- Sales of $1.0 billion, down 4 percent compared to sales for the
same period last year.
- Operating income increased 22 percent to $180 million
reflecting ROS of 17.9 percent, an increase of 400 basis points
when compared to third quarter of 2022; on an adjusted basis, ROS
expanded 140 basis points to 21.0 percent.
- GAAP EPS from continuing operations increased 13 percent to
$0.79 compared to the same period last year and adjusted EPS
decreased 5 percent to $0.94 compared to the same period last
year.
- Net cash provided by operating activities of continuing
operations was $162 million, an increase of $67 million compared to
the same period last year and free cash flow provided by continuing
operations for the quarter was $143 million, an increase of $71
million compared to the same period last year.
- The company updates its full year 2023 GAAP EPS guidance to
approximately $3.25 to $3.30 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), a leader in helping the world
sustainably move, improve and enjoy water, life’s most essential
resource, today announced third quarter 2023 sales of $1.0 billion.
Sales were down 4 percent compared to sales for the same period
last year. Excluding currency translation, acquisitions and
divestitures, core sales declined 7 percent in the third quarter.
Third quarter 2023 earnings per diluted share from continuing
operations (“EPS”) were $0.79 compared to $0.70 in the third
quarter of 2022. On an adjusted basis, the company reported third
quarter 2023 EPS of $0.94 compared to $0.99 in the third quarter of
2022. 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: “Our Q3 results surpassed our expectations and were
driven largely by our diversified water portfolio and
Transformation initiatives which contributed to significant margin
expansion. This marks our sixth consecutive quarter of sales over
$1 billion. In addition, our Manitowoc Ice acquisition continued to
exceed our expectations. Our Transformation initiatives remain on
track and we have continued to launch new innovation. These results
were driven by the collective actions and hard work of all of our
employees and their dedication to serving our customers and driving
value for our shareholders. Our strategy is enabling us to help the
world sustainably move, improve and enjoy water and we believe we
are making the right investments to drive long-term value.”
Third quarter 2023 operating income was $180 million, up 22
percent compared to operating income for the third quarter of 2022,
and return on sales (“ROS”) was 17.9 percent, an increase of 400
basis points when compared to the third quarter of 2022. On an
adjusted basis, the company reported segment income of $212 million
for the third quarter of 2023, up 3 percent compared to segment
income for the third quarter of 2022, and ROS was 21.0 percent, an
increase of 140 basis points when compared to the third quarter of
2022.
Industrial & Flow Technologies sales were up 3 percent
compared to sales for the same period last year. Excluding currency
translation, acquisitions and divestitures, core sales grew 1
percent in the third quarter. Segment income of $78 million was up
18 percent compared to the third quarter of 2022, and ROS was 19.4
percent, an increase of 250 basis points when compared to the third
quarter of 2022.
Water Solutions sales were up 9 percent compared to sales for
the same period last year. Excluding currency translation,
acquisitions and divestitures, core sales remained flat in the
third quarter. Segment income of $69 million was up 40 percent
compared to the third quarter of 2022, and ROS was 23.0 percent, an
increase of 510 basis points when compared to the third quarter of
2022.
Pool sales were down 21 percent compared to sales for the same
period last year. Excluding currency translation, acquisitions and
divestitures, core sales declined 21 percent in the third quarter.
Segment income of $91 million was down 17 percent compared to the
third quarter of 2022, and ROS was 29.3 percent, an increase of 130
basis points when compared to the third quarter of 2022.
Net cash provided by operating activities of continuing
operations was $162 million for the quarter compared to $95 million
in the third quarter of 2022 and free cash flow provided by
continuing operations for the quarter was $143 million compared to
$72 million in the third quarter of 2022.
Pentair paid a regular cash dividend of $0.22 per share in the
third quarter of 2023. Pentair previously announced on September
18, 2023 that it will pay a regular quarterly cash dividend of
$0.22 per share on November 3, 2023 to shareholders of record at
the close of business on October 20, 2023. This year marks the 47th
consecutive year that Pentair has increased its dividend.
OUTLOOK
Mr. Stauch concluded, “We are updating our EPS guidance
reflecting strong execution across all three segments while being
mindful of the uncertainty across the global macroeconomic and
geopolitical landscape. We are focused on investing in the
long-term growth of Pentair and remain confident in our diversified
water portfolio and Transformation initiatives.”
The company updates its estimated 2023 GAAP EPS from continuing
operations to approximately $3.25 to $3.30 and on an adjusted EPS
basis to approximately $3.70 to $3.75. The company updates full
year 2023 sales guidance to be down approximately 1 percent on a
reported basis. The company expects full year free cash flow to
approximate 100 percent of net income.
In addition, the company introduces fourth quarter 2023 GAAP EPS
from continuing operations guidance of approximately $0.75 to $0.80
and on an adjusted EPS basis of approximately $0.82 to $0.87. The
company expects fourth quarter sales to be down approximately 3 to
4 percent on a reported basis compared to the fourth quarter of
2022.
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 2023 results on a conference call with
investors at 9:00 a.m. Eastern 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 presentations, each of
which can be found on Pentair’s website. The webcast and
presentations 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,”
or “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 global economic and business conditions impacting our
business, including the strength of housing and related markets and
conditions relating to international hostilities; supply, demand,
logistics, competition and pricing pressures related to and in the
markets we serve; the ability to achieve the benefits of our
restructuring plans, cost reduction initiatives and Transformation
Program; the impact of raw material, logistics and labor costs and
other inflation; volatility in currency exchange rates and interest
rates; failure of markets to accept new product introductions and
enhancements; the ability to successfully identify, finance,
complete and integrate acquisitions; risks associated with
operating foreign businesses; 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 (the “SEC”), including
our Annual Report on Form 10-K for the year ended December 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 help the world sustainably move, improve, and
enjoy water, life’s most essential resource. From our residential
and commercial water solutions, to industrial water management and
everything in between, Pentair is focused on smart, sustainable
water solutions that help our planet and people thrive.
Pentair had revenue in 2022 of approximately $4.1 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 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,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Net sales
$
1,008.8
$
1,055.1
$
3,119.9
$
3,118.9
Cost of goods sold
637.0
707.0
1,966.8
2,079.1
Gross profit
371.8
348.1
1,153.1
1,039.8
% of net sales
36.9
%
33.0
%
37.0
%
33.3
%
Selling, general and administrative
expenses
166.2
177.3
504.6
487.0
% of net sales
16.5
%
16.8
%
16.2
%
15.6
%
Research and development expenses
25.5
23.7
76.3
69.1
% of net sales
2.5
%
2.2
%
2.4
%
2.2
%
Operating income
180.1
147.1
572.2
483.7
% of net sales
17.9
%
13.9
%
18.3
%
15.5
%
Other (income) expense
Gain on sale of businesses
—
(0.2
)
—
(0.2
)
Other (income) expense
(0.3
)
0.3
(4.4
)
0.5
Net interest expense
27.5
19.3
91.7
34.2
% of net sales
2.7
%
1.8
%
2.9
%
1.1
%
Income from continuing operations before
income taxes
152.9
127.7
484.9
449.2
Provision for income taxes
20.8
12.3
70.1
62.3
Effective tax rate
13.6
%
9.6
%
14.5
%
13.9
%
Net income from continuing
operations
132.1
115.4
414.8
386.9
Loss from discontinued operations, net of
tax
—
—
(0.1
)
(1.0
)
Net income
$
132.1
$
115.4
$
414.7
$
385.9
Earnings (loss) per ordinary
share
Basic
Continuing operations
$
0.80
$
0.70
$
2.51
$
2.35
Discontinued operations
—
—
—
(0.01
)
Basic earnings per ordinary share
$
0.80
$
0.70
$
2.51
$
2.34
Diluted
Continuing operations
$
0.79
$
0.70
$
2.50
$
2.33
Discontinued operations
—
—
—
(0.01
)
Diluted earnings per ordinary share
$
0.79
$
0.70
$
2.50
$
2.32
Weighted average ordinary shares
outstanding
Basic
165.2
164.5
165.0
164.8
Diluted
166.6
165.2
166.2
165.8
Cash dividends paid per ordinary
share
$
0.22
$
0.21
$
0.66
$
0.63
Pentair plc and
Subsidiaries
Condensed Consolidated Balance
Sheets (Unaudited)
September 30,
2023
December 31,
2022
In millions
Assets
Current assets
Cash and cash equivalents
$
137.0
$
108.9
Accounts and notes receivable, net
507.0
531.5
Inventories
712.6
790.0
Other current assets
142.8
128.1
Total current assets
1,499.4
1,558.5
Property, plant and equipment,
net
350.5
344.5
Other assets
Goodwill
3,242.5
3,252.6
Intangibles, net
1,051.7
1,094.6
Other non-current assets
266.9
197.3
Total other assets
4,561.1
4,544.5
Total assets
$
6,411.0
$
6,447.5
Liabilities and Equity
Current liabilities
Accounts payable
$
286.1
$
355.0
Employee compensation and benefits
117.5
106.0
Other current liabilities
598.3
602.1
Total current liabilities
1,001.9
1,063.1
Other liabilities
Long-term debt
1,993.6
2,317.3
Pension and other post-retirement
compensation and benefits
68.9
70.8
Deferred tax liabilities
40.9
43.3
Other non-current liabilities
264.8
244.9
Total liabilities
3,370.1
3,739.4
Equity
3,040.9
2,708.1
Total liabilities and equity
$
6,411.0
$
6,447.5
Pentair plc and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Nine months ended
In millions
September 30,
2023
September 30,
2022
Operating activities
Net income
$
414.7
$
385.9
Loss from discontinued operations, net of
tax
0.1
1.0
Adjustments to reconcile net income
from continuing operations to net cash provided by (used for)
operating activities
Equity income of unconsolidated
subsidiaries
(2.1
)
(1.2
)
Depreciation
44.3
39.9
Amortization
41.5
31.4
Deferred income taxes
(45.0
)
(37.5
)
Gain on sale of businesses
—
(0.2
)
Share-based compensation
21.3
20.6
Asset impairment and write-offs
6.2
—
Amortization of bridge financing fees
—
9.0
Gain on sale of assets
(3.4
)
(2.3
)
Changes in assets and liabilities, net
of effects of business acquisitions
Accounts receivable
23.9
24.3
Inventories
67.8
(170.6
)
Other current assets
(14.7
)
(27.1
)
Accounts payable
(63.8
)
(36.7
)
Employee compensation and benefits
11.7
(34.9
)
Other current liabilities
(0.2
)
79.8
Other non-current assets and
liabilities
—
(9.9
)
Net cash provided by operating activities
of continuing operations
502.3
271.5
Net cash used for operating activities of
discontinued operations
(1.6
)
(1.0
)
Net cash provided by operating
activities
500.7
270.5
Investing activities
Capital expenditures
(54.8
)
(63.2
)
Proceeds from sale of property and
equipment
5.4
3.0
Settlement of net investment hedges
—
8.8
Acquisitions, net of cash acquired
(0.6
)
(1,592.8
)
Other
4.1
0.3
Net cash used for investing activities
(45.9
)
(1,643.9
)
Financing activities
Net (repayments) borrowings of revolving
long-term debt
(320.0
)
256.1
Proceeds from long-term debt
—
1,391.3
Repayments of long-term debt
(6.3
)
(88.3
)
Debt issuance costs
—
(15.7
)
Shares issued to employees, net of shares
withheld
9.0
(4.0
)
Repurchases of ordinary shares
—
(50.0
)
Dividends paid
(108.9
)
(104.1
)
Receipts upon the maturity of cross
currency swaps
—
0.2
Net cash (used for) provided by financing
activities
(426.2
)
1,385.5
Effect of exchange rate changes on cash
and cash equivalents
(0.5
)
12.2
Change in cash and cash
equivalents
28.1
24.3
Cash and cash equivalents, beginning of
period
108.9
94.5
Cash and cash equivalents, end of
period
$
137.0
$
118.8
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, 2023
June 30, 2023
September 30,
2023
September 30,
2023
Net cash (used for) provided by operating
activities of continuing operations
$
(106.6
)
$
446.7
$
162.2
$
502.3
Capital expenditures
(16.6
)
(18.8
)
(19.4
)
(54.8
)
Proceeds from sale of property and
equipment
0.2
4.8
0.4
5.4
Free cash flow from continuing
operations
(123.0
)
432.7
143.2
452.9
Net cash used for discontinued
operations
—
(1.6
)
—
(1.6
)
Free cash flow
$
(123.0
)
$
431.1
$
143.2
$
451.3
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
Pentair plc and
Subsidiaries
Supplemental Financial
Information by Reportable Segment (Unaudited)
2023
2022
In millions
First
Quarter
Second
Quarter
Third Quarter
Nine
Months
First
Quarter
Second
Quarter
Third Quarter
Nine
Months
Net sales
Industrial & Flow Technologies
$
391.8
$
411.6
$
400.2
$
1,203.6
$
358.1
$
377.4
$
389.5
$
1,125.0
Water Solutions
272.0
336.2
299.4
907.6
205.8
222.2
275.3
703.3
Pool
364.3
334.3
308.8
1,007.4
435.4
464.0
390.0
1,289.4
Other
0.5
0.4
0.4
1.3
0.3
0.6
0.3
1.2
Consolidated
$
1,028.6
$
1,082.5
$
1,008.8
$
3,119.9
$
999.6
$
1,064.2
$
1,055.1
$
3,118.9
Segment income (loss)
Industrial & Flow Technologies
$
65.0
$
74.8
$
77.5
$
217.3
$
52.2
$
59.1
$
65.7
$
177.0
Water Solutions
52.4
74.8
68.8
196.0
22.2
32.5
49.3
104.0
Pool
116.2
105.1
90.6
311.9
116.3
136.7
109.3
362.3
Other
(22.6
)
(20.5
)
(24.8
)
(67.9
)
(18.6
)
(22.4
)
(17.4
)
(58.4
)
Consolidated
$
211.0
$
234.2
$
212.1
$
657.3
$
172.1
$
205.9
$
206.9
$
584.9
Return on sales
Industrial & Flow Technologies
16.6
%
18.2
%
19.4
%
18.1
%
14.6
%
15.7
%
16.9
%
15.7
%
Water Solutions
19.3
%
22.2
%
23.0
%
21.6
%
10.8
%
14.6
%
17.9
%
14.8
%
Pool
31.9
%
31.4
%
29.3
%
31.0
%
26.7
%
29.5
%
28.0
%
28.1
%
Consolidated adjusted return on sales
20.5
%
21.6
%
21.0
%
21.1
%
17.2
%
19.3
%
19.6
%
18.8
%
Pentair plc and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Financial Measures for the Year Ending December 31,
2023
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
$
1,028.6
$
1,082.5
$
1,008.8
approx
Down 3% - 4%
approx
Down 1%
Operating income
183.6
208.5
180.1
approx
Up 55% - 63%
approx
Up 25% - 26%
Return on sales
17.8
%
19.3
%
17.9
%
Adjustments:
Restructuring and other
2.9
0.6
1.6
approx
—
approx
5
Transformation costs
8.5
6.0
13.5
approx
—
approx
28
Intangible amortization
13.8
13.9
13.8
approx
14
approx
55
Legal accrual adjustments and
settlements
(1.9
)
4.1
—
approx
—
approx
2
Asset impairment and write-offs
3.9
0.5
1.8
approx
—
approx
6
Equity income of unconsolidated
subsidiaries
0.2
0.6
1.3
approx
1
approx
3
Segment income
211.0
234.2
212.1
approx
Up 3% - 8%
approx
Up 10% - 11%
Adjusted return on sales
20.5
%
21.6
%
21.0
%
Net income from continuing operations—as
reported
128.5
154.2
132.1
approx
$124 - $132
approx
$539 - $548
Other income
—
(5.1
)
—
approx
—
approx
$
(5
)
Adjustments to operating income
27.2
25.1
30.7
approx
14
approx
96
Income tax adjustments
(4.6
)
(3.1
)
(6.6
)
approx
(2
)
approx
(16
)
Net income from continuing operations—as
adjusted
$
151.1
$
171.1
$
156.2
approx
$136 - $144
approx
$614 - $623
Continuing earnings per ordinary
share—diluted
Diluted earnings per ordinary share—as
reported
$
0.78
$
0.93
$
0.79
approx
$0.75 - $0.80
approx
$3.25 - $3.30
Adjustments
0.13
0.10
0.15
approx
0.07
approx
0.45
Diluted earnings per ordinary share—as
adjusted
$
0.91
$
1.03
$
0.94
approx
$0.82 - $0.87
approx
$3.70 - $3.75
Pentair plc and
Subsidiaries
Reconciliation of GAAP to
Non-GAAP Financial Measures for the Year Ended December 31,
2022
Excluding the Effect of
Adjustments (Unaudited)
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
$
1,002.9
$
4,121.8
Operating income
145.8
190.8
147.1
111.6
595.3
Return on sales
14.6
%
17.9
%
13.9
%
11.1
%
14.4
%
Adjustments:
Restructuring and other
2.1
1.1
12.5
16.7
32.4
Transformation costs
5.5
5.2
10.1
6.4
27.2
Intangible amortization
6.6
6.3
18.5
21.1
52.5
Legal accrual adjustments and
settlements
(0.7
)
0.5
—
0.4
0.2
Asset impairment and write-offs
—
—
—
25.6
25.6
Inventory step-up
—
—
5.8
—
5.8
Deal-related costs and expenses
6.4
1.6
13.4
0.8
22.2
Russia business exit impact
5.9
—
(0.8
)
(0.4
)
4.7
Equity income of unconsolidated
subsidiaries
0.5
0.4
0.3
0.6
1.8
Segment income
172.1
205.9
206.9
182.8
767.7
Adjusted return on sales
17.2
%
19.3
%
19.6
%
18.2
%
18.6
%
Net income from continuing operations—as
reported
118.5
153.0
115.4
96.3
483.2
Gain on sale of businesses
—
—
(0.2
)
—
(0.2
)
Pension and other post retirement
mark-to-market gain
—
—
—
(17.5
)
(17.5
)
Amortization of bridge financing fees
2.6
5.1
1.3
—
9.0
Adjustments to operating income
25.8
14.7
59.5
70.6
170.6
Income tax adjustments
(5.4
)
(3.8
)
(12.3
)
(14.4
)
(35.9
)
Net income from continuing operations—as
adjusted
$
141.5
$
169.0
$
163.7
$
135.0
$
609.2
Continuing earnings per ordinary
share—diluted
Diluted earnings per ordinary share—as
reported
$
0.71
$
0.92
$
0.70
$
0.58
$
2.92
Adjustments
0.14
0.10
0.29
0.24
0.76
Diluted earnings per ordinary share—as
adjusted
$
0.85
$
1.02
$
0.99
$
0.82
$
3.68
Pentair plc and
Subsidiaries
Reconciliation of Net Sales
Growth to Core Net Sales Growth by Segment
For the Quarter Ended
September 30, 2023 (Unaudited)
Q3 Net Sales Growth
Core
Currency
Acq. / Div.
Total
Total Pentair
(7.3
)%
0.6
%
2.3
%
(4.4
)%
Industrial & Flow Technologies
1.1
%
1.6
%
—
%
2.7
%
Water Solutions
(0.2
)%
0.3
%
8.7
%
8.8
%
Pool
(20.8
)%
—
%
—
%
(20.8
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024778636/en/
PENTAIR CONTACTS Shelly Hubbard Vice President, Investor
Relations Direct: 763-656-5575 Email:
shelly.hubbard@pentair.com
Rebecca Osborn Director, External Communications Direct:
763-656-5589 Email: rebecca.osborn@pentair.com
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