Jul 28, 2016
MANCHESTER, United Kingdom -
- Second quarter sales of $1.7 billion.
- Second quarter GAAP EPS of $0.78 and adjusted EPS of $1.11.
- Net cash provided by operating activities of $385 million and free cash flow of $351 million in the quarter. The company expects to deliver full year free cash flow of approximately 100 percent of adjusted net income.
- The company updates its 2016 GAAP EPS to a range of $3.23 - $3.38 and on an adjusted basis to a range of $4.05 - $4.20.
Reconciliations of GAAP to Non-GAAP measures are in the attached financial tables.
MANCHESTER, United Kingdom — July 28, 2016 Pentair plc (NYSE: PNR) today announced second quarter 2016 sales of $1.7 billion. Sales were up 4 percent compared to sales for the same period last year. Excluding the unfavorable impact of currency translation ("FX") and the positive contribution from acquisitions, core sales declined 3 percent in the second quarter. Second quarter 2016 earnings per diluted share from continuing operations ("EPS") were $0.78 compared to $0.84 in the second quarter of 2015. On an adjusted basis, the company reported EPS of $1.11 compared to $1.08 in the second quarter of 2015. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.
Second quarter 2016 operating income was $217 million, down 1 percent compared to operating income for second quarter of 2015, and return on sales ("ROS") was 12.5 percent, a decrease of 60 basis points when compared to the second quarter of 2015. On an adjusted basis, the company reported segment income of $291 million for the second quarter, up 7 percent compared to segment income for the second quarter of 2015, and ROS was 16.8 percent, an increase of 30 basis points when compared to the second quarter of 2015
Net cash provided by operating activities was $385 million and free cash flow was $351 million for the quarter. The company continues to expect to deliver full year free cash flow of approximately 100 percent of adjusted net income.
Pentair paid dividends of $0.33 per share in the second quarter of 2016. Pentair previously announced on December 8, 2015 that its Board of Directors approved a 5 percent increase in the company's regular annual cash dividend rate for 2016 to $1.34 from $1.28. 2016 marks the 40th consecutive year that Pentair has increased its dividend.
"We are pleased with our second quarter performance, which came in at the high end of our expectations as we once again executed against our commitments," said Randall J. Hogan, Pentair Chairman and Chief Executive Officer. "We continue to be encouraged by the strength in our Residential & Commercial and Infrastructure verticals. We have narrowed our full year outlook reflecting further signs of stabilization in our Industrial business and what we believe is sequential flattening in our Energy business. Our cash flow remains strong and we remain focused on further strengthening our balance sheet."
The company updates its 2016 GAAP EPS to a range of $3.23 - $3.38 and on an adjusted basis to a range of $4.05 - $4.20. The company anticipates full year 2016 sales of $6.7 billion, or up approximately 4 percent on a reported basis and down approximately 1 percent on a core basis. The company still expects to deliver full year free cash flow of approximately 100 percent of adjusted net income.
In addition, the company introduced third quarter 2016 GAAP EPS guidance of $0.86 - $0.92 and on an adjusted basis $1.02 - $1.08, up approximately 8 percent on an adjusted basis versus the same quarter last year. The company expects third quarter revenue to be approximately $1.66 billion, which would be up approximately 7 percent on a reported basis and flat on a core basis compared to third quarter 2015 revenue.
EARNINGS CONFERENCE CALL
Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the company's performance, second quarter and first half 2016 results on a two-way 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 Investors 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 presentation, both 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 press 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," "positioned," "strategy," "future" or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements. These forwardlooking 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 overall global economic and business conditions, including worldwide demand for oil and gas; the ability to achieve the benefits of our restructuring plans; the ability to successfully identify, finance, complete and integrate acquisitions, including the ability to successfully integrate and achieve the expected benefits of the acquisition of ERICO Global Company; competition and pricing pressures in the markets we serve; the strength of housing and related markets; volatility in currency exchange rates and commodity prices; inability to generate savings from excellence in operations initiatives consisting of lean enterprise, supply management and cash flow practices; increased risks associated with operating foreign businesses; the ability to deliver backlog and win future project work; failure of markets to accept new product introductions and enhancements; the impact of changes in laws and regulations, including those that limit U.S. tax benefits; the outcome of litigation and governmental proceedings; and the ability to achieve our long-term strategic operating goals. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission ("SEC"), including in our 2015 Annual Report on Form 10-K. All forward-looking statements speak only as of the date of this report. We assume no obligation, and disclaim any obligation, to update the information contained in this report.
ABOUT PENTAIR PLC
Pentair plc (www.pentair.com) delivers industry-leading products, services and solutions for its customers' diverse needs in water and other fluids, thermal management and equipment protection. With 2015 revenues of $6.4 billion, Pentair employs approximately 30,000 people worldwide.
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