- Third quarter sales of $1.06 billion.
- Third quarter GAAP EPS of $0.70 and adjusted EPS of $0.99.
- The company updates its full year 2022 GAAP EPS guidance to
approximately $3.01 and on an adjusted basis to approximately
$3.65.
Reconciliations of GAAP to Non-GAAP measures are in the attached
financial tables.
Pentair plc (NYSE: PNR) today announced third quarter 2022 sales
of $1.06 billion. Sales were up 9 percent compared to sales for the
same period last year. Excluding currency translation, acquisitions
and divestitures, core sales grew 4 percent in the third quarter.
Third quarter 2022 earnings per diluted share from continuing
operations (“EPS”) were $0.70 compared to $0.86 in the third
quarter of 2021. On an adjusted basis, the company reported EPS of
$0.99 compared to $0.89 in the third 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 solid third quarter results with sales
growing near double digits and strong segment income and adjusted
EPS gains. We saw price outpace inflation once again resulting in
strong margin expansion. We are proud of these results given the
ongoing supply chain disruptions and the manufacturing
inefficiencies that resulted. While we have begun to see some
inventory correcting in our residential channels, our commercial
and industrial businesses continue to do well. We closed on the
acquisition of Manitowoc Ice in the quarter and the integration is
off to a good start.”
Third quarter 2022 operating income was $147 million, down 12
percent compared to operating income for the third quarter of 2021,
and return on sales (“ROS”) was 13.9 percent, a decrease of 340
basis points when compared to the third quarter of 2021. On an
adjusted basis, the company reported segment income of $207 million
for the third quarter of 2022, up 15 percent compared to segment
income for the third quarter of 2021, and ROS was 19.6 percent, an
increase of 110 basis points when compared to the third quarter of
2021.
Consumer Solutions sales were up 8 percent compared to sales for
the same period last year. Excluding currency translation,
acquisitions and divestitures, core sales declined 2 percent in the
third quarter. Segment income of $159 million was up 10 percent
compared to the third quarter of 2021, and ROS was 23.8 percent, an
increase of 30 basis points when compared to the third quarter of
2021.
Industrial & Flow Technologies sales were up 10 percent
compared to sales for the same period last year. Excluding currency
translation, acquisitions and divestitures, core sales grew 14
percent in the third quarter. Segment income of $66 million was up
25 percent compared to the third quarter of 2021, and ROS was 16.9
percent, an increase of 210 basis points when compared to the third
quarter of 2021.
Net cash provided by operating activities of continuing
operations was $95 million for the quarter compared to $179 million
in the third quarter of 2021 and free cash flow provided by
continuing operations for the quarter was $72 million compared to
$165 million in the third quarter of 2021.
Pentair paid a regular cash dividend of $0.21 per share in the
third quarter of 2022. Pentair previously announced on September
19, 2022 that it will pay a regular quarterly cash dividend of
$0.21 per share on November 4, 2022 to shareholders of record at
the close of business on October 21, 2022. This year marks the 46th
consecutive year that Pentair has increased its dividend.
OUTLOOK
The company updates its estimated 2022 GAAP EPS to approximately
$3.01 and on an adjusted EPS basis to approximately $3.65. The
company updates full year 2022 sales guidance to be up
approximately 9 percent on a reported basis.
In addition, the company introduces fourth quarter 2022 GAAP EPS
guidance of approximately $0.68 and on an adjusted EPS basis of
approximately $0.79. The company expects fourth quarter sales to be
approximately flat on a reported basis compared to the fourth
quarter of 2021.
Mr. Stauch further added, “Given the acceleration of inventory
correction in our residential channels, coupled with headwinds from
foreign exchange and higher interest rates, we expect volumes to
continue to moderate for the next few quarters. While we have not
yet set our 2023 plan, we believe we are well positioned to grow
next year given pricing carryover, accretion from Manitowoc Ice,
reduced manufacturing inefficiencies that have been an ongoing
issue in 2022, and our Transformation initiatives gaining momentum.
We believe we have a solid foundation and we have an exciting
future. Our mission and purpose remain important as we help the
world sustainably move, improve, and enjoy water, life’s most
essential resource.”
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 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. 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 integrate the Manitowoc Ice acquisition successfully;
our ability to retain customers and employees of Manitowoc Ice; the
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; the overall impact of the COVID-19 pandemic
including the impact of virus variants and the effectiveness of
vaccinations on the global economy, our workforce, businesses,
operations, customers, suppliers and customer demand; supply,
demand, logistics, competition and pricing pressures related to and
in the markets we serve; volatility in currency exchange and
interest 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 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 ability to trade, 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 June 30, 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
Nine months ended
In millions, except per-share data
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Net sales
$
1,055.1
$
969.2
$
3,118.9
$
2,776.2
Cost of goods sold
707.0
634.4
2,079.1
1,785.2
Gross profit
348.1
334.8
1,039.8
991.0
% of net sales
33.0
%
34.5
%
33.3
%
35.7
%
Selling, general and administrative
177.3
145.6
487.0
440.4
% of net sales
16.8
%
15.0
%
15.6
%
15.9
%
Research and development
23.7
21.9
69.1
64.4
% of net sales
2.2
%
2.3
%
2.2
%
2.3
%
Operating income
147.1
167.3
483.7
486.2
% of net sales
13.9
%
17.3
%
15.5
%
17.5
%
Other (income) expense:
Gain on sale of businesses
(0.2
)
(1.4
)
(0.2
)
(1.4
)
Other expense
0.3
0.3
0.5
1.0
Net interest expense
19.3
2.6
34.2
11.5
% of net sales
1.8
%
0.3
%
1.1
%
0.4
%
Income from continuing operations before
income taxes
127.7
165.8
449.2
475.1
Provision for income taxes
12.3
22.1
62.3
67.7
Effective tax rate
9.6
%
13.3
%
13.9
%
14.2
%
Net income from continuing
operations
115.4
143.7
386.9
407.4
Loss from discontinued operations, net of
tax
—
(0.1
)
(1.0
)
(3.1
)
Net income
$
115.4
$
143.6
$
385.9
$
404.3
Earnings (loss) per ordinary
share
Basic
Continuing operations
$
0.70
$
0.87
$
2.35
$
2.46
Discontinued operations
—
—
(0.01
)
(0.02
)
Basic earnings per ordinary share
$
0.70
$
0.87
$
2.34
$
2.44
Diluted
Continuing operations
$
0.70
$
0.86
$
2.33
$
2.43
Discontinued operations
—
—
(0.01
)
(0.02
)
Diluted earnings per ordinary share
$
0.70
$
0.86
$
2.32
$
2.41
Weighted average ordinary shares
outstanding
Basic
164.5
165.7
164.8
166.0
Diluted
165.2
167.6
165.8
167.7
Cash dividends paid per ordinary
share
$
0.21
$
0.20
$
0.63
$
0.60
Pentair plc and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
September 30,
2022
December 31,
2021
In millions
Assets
Current assets
Cash and cash equivalents
$
118.8
$
94.5
Accounts and notes receivable, net
529.7
534.3
Inventories
778.7
562.9
Other current assets
135.3
112.3
Total current assets
1,562.5
1,304.0
Property, plant and equipment,
net
339.1
310.0
Other assets
Goodwill
3,202.5
2,504.5
Intangibles, net
1,110.7
428.0
Other non-current assets
293.8
207.1
Total other assets
4,607.0
3,139.6
Total assets
$
6,508.6
$
4,753.6
Liabilities and Equity
Current liabilities
Accounts payable
$
372.0
$
385.7
Employee compensation and benefits
102.9
140.1
Other current liabilities
625.6
525.9
Total current liabilities
1,100.5
1,051.7
Other liabilities
Long-term debt
2,448.1
894.1
Pension and other post-retirement
compensation and benefits
88.4
93.2
Deferred tax liabilities
46.5
89.8
Other non-current liabilities
185.9
202.9
Total liabilities
3,869.4
2,331.7
Equity
2,639.2
2,421.9
Total liabilities and equity
$
6,508.6
$
4,753.6
Pentair plc and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Nine months ended
In millions
September 30,
2022
September 30,
2021
Operating activities
Net income
$
385.9
$
404.3
Loss from discontinued operations, net of
tax
1.0
3.1
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
(1.2
)
(0.2
)
Depreciation
39.9
38.3
Amortization
31.4
19.4
Deferred income taxes
(37.5
)
(4.8
)
Gain on sale of businesses
(0.2
)
(1.4
)
Share-based compensation
20.6
20.8
Amortization of bridge financing fees
9.0
—
(Gain) loss on sale of assets
(2.3
)
0.7
Changes in assets and liabilities, net
of effects of business acquisitions
Accounts receivable
24.3
(78.2
)
Inventories
(170.6
)
(76.1
)
Other current assets
(27.1
)
(9.6
)
Accounts payable
(36.7
)
79.3
Employee compensation and benefits
(34.9
)
30.7
Other current liabilities
79.8
118.2
Other non-current assets and
liabilities
(9.9
)
(4.1
)
Net cash provided by operating activities
of continuing operations
271.5
540.4
Net cash used for operating activities of
discontinued operations
(1.0
)
(0.3
)
Net cash provided by operating
activities
270.5
540.1
Investing activities
Capital expenditures
(63.2
)
(38.6
)
Proceeds from sale of property and
equipment
3.0
3.7
Proceeds from the sale of businesses,
net
—
1.4
Acquisitions, net of cash acquired
(1,592.8
)
(83.6
)
Settlement of net investment hedges
8.8
—
Other
0.3
2.7
Net cash used for investing activities
(1,643.9
)
(114.4
)
Financing activities
Net borrowings (repayments) of revolving
long-term debt
256.1
(36.1
)
Proceeds from long-term debt
1,391.3
—
Repayments of long-term debt
(88.3
)
(103.8
)
Debt issuance costs
(15.7
)
—
Shares issued to employees, net of shares
withheld
(4.0
)
12.7
Repurchases of ordinary shares
(50.0
)
(100.0
)
Dividends paid
(104.1
)
(99.9
)
Receipts (payments) upon the maturity of
cross currency swaps
0.2
(14.7
)
Net cash provided by (used for) financing
activities
1,385.5
(341.8
)
Effect of exchange rate changes on cash
and cash equivalents
12.2
7.2
Change in cash and cash
equivalents
24.3
91.1
Cash and cash equivalents, beginning of
period
94.5
82.1
Cash and cash equivalents, end of
period
$
118.8
$
173.2
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, 2022
June 30, 2022
September 30,
2022
September 30,
2022
Net cash (used for) provided by operating
activities of continuing operations
$
(131.5
)
$
307.8
$
95.2
$
271.5
Capital expenditures
(17.7
)
(22.4
)
(23.1
)
(63.2
)
Proceeds from sale of property and
equipment
—
2.9
0.1
3.0
Free cash flow from continuing
operations
$
(149.2
)
$
288.3
$
72.2
$
211.3
Net cash used for discontinued
operations
—
(1.0
)
—
(1.0
)
Free cash flow
$
(149.2
)
$
287.3
$
72.2
$
210.3
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
Supplemental Financial
Information by Reportable Segment (Unaudited)
2022
2021
In millions
First Quarter
Second Quarter
Third Quarter
Nine Months
First Quarter
Second Quarter
Third Quarter
Nine Months
Net sales
Consumer Solutions
$
641.2
$
686.2
$
665.3
$
1,992.7
$
521.4
$
576.9
$
613.6
$
1,711.9
Industrial & Flow Technologies
358.1
377.4
389.5
1,125.0
344.1
363.9
355.1
1,063.1
Other
0.3
0.6
0.3
1.2
0.4
0.3
0.5
1.2
Consolidated
$
999.6
$
1,064.2
$
1,055.1
$
3,118.9
$
865.9
$
941.1
$
969.2
$
2,776.2
Segment income (loss)
Consumer Solutions
$
138.5
$
169.2
$
158.6
$
466.3
$
131.0
$
143.4
$
144.2
$
418.6
Industrial & Flow Technologies
52.2
59.1
65.7
177.0
50.0
57.1
52.4
159.5
Other
(18.6
)
(22.4
)
(17.4
)
(58.4
)
(16.6
)
(25.6
)
(16.9
)
(59.1
)
Consolidated
$
172.1
$
205.9
$
206.9
$
584.9
$
164.4
$
174.9
$
179.7
$
519.0
Return on sales
Consumer Solutions
21.6
%
24.7
%
23.8
%
23.4
%
25.1
%
24.9
%
23.5
%
24.5
%
Industrial & Flow Technologies
14.6
%
15.7
%
16.9
%
15.7
%
14.5
%
15.7
%
14.8
%
15.0
%
Consolidated
17.2
%
19.3
%
19.6
%
18.8
%
19.0
%
18.6
%
18.5
%
18.7
%
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
Fourth Quarter
Full Year
Net sales
$
999.6
$
1,064.2
$
1,055.1
approx
Flat
approx
Up 9%
Operating income
145.8
190.8
147.1
approx
Up 5%
approx
Up 1%
% of net sales
14.6
%
17.9
%
13.9
%
Adjustments:
Restructuring and other
2.1
1.1
12.5
approx
$
—
approx
$
16
Transformation costs
5.5
5.2
10.1
approx
—
approx
21
Intangible amortization
6.6
6.3
18.5
approx
21
approx
52
Legal accrual adjustments and
settlements
(0.7
)
0.5
—
approx
—
approx
—
Inventory step-up
—
—
5.8
approx
—
approx
6
Deal-related costs and expenses
6.4
1.6
13.4
approx
—
approx
21
Russia business exit impact
5.9
—
(0.8
)
approx
—
approx
5
Equity income of unconsolidated
subsidiaries
0.5
0.4
0.3
approx
1
approx
2
Segment income
172.1
205.9
206.9
approx
Up 8%
approx
Up 12%
Return on sales
17.2
%
19.3
%
19.6
%
Net income from continuing operations—as
reported
118.5
153.0
115.4
approx
$
113
approx
$
498
Gain on sale of businesses
—
—
(0.2
)
approx
—
approx
—
Amortization of bridge financing fees
2.6
5.1
1.3
approx
—
approx
9
Adjustments to operating income
25.8
14.7
59.5
approx
21
approx
121
Income tax adjustments
(5.4
)
(3.8
)
(12.3
)
approx
(3
)
approx
(24
)
Net income from continuing operations—as
adjusted
$
141.5
$
169.0
$
163.7
approx
$
131
approx
$
604
Continuing earnings per ordinary
share—diluted
Diluted earnings per ordinary share—as
reported
$
0.71
$
0.92
$
0.70
approx
$
0.68
approx
$
3.01
Adjustments
0.14
0.10
0.29
approx
0.11
approx
0.64
Diluted earnings per ordinary share—as
adjusted
$
0.85
$
1.02
$
0.99
approx
$
0.79
approx
$
3.65
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
September 30, 2022 (Unaudited)
Q3 Net Sales Growth
Core
Currency
Acq. / Div.
Total
Total Pentair
4.2
%
(2.7
)%
7.4
%
8.9
%
Consumer Solutions
(1.5
)%
(1.4
)%
11.3
%
8.4
%
Industrial & Flow Technologies
14.1
%
(5.2
)%
0.8
%
9.7
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221025005320/en/
Jim Lucas SVP, Treasurer 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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