
(2
)
Deal-related costs and expenses
0.7
1.0
2.1
3.8
approx
—
approx
4
Equity income (loss) of unconsolidated
subsidiaries
0.2
(0.1
)
0.1
0.2
approx
1
approx
1
Segment income
164.4
174.9
179.7
519.0
approx
Up 16% - 24%
approx
Up 32% - 34%
Return on sales
19.0
%
18.6
%
18.5
%
18.7
%
Net income from continuing operations—as
reported
131.1
132.6
143.7
407.4
approx
$128 - $138
approx
$535 - $545
Gain on sale of businesses
—
—
(1.4
)
(1.4
)
approx
—
approx
(1
)
Other income
—
(0.3
)
—
(0.3
)
approx
—
approx
—
Adjustments to operating income
7.1
13.2
12.3
32.6
approx
6
approx
38
Income tax adjustments
(2.4
)
(4.6
)
(6.2
)
(13.2
)
approx
1
approx
(12
)
Net income from continuing operations—as
adjusted
$
135.8
$
140.9
$
148.4
$
425.1
approx
$135 - $145
approx
$560 - $570
Continuing earnings per ordinary
share—diluted
Diluted earnings per ordinary share
—as reported
$
0.78
$
0.79
$
0.86
$
2.43
approx
$0.77 - $0.83
approx
$3.19 - $3.25
Adjustments
0.03
0.05
0.03
0.10
approx
0.04
approx
0.15
Diluted earnings per ordinary share
—as adjusted
$
0.81
$
0.84
$
0.89
$
2.53
approx
$0.81 - $0.87
approx
$3.34 - $3.40
Pentair plc and
Subsidiaries
Reconciliation of GAAP to
non-GAAP financial measures for the year ended December 31,
2020
excluding the effect of 2020
adjustments (Unaudited)
In millions, except per-share data
First Quarter
Second Quarter
Third Quarter
Nine Months
Fourth Quarter
Full Year
Net sales
$
710.0
$
713.3
$
798.5
$
2,221.8
$
796.0
$
3,017.8
Operating income
100.7
111.1
128.1
339.9
121.5
461.4
% of net sales
14.2
%
15.6
%
16.0
%
15.3
%
15.3
%
15.3
%
Adjustments:
Restructuring and other
2.4
1.1
2.1
5.6
9.8
15.4
Intangible amortization
7.6
7.0
6.9
21.5
6.9
28.4
COVID-19 related costs and expenses
0.9
4.8
2.6
8.3
2.1
10.4
Deal-related costs and expenses
0.4
—
—
0.4
0.2
0.6
Equity (loss) income of unconsolidated
subsidiaries
(0.5
)
0.7
0.8
1.0
0.4
1.4
Segment income
111.5
124.7
140.5
376.7
140.9
517.6
Return on sales
15.7
%
17.5
%
17.6
%
17.0
%
17.7
%
17.2
%
Net income from continuing operations—as
reported
72.7
73.8
110.8
257.3
99.8
357.1
Loss on sale of businesses
—
0.1
—
0.1
—
0.1
Pension and other post retirement
mark-to-market loss
—
—
—
—
6.7
6.7
Other income
—
—
(2.2
)
(2.2
)
—
(2.2
)
Adjustments to operating income
11.3
12.9
11.6
35.8
19.0
54.8
Income tax adjustments
3.3
11.1
(3.6
)
10.8
(8.1
)
2.7
Net income from continuing operations—as
adjusted
$
87.3
$
97.9
$
116.6
$
301.8
$
117.4
$
419.2
Continuing earnings per ordinary
share—diluted
Diluted earnings per ordinary share—as
reported
$
0.43
$
0.44
$
0.66
$
1.54
$
0.60
$
2.13
Adjustments
0.09
0.15
0.04
0.26
0.10
0.37
Diluted earnings per ordinary share—as
adjusted
$
0.52
$
0.59
$
0.70
$
1.80
$
0.70
$
2.50
Pentair plc and
Subsidiaries
Reconciliation of Net Sales
Growth to Core Net Sales Growth by Segment
For the Quarter Ended
September 30, 2021 (Unaudited)
Q3 Net Sales Growth
Core
Currency
Acq. / Div.
Total
Total Pentair
18.4
%
0.7
%
2.3
%
21.4
%
Consumer Solutions
26.1
%
0.2
%
4.0
%
30.3
%
Industrial & Flow Technologies
7.6
%
0.9
%
—
%
8.5
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211026005369/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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