Pentair Reports First Quarter 2022 Results
Pentair plc (NYSE: PNR) reported first quarter 2022 sales of $1.0 billion, marking a 15% increase year-over-year. GAAP EPS was $0.71, down from $0.78 in Q1 2021, while adjusted EPS rose to $0.85 from $0.81. The company updated its 2022 GAAP EPS guidance to $3.40 to $3.50 and adjusted EPS to $3.70 to $3.80. Free cash flow was -$149 million for the quarter. Pentair anticipates second quarter sales growth of 11% to 13% compared to Q2 2021. Despite challenges in supply chains and inflation, segment income was up 5% year-over-year.
- First quarter sales of $1.0 billion, up 15% YoY.
- Adjusted EPS increased to $0.85 from $0.81 YoY.
- Updated full year 2022 sales guidance to grow by 9-11%.
- Consumer Solutions sales up 23% YoY.
- Segment income up 5% YoY.
- GAAP EPS decreased to $0.71 from $0.78 YoY.
- Operating income down 7% YoY.
- Free cash flow used was $149 million, compared to $29 million last year.
- Return on sales decreased in multiple segments.
-
First quarter sales of
.$1.0 billion -
First quarter GAAP EPS of
and adjusted EPS of$0.71 .$0.85 -
The company updates its full year 2022 GAAP EPS guidance to approximately
to$3.40 and on an adjusted basis to approximately$3.50 to$3.70 .$3.80
Reconciliations of GAAP to Non-GAAP measures are in the attached financial tables.
“We announced in March our intent to acquire
First quarter 2022 operating income was
Consumer Solutions sales were up 23 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 17 percent in the first quarter. Segment income of
Industrial & Flow Technologies sales were up 4 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 6 percent in the first quarter. Segment income of
Net cash used for operating activities of continuing operations was
OUTLOOK
The company updates its estimated 2022 GAAP EPS from continuing operations to approximately
In addition, the company introduces second quarter 2022 GAAP EPS from continuing operations guidance of approximately
EARNINGS CONFERENCE CALL
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. All statements made about the anticipated
ABOUT
At
|
||||||
Condensed Consolidated Statements of Operations (Unaudited) |
||||||
|
|
|
||||
|
Three months ended |
|||||
In millions, except per-share data |
|
|
||||
Net sales |
$ |
999.6 |
|
$ |
865.9 |
|
Cost of goods sold |
|
667.4 |
|
|
550.7 |
|
Gross profit |
|
332.2 |
|
|
315.2 |
|
% of net sales |
|
33.2 |
% |
|
36.4 |
% |
Selling, general and administrative |
|
164.1 |
|
|
136.6 |
|
% of net sales |
|
16.4 |
% |
|
15.8 |
% |
Research and development |
|
22.3 |
|
|
21.5 |
|
% of net sales |
|
2.2 |
% |
|
2.5 |
% |
Operating income |
|
145.8 |
|
|
157.1 |
|
% of net sales |
|
14.6 |
% |
|
18.1 |
% |
Other expense: |
|
|
||||
Other expense |
|
0.1 |
|
|
0.4 |
|
Net interest expense |
|
5.7 |
|
|
5.1 |
|
% of net sales |
|
0.6 |
% |
|
0.6 |
% |
Income from continuing operations before income taxes |
|
140.0 |
|
|
151.6 |
|
Provision for income taxes |
|
21.5 |
|
|
20.5 |
|
Effective tax rate |
|
15.4 |
% |
|
13.5 |
% |
Net income from continuing operations |
|
118.5 |
|
|
131.1 |
|
Loss from discontinued operations, net of tax |
|
(0.9 |
) |
|
(2.5 |
) |
Net income |
$ |
117.6 |
|
$ |
128.6 |
|
Earnings (loss) per ordinary share |
|
|
||||
Basic |
|
|
||||
Continuing operations |
$ |
0.72 |
|
$ |
0.79 |
|
Discontinued operations |
|
(0.01 |
) |
|
(0.02 |
) |
Basic earnings per ordinary share |
$ |
0.71 |
|
$ |
0.77 |
|
Diluted |
|
|
||||
Continuing operations |
$ |
0.71 |
|
$ |
0.78 |
|
Discontinued operations |
|
(0.01 |
) |
|
(0.01 |
) |
Diluted earnings per ordinary share |
$ |
0.70 |
|
$ |
0.77 |
|
Weighted average ordinary shares outstanding |
|
|
||||
Basic |
|
165.3 |
|
|
166.2 |
|
Diluted |
|
166.5 |
|
|
167.7 |
|
Cash dividends paid per ordinary share |
$ |
0.21 |
|
$ |
0.20 |
|
|
||||
Condensed Consolidated Balance Sheets (Unaudited) |
||||
|
|
|
||
|
|
|
||
In millions |
||||
Assets |
||||
Current assets |
|
|
||
Cash and cash equivalents |
$ |
102.3 |
$ |
94.5 |
Accounts and notes receivable, net |
|
648.6 |
|
534.3 |
Inventories |
|
656.2 |
|
562.9 |
Other current assets |
|
134.6 |
|
112.3 |
Total current assets |
|
1,541.7 |
|
1,304.0 |
Property, plant and equipment, net |
|
315.0 |
|
310.0 |
Other assets |
|
|
||
|
|
2,493.4 |
|
2,504.5 |
Intangibles, net |
|
420.0 |
|
428.0 |
Other non-current assets |
|
205.8 |
|
207.1 |
Total other assets |
|
3,119.2 |
|
3,139.6 |
Total assets |
$ |
4,975.9 |
$ |
4,753.6 |
Liabilities and Equity |
||||
Current liabilities |
|
|
||
Accounts payable |
$ |
396.8 |
$ |
385.7 |
Employee compensation and benefits |
|
102.0 |
|
140.1 |
Other current liabilities |
|
515.6 |
|
525.9 |
Total current liabilities |
|
1,014.4 |
|
1,051.7 |
Other liabilities |
|
|
||
Long-term debt |
|
1,091.1 |
|
894.1 |
Pension and other post-retirement compensation and benefits |
|
91.8 |
|
93.2 |
Deferred tax liabilities |
|
85.1 |
|
89.8 |
Other non-current liabilities |
|
189.6 |
|
202.9 |
Total liabilities |
|
2,472.0 |
|
2,331.7 |
Equity |
|
2,503.9 |
|
2,421.9 |
Total liabilities and equity |
$ |
4,975.9 |
$ |
4,753.6 |
|
||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||
|
||||||
|
Three months ended |
|||||
In millions |
|
|
||||
Operating activities |
|
|
||||
Net income |
$ |
117.6 |
|
$ |
128.6 |
|
Loss from discontinued operations, net of tax |
|
0.9 |
|
|
2.5 |
|
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 |
|
(0.5 |
) |
|
(0.2 |
) |
Depreciation |
|
13.0 |
|
|
12.7 |
|
Amortization |
|
6.6 |
|
|
7.1 |
|
Deferred income taxes |
|
(3.7 |
) |
|
(2.8 |
) |
Share-based compensation |
|
6.9 |
|
|
5.6 |
|
Amortization of bridge financing fees |
|
2.6 |
|
|
— |
|
Changes in assets and liabilities, net of effects of business acquisitions |
|
|
||||
Accounts receivable |
|
(116.1 |
) |
|
(202.4 |
) |
Inventories |
|
(95.1 |
) |
|
(12.5 |
) |
Other current assets |
|
(23.5 |
) |
|
(16.6 |
) |
Accounts payable |
|
10.4 |
|
|
54.8 |
|
Employee compensation and benefits |
|
(37.5 |
) |
|
(14.8 |
) |
Other current liabilities |
|
(12.4 |
) |
|
17.7 |
|
Other non-current assets and liabilities |
|
(0.7 |
) |
|
1.5 |
|
Net cash used for operating activities of continuing operations |
|
(131.5 |
) |
|
(18.8 |
) |
Net cash used for operating activities of discontinued operations |
|
— |
|
|
(0.2 |
) |
Net cash used for operating activities |
|
(131.5 |
) |
|
(19.0 |
) |
Investing activities |
|
|
||||
Capital expenditures |
|
(17.7 |
) |
|
(13.2 |
) |
Proceeds from sale of property and equipment |
|
— |
|
|
3.4 |
|
Acquisitions, net of cash acquired |
|
(1.4 |
) |
|
— |
|
Net cash used for investing activities |
|
(19.1 |
) |
|
(9.8 |
) |
Financing activities |
|
|
||||
Net borrowings of revolving long-term debt |
|
199.6 |
|
|
92.4 |
|
Debt issuance costs |
|
(5.8 |
) |
|
— |
|
Shares issued to employees, net of shares withheld |
|
(5.3 |
) |
|
(0.2 |
) |
Repurchases of ordinary shares |
|
— |
|
|
(9.6 |
) |
Dividends paid |
|
(34.7 |
) |
|
(33.3 |
) |
Payments upon the maturity of cross currency swaps |
|
— |
|
|
(14.7 |
) |
Net cash provided by financing activities |
|
153.8 |
|
|
34.6 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
4.6 |
|
|
7.1 |
|
Change in cash and cash equivalents |
|
7.8 |
|
|
12.9 |
|
Cash and cash equivalents, beginning of period |
|
94.5 |
|
|
82.1 |
|
Cash and cash equivalents, end of period |
$ |
102.3 |
|
$ |
95.0 |
|
|
|
|
|
||||||
Reconciliation of the GAAP Operating Activities Cash Flow to the Non-GAAP Free Cash Flow (Unaudited) |
||||||
|
||||||
|
Three months ended |
Three months ended |
||||
In millions |
|
|
||||
Net cash used for operating activities of continuing operations |
$ |
(131.5 |
) |
$ |
(18.8 |
) |
Capital expenditures |
|
(17.7 |
) |
|
(13.2 |
) |
Proceeds from sale of property and equipment |
|
— |
|
|
3.4 |
|
Free cash flow from continuing operations |
$ |
(149.2 |
) |
$ |
(28.6 |
) |
Net cash used for discontinued operations |
|
— |
|
|
(0.2 |
) |
Free cash flow |
$ |
(149.2 |
) |
$ |
(28.8 |
) |
|
|
|
|
||||||
Supplemental Financial Information by Reportable Segment (Unaudited) |
||||||
|
|
|
||||
|
2022 |
2021 |
||||
In millions |
First
|
First
|
||||
Net sales |
|
|
||||
Consumer Solutions |
$ |
641.2 |
|
$ |
521.4 |
|
Industrial & Flow Technologies |
|
358.1 |
|
|
344.1 |
|
Other |
|
0.3 |
|
|
0.4 |
|
Consolidated |
$ |
999.6 |
|
$ |
865.9 |
|
Segment income (loss) |
|
|
||||
Consumer Solutions |
$ |
138.5 |
|
$ |
131.0 |
|
Industrial & Flow Technologies |
|
52.2 |
|
|
50.0 |
|
Other |
|
(18.6 |
) |
|
(16.6 |
) |
Consolidated |
$ |
172.1 |
|
$ |
164.4 |
|
Return on sales |
|
|
||||
Consumer Solutions |
|
21.6 |
% |
|
25.1 |
% |
Industrial & Flow Technologies |
|
14.6 |
% |
|
14.5 |
% |
Consolidated |
|
17.2 |
% |
|
19.0 |
% |
|
|
|
|
|||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures for the Year Ending |
|||||||||||
Excluding the Effect of Adjustments (Unaudited) |
|||||||||||
|
|
|
|
|
|
||||||
|
Actual |
Forecast |
|||||||||
In millions, except per-share data |
First
|
Second
|
Full
|
||||||||
Net sales |
$ |
999.6 |
|
approx |
Up |
approx |
Up |
||||
Operating income |
|
145.8 |
|
approx |
Up |
approx |
Up |
||||
% of net sales |
|
14.6 |
% |
|
|
|
|
||||
Adjustments: |
|
|
|
|
|
||||||
Restructuring and other |
|
2.1 |
|
approx |
$ |
— |
approx |
$ |
2 |
|
|
Transformation costs |
|
5.5 |
|
approx |
|
— |
approx |
|
6 |
|
|
Intangible amortization |
|
6.6 |
|
approx |
|
6 |
approx |
|
23 |
|
|
Legal accrual adjustments |
|
(0.7 |
) |
approx |
|
— |
approx |
|
(1 |
) |
|
Deal-related costs and expenses |
|
6.4 |
|
approx |
|
— |
approx |
|
6 |
|
|
|
|
5.9 |
|
approx |
|
— |
approx |
|
6 |
|
|
Equity income of unconsolidated subsidiaries |
|
0.5 |
|
approx |
|
1 |
approx |
|
3 |
|
|
Segment income |
|
172.1 |
|
approx |
Up |
approx |
Up |
||||
Return on sales |
|
17.2 |
% |
|
|
|
|
||||
Net income from continuing operations—as reported |
|
118.5 |
|
approx |
|
approx |
|
||||
Amortization of bridge financing fees |
|
2.6 |
|
approx |
|
4 |
approx |
|
7 |
|
|
Adjustments to operating income |
|
25.8 |
|
approx |
|
6 |
approx |
|
42 |
|
|
Income tax adjustments |
|
(5.4 |
) |
approx |
|
2 |
approx |
|
2 |
|
|
Net income from continuing operations—as adjusted |
$ |
141.5 |
|
approx |
|
approx |
|
||||
Continuing earnings per ordinary share—diluted |
|
|
|
|
|
||||||
Diluted earnings per ordinary share—as reported |
$ |
0.71 |
|
approx |
|
approx |
|
||||
Adjustments |
|
0.14 |
|
approx |
|
0.07 |
approx |
|
0.30 |
|
|
Diluted earnings per ordinary share—as adjusted |
$ |
0.85 |
|
approx |
|
approx |
|
||||
|
|||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures for the Year Ended |
|||||||||||||||
Excluding the Effect of Adjustments (Unaudited) |
|||||||||||||||
|
|
|
|
|
|
||||||||||
In millions, except per-share data |
First
|
Second
|
Third
|
Fourth
|
Full
|
||||||||||
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 |
|
|
||||
Reconciliation of Net Sales Growth to Core Net Sales Growth by Segment |
||||
For the Quarter Ended |
||||
|
||||
|
Q1 Net Sales Growth |
|||
|
Core |
Currency |
Acq. / Div. |
Total |
Total |
12.4 % |
(1.3) % |
4.3 % |
15.4 % |
Consumer Solutions |
16.7 % |
(0.6) % |
6.9 % |
23.0 % |
Industrial & Flow Technologies |
6.0 % |
(2.3) % |
0.4 % |
4.1 % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220421005370/en/
SVP, Treasurer, FP&A, and Investor Relations
Direct: 763-656-5575
Email: jim.lucas@pentair.com
Senior Manager,
Direct: 763-656-5589
Email: rebecca.osborn@pentair.com
Source:
FAQ
What were Pentair's first quarter 2022 sales figures?
What is the updated GAAP EPS guidance for Pentair for 2022?
How did Pentair's adjusted EPS change in the first quarter of 2022?
What impact did inflation have on Pentair's first quarter 2022 performance?