) reported first-quarter 2014 adjusted earnings of 73 cents per
share, up 26% from 58 cents reported in the year-ago quarter. The
results were in line with the Zacks Consensus Estimate.
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Earnings came at the upper end of the company's guidance range of
70 to 73 cents. Both the reported quarter and the year-ago
quarter figures exclude repositioning costs, acquisition and
redomicile-related expenses, gain/loss on sale of a business and
certain tax items. Including these items, earnings were 59 cents
per share in the reported quarter compared with 28 cents in the
Net sales decreased 2.8% year over year to $1,725 million and
also fell short of the Zacks Consensus Estimate of $1,800
Cost of sales decreased 8.3% to $1.15 billion in the first
quarter from $1.25 billion in the year-ago quarter. Gross profit
in the reported quarter was $578 million, up 10% compared with
$523.8 million in the prior-year quarter. Consequently, gross
margin expanded 400 basis points (bps) year over year to 33.5% in
Adjusted operating income jumped more than two-fold to $204.3
million from the year-ago quarter. Operating margin increased 50
bps to 11.8%.
Net sales in the
Valves & Controls
segment amounted to $535 million, down 9% year over year. Segment
adjusted operating profit rose 4% to $62 million from $59 million
in the year-ago quarter. Backlog grew 2% sequentially to $1.4
segment reported revenues of $418 million, up 5% from the
year-ago quarter. Segment adjusted operating earnings went up 6%
year over year to $49 million.
Sales from the
segment decreased 7% year over year to $364 million. Adjusted
operating earnings also declined 2% year over year to $37
Revenues in the
segment grew 1% year over year to $415 million. Adjusted
operating profit increased 13% year over year to $79 million from
$70 million in the year-ago quarter.
As of Mar 29, 2014, cash and cash equivalents were $211 million,
compared with $265 million as of Dec 31, 2013. The company
recorded cash usage in operating activities of $27.3 million in
the reported quarter, compared with $18.5 million in the
prior-year quarter. Total debt of the company increased to $2.9
billion as of Mar 29, 2014 from $2.6 billion as of Dec 31, 2013.
The company's debt-to-total-capital ratio stood at 33% as of Mar
29, 2014, compared with 29% as of Dec 31, 2013.
Pentair reaffirmed its adjusted earnings per share (EPS) guidance
in the range of $3.85 - $4.00 for full-year 2014, which
represents an increase of around 22% over 2013 adjusted EPS. The
company reiterated its sales guidance for 2014. It expects sales
to be around $7.7 billion, up 2%-3% over 2013 sales. Pentair also
expects free cash flow to remain in excess of 105% of net income
Additionally, Pentair projects second-quarter 2014 adjusted EPS
in the range of $1.02 to $1.05, up around 13% from the prior-year
quarter. Second-quarter revenues are expected to be approximately
Pentair expects to deliver double-digit EPS growth in 2014. The
company will benefit from the improvement in the North American
residential market as well as global food and beverage market,
stabilization across Europe, cost synergies from last year's
merger with Tyco Flow and consistent share repurchases. However,
a weak Australian economy and fluctuations in exchange rates
Pentair delivers industry-leading products, services and
solutions to meet diverse needs of customers related to water and
other fluids, thermal management and equipment protection.
Notably, the company has more than 30,000 employees worldwide.
Pentair currently carries a short-term Zacks Rank #4 (Sell).
However, other better-ranked stocks worth a look in the
industrial products sector include
AO Smith Corp.
Zebra Technologies Corp.
). While AO Smith sports a Zacks Rank #1 (Strong Buy), Zebra
Technologies and AVT carry a Zacks Rank #2 (Buy).