Pentair Reports Strong First Quarter 2024 Results

Published
  • Sales of $1.0 billion
  • Operating income of $181 million reflecting ROS of 17.8 percent, flat to prior year; on an adjusted basis, ROS expanded 90 basis points to 21.4 percent
  • GAAP EPS of $0.80 and adjusted EPS of $0.94
  • The company updates its full year 2024 GAAP EPS guidance to approximately $3.76 to $3.86 and reiterates EPS guidance on an adjusted basis of approximately $4.15 to $4.25

Reconciliations of GAAP to Non-GAAP measures are in the attached financial tables.

LONDON--(BUSINESS WIRE)-- Pentair plc (NYSE: PNR), a leader in helping the world sustainably move, improve and enjoy water, life’s most essential resource, today announced first quarter 2024 sales of $1.0 billion. Sales were down 1 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales declined 1 percent in the first quarter. First quarter 2024 earnings per diluted share from continuing operations (“EPS”) were $0.80 compared to $0.78 in the first quarter of 2023. On an adjusted basis, the company reported first quarter 2024 EPS of $0.94 compared to $0.91 in the first quarter of 2023. 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 balanced water portfolio delivered strong first quarter results that exceeded our expectations. For the first time in nearly four years, we are pleased to be entering what we believe to be a more normal operating environment. Order rates remained solid and our backlog and lead times have been normalizing. Our Transformation initiatives remained on track and continue to fuel our return on sales goal of 24 percent with potential upside by the end of fiscal 2026 as we highlighted at our recent Investor Day.”

First quarter 2024 operating income was $181 million, down 2 percent compared to operating income for the first quarter of 2023, and return on sales (“ROS”) was 17.8 percent, or flat when compared to the first quarter of 2023. On an adjusted basis, the company reported segment income of $217 million for the first quarter of 2024, up 3 percent compared to segment income for the first quarter of 2023, and ROS was 21.4 percent, an increase of 90 basis points when compared to the first quarter of 2023.

Flow sales were down 2 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales declined 2 percent in the first quarter. Segment income of $77 million was up 19 percent compared to the first quarter of 2023, and ROS was 20.1 percent, an increase of 350 basis points when compared to the first quarter of 2023.

Water Solutions sales were flat compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales increased 1 percent in the first quarter. Segment income of $56 million was up 6 percent compared to the first quarter of 2023, and ROS was 20.4 percent, an increase of 110 basis points when compared to the first quarter of 2023.

Pool sales were down 1 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales declined 1 percent in the first quarter. Segment income of $111 million was down 5 percent compared to the first quarter of 2023, and ROS was 30.8 percent, a decrease of 110 basis points when compared to the first quarter of 2023.

Net cash used for operating activities of continuing operations was $107 million for the first quarters of 2024 and 2023. Free cash flow used for continuing operations for the quarter was $127 million compared to $123 million in the first quarter of 2023.

Pentair paid a regular cash dividend of $0.23 per share in the first quarter of 2024. Pentair previously announced on February 19, 2024 that it will pay a regular quarterly cash dividend of $0.23 per share on May 3, 2024 to shareholders of record at the close of business on April 19, 2024. This year marks the 48th consecutive year that Pentair has increased its dividend.

OUTLOOK

Mr. Stauch concluded, “We are reiterating our full year outlook and introducing strong Q2 guidance reflecting solid execution across all three segments while being mindful of the uncertainty across the global macroeconomic and geopolitical landscape. We continue to focus on investing in the long-term growth of Pentair and remain confident in our balanced water portfolio and Transformation initiatives.”

The company updates its estimated 2024 GAAP EPS from continuing operations to approximately $3.76 to $3.86 and reiterates its guidance on an adjusted EPS basis of approximately $4.15 to $4.25. This is an increase of 11 percent to 13 percent compared to 2023. The Company anticipates full year 2024 sales to increase 2 percent to 3 percent on a reported basis.

In addition, the company introduces second quarter 2024 GAAP EPS from continuing operations guidance of approximately $1.08 to $1.10 and on an adjusted EPS basis of approximately $1.15 to $1.17. The company expects second quarter sales to be up approximately 1 percent to 2 percent on a reported basis compared to the second quarter of 2023.

EARNINGS CONFERENCE CALL

Pentair President and Chief Executive Officer John L. Stauch and Chief Financial Officer Robert P. Fishman will discuss the company’s first quarter 2024 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 environmental, social and governance (“ESG”) goals and targets. 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, 2023. 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 2023 of approximately $4.1 billion, and trades under the ticker symbol PNR. With approximately 10,500 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

In millions, except per-share data

March 31, 2024

March 31, 2023

Net sales

$

1,017.2

 

$

1,028.6

 

Cost of goods sold

 

627.1

 

 

646.8

 

Gross profit

 

390.1

 

 

381.8

 

% of net sales

 

38.4

%

 

37.1

%

Selling, general and administrative expenses

 

185.2

 

 

173.3

 

% of net sales

 

18.2

%

 

16.8

%

Research and development expenses

 

24.1

 

 

24.9

 

% of net sales

 

2.4

%

 

2.4

%

Operating income

 

180.8

 

 

183.6

 

% of net sales

 

17.8

%

 

17.8

%

Other expense

 

 

Other expense

 

0.1

 

 

0.7

 

Net interest expense

 

27.3

 

 

32.4

 

% of net sales

 

2.7

%

 

3.1

%

Income from continuing operations before income taxes

 

153.4

 

 

150.5

 

Provision for income taxes

 

19.9

 

 

22.0

 

Effective tax rate

 

13.0

%

 

14.6

%

Net income from continuing operations

 

133.5

 

 

128.5

 

(Loss) income from discontinued operations, net of tax

 

(0.2

)

 

1.2

 

Net income

$

133.3

 

$

129.7

 

Earnings per ordinary share

 

 

Basic

 

 

Continuing operations

$

0.80

 

$

0.78

 

Discontinued operations

 

 

 

0.01

 

Basic earnings per ordinary share

$

0.80

 

$

0.79

 

Diluted

 

 

Continuing operations

$

0.80

 

$

0.78

 

Discontinued operations

 

 

 

0.01

 

Diluted earnings per ordinary share

$

0.80

 

$

0.79

 

Weighted average ordinary shares outstanding

 

 

Basic

 

165.7

 

 

164.8

 

Diluted

 

167.2

 

 

165.8

 

Cash dividends paid per ordinary share

$

0.23

 

$

0.22

 

 

Pentair plc and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

 

 

 

 

March 31, 2024

December 31, 2023

In millions

Assets

Current assets

 

 

Cash and cash equivalents

$

109.1

$

170.3

Accounts receivable, net

 

807.4

 

561.7

Inventories

 

675.1

 

677.7

Other current assets

 

157.0

 

159.3

Total current assets

 

1,748.6

 

1,569.0

Property, plant and equipment, net

 

363.1

 

362.0

Other assets

 

 

Goodwill

 

3,255.8

 

3,274.6

Intangibles, net

 

1,026.2

 

1,042.4

Other non-current assets

 

345.0

 

315.3

Total other assets

 

4,627.0

 

4,632.3

Total assets

$

6,738.7

$

6,563.3

Liabilities and Equity

Current liabilities

 

 

Accounts payable

$

308.8

$

278.9

Employee compensation and benefits

 

96.0

 

125.4

Other current liabilities

 

514.5

 

545.3

Total current liabilities

 

919.3

 

949.6

Other liabilities

 

 

Long-term debt

 

2,084.3

 

1,988.3

Pension and other post-retirement compensation and benefits

 

73.1

 

73.6

Deferred tax liabilities

 

39.0

 

40.0

Other non-current liabilities

 

295.8

 

294.7

Total liabilities

 

3,411.5

 

3,346.2

Equity

 

3,327.2

 

3,217.1

Total liabilities and equity

$

6,738.7

$

6,563.3

 

Pentair plc and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Three months ended

In millions

March 31, 2024

March 31, 2023

Operating activities

 

 

Net income

$

133.3

 

$

129.7

 

Loss (income) from discontinued operations, net of tax

 

0.2

 

 

(1.2

)

Adjustments to reconcile net income from continuing operations to net cash provided by (used for) operating activities

 

 

Equity income of unconsolidated subsidiaries

 

(0.9

)

 

(0.2

)

Depreciation

 

14.9

 

 

14.7

 

Amortization

 

13.5

 

 

13.8

 

Deferred income taxes

 

4.8

 

 

(14.0

)

Share-based compensation

 

7.9

 

 

7.2

 

Asset impairment and write-offs

 

0.8

 

 

4.1

 

Changes in assets and liabilities, net of effects of business acquisitions

 

 

Accounts receivable

 

(249.5

)

 

(184.8

)

Inventories

 

(3.2

)

 

6.0

 

Other current assets

 

(11.8

)

 

(17.4

)

Accounts payable

 

33.0

 

 

(24.9

)

Employee compensation and benefits

 

(28.3

)

 

(12.8

)

Other current liabilities

 

(28.1

)

 

(28.7

)

Other non-current assets and liabilities

 

6.0

 

 

1.9

 

Net cash used for operating activities of continuing operations

 

(107.4

)

 

(106.6

)

Net cash used for operating activities of discontinued operations

 

(0.2

)

 

 

Net cash used for operating activities

 

(107.6

)

 

(106.6

)

Investing activities

 

 

Capital expenditures

 

(19.3

)

 

(16.6

)

Proceeds from sale of property and equipment

 

 

 

0.2

 

Acquisitions, net of cash acquired

 

 

 

0.2

 

Net cash used for investing activities

 

(19.3

)

 

(16.2

)

Financing activities

 

 

Net borrowings of revolving long-term debt

 

101.4

 

 

173.6

 

Repayments of long-term debt

 

(6.3

)

 

 

Shares issued to employees, net of shares withheld

 

6.1

 

 

(4.1

)

Dividends paid

 

(38.0

)

 

(36.2

)

Net cash provided by financing activities

 

63.2

 

 

133.3

 

Effect of exchange rate changes on cash and cash equivalents

 

2.5

 

 

(0.2

)

Change in cash and cash equivalents

 

(61.2

)

 

10.3

 

Cash and cash equivalents, beginning of period

 

170.3

 

 

108.9

 

Cash and cash equivalents, end of period

$

109.1

 

$

119.2

 

 

 

 

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

In millions

March 31, 2024

March 31, 2023

Net cash used for operating activities of continuing operations

$

(107.4

)

$

(106.6

)

Capital expenditures

 

(19.3

)

 

(16.6

)

Proceeds from sale of property and equipment

 

 

 

0.2

 

Free cash flow from continuing operations

 

(126.7

)

 

(123.0

)

Net cash used for operating activities of discontinued operations

 

(0.2

)

 

 

Free cash flow

$

(126.9

)

$

(123.0

)

 

 

 

Pentair plc and Subsidiaries

Supplemental Financial Information by Reportable Segment (Unaudited)

 

 

 

 

 

2024

 

 

2023

 

In millions

First Quarter

First Quarter

Net sales

 

 

Flow

$

384.3

 

$

391.8

 

Water Solutions

 

273.1

 

 

272.0

 

Pool

 

359.5

 

 

364.3

 

Other

 

0.3

 

 

0.5

 

Consolidated

$

1,017.2

 

$

1,028.6

 

Segment income (loss)

 

 

Flow

$

77.3

 

$

65.0

 

Water Solutions

 

55.6

 

 

52.4

 

Pool

 

110.8

 

 

116.2

 

Other

 

(26.4

)

 

(22.6

)

Consolidated

$

217.3

 

$

211.0

 

Return on sales

 

 

Flow

 

20.1

%

 

16.6

%

Water Solutions

 

20.4

%

 

19.3

%

Pool

 

30.8

%

 

31.9

%

Consolidated adjusted return on sales

 

21.4

%

 

20.5

%

 

 

 

Pentair plc and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures for the Year Ending December 31, 2024

Excluding the Effect of Adjustments (Unaudited)

 

 

 

 

 

 

 

Actual

Forecast

In millions, except per-share data

First Quarter

Second Quarter

Full Year

Net sales

$

1,017.2

 

approx

Up 1% - 2%

approx

Up 2% - 3%

Operating income

 

180.8

 

approx

Up 17% - 18%

approx

Up 14% - 17%

Return on sales

 

17.8

%

 

 

 

 

Adjustments:

 

 

 

 

 

Restructuring and other

 

4.6

 

approx

$

approx

$

5

Transformation costs

 

17.0

 

approx

 

approx

 

17

Intangible amortization

 

13.5

 

approx

 

14

approx

 

55

Legal accrual adjustments and settlements

 

(0.3

)

approx

 

approx

 

Asset impairment and write-offs

 

0.8

 

approx

 

approx

 

1

Equity income of unconsolidated subsidiaries

 

0.9

 

approx

 

1

approx

 

4

Segment income

 

217.3

 

approx

Up 10% - 12%

approx

Up 8% - 11%

Adjusted return on sales

 

21.4

%

 

 

 

 

Net income from continuing operations—as reported

 

133.5

 

approx

$180 - $183

approx

$626 - $643

Adjustments to operating income

 

35.6

 

approx

 

14

approx

 

78

Income tax adjustments

 

(11.3

)

approx

 

(2)

approx

 

(13)

Net income from continuing operations—as adjusted

$

157.8

 

approx

$192 - $195

approx

$691 - $708

Continuing earnings per ordinary share—diluted

 

 

 

 

 

Diluted earnings per ordinary share—as reported

$

0.80

 

approx

$1.08 - $1.10

approx

$3.76 - $3.86

Adjustments

 

0.14

 

approx

 

0.07

approx

 

0.39

Diluted earnings per ordinary share—as adjusted

$

0.94

 

approx

$1.15 - $1.17

approx

$4.15 - $4.25

 

Pentair plc and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures for the Year Ended December 31, 2023

Excluding the Effect of Adjustments (Unaudited)

 

 

 

 

 

 

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

 

$

984.6

 

$

4,104.5

 

Operating income

 

183.6

 

 

208.5

 

 

180.1

 

 

167.0

 

 

739.2

 

Return on sales

 

17.8

%

 

19.3

%

 

17.9

%

 

17.0

%

 

18.0

%

Adjustments:

 

 

 

 

 

Restructuring and other

 

2.9

 

 

0.6

 

 

1.6

 

 

(1.7

)

 

3.4

 

Transformation costs

 

8.5

 

 

6.0

 

 

13.5

 

 

16.3

 

 

44.3

 

Intangible amortization

 

13.8

 

 

13.9

 

 

13.8

 

 

13.8

 

 

55.3

 

Legal accrual adjustments and settlements

 

(1.9

)

 

4.1

 

 

 

 

 

 

2.2

 

Asset impairment and write-offs

 

3.9

 

 

0.5

 

 

1.8

 

 

1.7

 

 

7.9

 

Equity income of unconsolidated subsidiaries

 

0.2

 

 

0.6

 

 

1.3

 

 

0.7

 

 

2.8

 

Segment income

 

211.0

 

 

234.2

 

 

212.1

 

 

197.8

 

 

855.1

 

Adjusted return on sales

 

20.5

%

 

21.6

%

 

21.0

%

 

20.1

%

 

20.8

%

Net income from continuing operations—as reported

 

128.5

 

 

154.2

 

 

132.1

 

 

208.1

 

 

622.9

 

Pension and other post retirement mark to market loss

 

 

 

 

 

 

 

6.1

 

 

6.1

 

Other income

 

 

 

(5.1

)

 

 

 

 

 

(5.1

)

Adjustments to operating income

 

27.2

 

 

25.1

 

 

30.7

 

 

30.1

 

 

113.1

 

Income tax adjustments (1)

 

(4.6

)

 

(3.1

)

 

(6.6

)

 

(98.5

)

 

(112.8

)

Net income from continuing operations—as adjusted

$

151.1

 

$

171.1

 

$

156.2

 

$

145.8

 

$

624.2

 

Continuing earnings per ordinary share—diluted

 

 

 

 

 

Diluted earnings per ordinary share—as reported

$

0.78

 

$

0.93

 

$

0.79

 

$

1.25

 

$

3.75

 

Adjustments

 

0.13

 

 

0.10

 

 

0.15

 

 

(0.38

)

 

 

Diluted earnings per ordinary share—as adjusted

$

0.91

 

$

1.03

 

$

0.94

 

$

0.87

 

$

3.75

 

(1)

Income tax adjustments in the fourth quarter include $74.3 million resulting from favorable impacts of worthless stock deductions related to exiting certain businesses in our Water Solutions segment and favorable discrete items primarily related to the recognition of deferred tax assets.

 

Pentair plc and Subsidiaries

Reconciliation of Net Sales Growth to Core Net Sales Growth by Segment

For the Quarter Ended March 31, 2024 (Unaudited)

 

 

Q1 Net Sales Growth

 

Core

Currency

Total

Total Pentair

(1.1

)%

%

(1.1

)%

Flow

(2.1

)%

0.2

%

(1.9

)%

Water Solutions

0.8

%

(0.4

)%

0.4

%

Pool

(1.3

)%

%

(1.3

)%

 

Shelly Hubbard Vice President, Investor Relations Direct: 612-812-0148 Email: shelly.hubbard@pentair.com

Rebecca Osborn Sr. Director, External Communications Direct: 763-656-5589 Email: rebecca.osborn@pentair.com

Source: Pentair plc

In This Story

PNR