) reported third-quarter 2013 adjusted earnings of 86 cents per
share, up 25% from the year-ago quarter. The results beat the
Zacks Consensus Estimate by a penny. The year-over-year increase
was driven by recovery of the residential market in North America
and global food and beverage market, partially offset by a weaker
SMITH (AO) CORP (AOS): Free Stock Analysis
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Earnings were at the upper end of the company's guidance range of
83 to 87 cents. On a reported basis, earnings came in at 85 cents
per share compared with 31 cents in the prior-year quarter. Both
quarters' earnings include acquisition related expenses,
repositioning costs and certain tax items.
Net sales declined 2% year over year to $1.8 billion. The results
managed to surpass the Zacks Consensus Estimate of $1.9 billion.
Adjusted operating income jumped 15% to $249 million from the
year-ago quarter. Operating margin increased 210 basis points to
Net sales in the
Water & Fluid Solutions
segment amounted to $814 million, up 1% year over year.
Segment adjusted operating profit rose 28% to $109 million from
$86 million in the year-ago quarter.
Valves & Controls
segment reported revenues of $612 million, down 1% from the
year-ago quarter. Adjusted operating earnings were $80 million, a
15% increase from the prior-year quarter. Backlog declined 1%
year over year to $1.4 billion.
Revenues in the
segment decreased 8% year over year to $406 million. However,
adjusted operating profit grew 4% to $84 million from the
As of Sep 28, 2013, Pentair had cash and cash equivalents of $238
million, down from $261 million as of Dec 31, 2012. Total debt of
the company increased to $2.6 billion as of Sep 28, 2013 from
$2.5 billion as of Dec 31, 2012.
Total cash flow provided by operating activities was $630 million
for the nine month period ended Sep 28, 2013, compared with $247
million in the comparable period last year. Free cash flow in the
reported quarter was $206 million.
Pentair narrowed its adjusted earnings per share guidance from
$3.15 - $3.25 to $3.19 - $3.21 for the full-year 2013. The
company lowered sales outlook from $7.5 billion to $7.4 billion
for 2013. Pentair also expects to generate free cash flow in
excess of 100% of net income in 2013.
Moreover, Pentair predicts fourth-quarter 2013 adjusted earnings
per share in the range of 83 to 85 cents per share.
Fourth-quarter revenue is expected to be approximately $1.8
billion. The company expects synergies from repositioning actions
and functional standardization efforts to the tune of $120
million for the full year of 2013 and $42 million in the fourth
Pentair anticipates strong double-digit adjusted EPS growth for
the full year. The adoption of Pentair Integrated Management
System (PIMS) in the Flow Control businesses will help in margin
expansion. However, overall economic uncertainty and ongoing
European weakness continue to act as headwinds for the company.
Pentair delivers industry-leading products, services and
solutions for fulfilling customers' diverse needs related to
water and other fluids, thermal management and equipment
protection. Pentair employs more than 30,000 people worldwide.
Pentair currently retains a short-term Zacks Rank #3 (Hold).
Other stocks in the industrial products sector currently
performing well include
AO Smith Corp.
) both with Zacks Rank #1 (Strong Buy), and
) carrying a Zacks Rank #2 (Buy).