Pentair plc (PNR - Free Report) reported second-quarter 2016 adjusted earnings of $1.11 per share, improved around 2.8% from $1.08 in the year-ago quarter and beat the Zacks Consensus Estimate by a penny. Earnings also came at the higher end of the management guidance of EPS range of $1.08–$1.11.
Including one-time items, the company reported earnings of 78 cents per share, down 7% from 84 cents in the year-ago quarter.
Operational Update
Net sales, which increased 4% year over year to $1.73 billion, just came ahead of the Zacks Consensus Estimate of $1.72 billion. Revenues came in line with the management guidance of $1.7 billion. Excluding the unfavorable impact of currency translation and positive contribution from acquisitions, core sales declined 3%.
Cost of sales grew 3.6% to $1,134 million in the quarter from $1,095 million in the year-ago quarter. Gross profit in the reported quarter was $599 million, up 5.8% from $566 million in the prior-year quarter. Gross margin expanded 50 basis points (bps) year over year to 34.6% in the quarter.
Adjusted segment income went up 6.5% to $291.4 million from $273.5 million in the year-ago quarter. Operating margin enhanced 30 bps to 16.8%.
Segmental Performance
Net sales in the Valves & Controls segment were $433.6 million, down 12.7% year over year. Segment operating profit plunged 32% to $43.7 million from $64.4 million in the year-ago quarter.
The Flow & Filtration Solutions segment reported revenues of $368.7 million, down 1.6% from the year-ago quarter. Segment operating earnings fell 2.8% year over year to $55.5 million.
Sales from the Water Quality Systems segment rose 2.4% year over year to $397 million. Operating earnings went up 11.4% to $98.2 million.
Revenues in the Technical Solutions segment jumped 32.8% to $540.6 million. Operating earnings surged 29% year over year to $111.6 million.
Financial Update
Pentair had cash and cash equivalents of $173.3 million at the end of second-quarter 2016 compared with $126 million at the end of 2015. Cash flow from operations came in at $369.5 million for the six-month period ended Jun 30, 2016 compared with $195 million in the comparable year-ago period. As of quarter end, Pentair’s total debt dropped to $4.6 billion from $4.7 billion as of Dec 31, 2015.
Guidance
Pentair lowered the upper end of its 2016 EPS guidance range to $4.05–$4.20 from the prior band of $4.05–$4.25, reflecting further signs of stabilization in its industrial business and sequential flattening in Energy business. The company reaffirmed its fiscal 2016 sales projection of $6.7 billion, which is up approximately 4% year over year on a reported basis but down 1% on a core basis. It still expects to deliver full-year free cash flow of approximately 100% of adjusted net income. Pentair’s cash flow remains strong and is focused on further strengthening balance sheet.
Pentair also initiated its third-quarter 2016 guidance. The company expects EPS in the range of $1.02–$1.08. Earnings will be up approximately 8% year over year on an adjusted basis. Revenues are projected at around $1.66 billion, up around 7% on a reported basis and flat on a core basis compared to third-quarter 2015 revenue.
Zacks Rank
Pentair currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industrial products sector include Apogee Enterprises, Inc. (APOG - Free Report) , Harsco Corporation and Mobile Mini, Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy).
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Pentair plc (PNR - Free Report) reported second-quarter 2016 adjusted earnings of $1.11 per share, improved around 2.8% from $1.08 in the year-ago quarter and beat the Zacks Consensus Estimate by a penny. Earnings also came at the higher end of the management guidance of EPS range of $1.08–$1.11.
Including one-time items, the company reported earnings of 78 cents per share, down 7% from 84 cents in the year-ago quarter.
Operational Update
Net sales, which increased 4% year over year to $1.73 billion, just came ahead of the Zacks Consensus Estimate of $1.72 billion. Revenues came in line with the management guidance of $1.7 billion. Excluding the unfavorable impact of currency translation and positive contribution from acquisitions, core sales declined 3%.
Cost of sales grew 3.6% to $1,134 million in the quarter from $1,095 million in the year-ago quarter. Gross profit in the reported quarter was $599 million, up 5.8% from $566 million in the prior-year quarter. Gross margin expanded 50 basis points (bps) year over year to 34.6% in the quarter.
Adjusted segment income went up 6.5% to $291.4 million from $273.5 million in the year-ago quarter. Operating margin enhanced 30 bps to 16.8%.
Segmental Performance
Net sales in the Valves & Controls segment were $433.6 million, down 12.7% year over year. Segment operating profit plunged 32% to $43.7 million from $64.4 million in the year-ago quarter.
The Flow & Filtration Solutions segment reported revenues of $368.7 million, down 1.6% from the year-ago quarter. Segment operating earnings fell 2.8% year over year to $55.5 million.
Sales from the Water Quality Systems segment rose 2.4% year over year to $397 million. Operating earnings went up 11.4% to $98.2 million.
Revenues in the Technical Solutions segment jumped 32.8% to $540.6 million. Operating earnings surged 29% year over year to $111.6 million.
Financial Update
Pentair had cash and cash equivalents of $173.3 million at the end of second-quarter 2016 compared with $126 million at the end of 2015. Cash flow from operations came in at $369.5 million for the six-month period ended Jun 30, 2016 compared with $195 million in the comparable year-ago period. As of quarter end, Pentair’s total debt dropped to $4.6 billion from $4.7 billion as of Dec 31, 2015.
Guidance
Pentair lowered the upper end of its 2016 EPS guidance range to $4.05–$4.20 from the prior band of $4.05–$4.25, reflecting further signs of stabilization in its industrial business and sequential flattening in Energy business. The company reaffirmed its fiscal 2016 sales projection of $6.7 billion, which is up approximately 4% year over year on a reported basis but down 1% on a core basis. It still expects to deliver full-year free cash flow of approximately 100% of adjusted net income. Pentair’s cash flow remains strong and is focused on further strengthening balance sheet.
Pentair also initiated its third-quarter 2016 guidance. The company expects EPS in the range of $1.02–$1.08. Earnings will be up approximately 8% year over year on an adjusted basis. Revenues are projected at around $1.66 billion, up around 7% on a reported basis and flat on a core basis compared to third-quarter 2015 revenue.
Zacks Rank
Pentair currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industrial products sector include Apogee Enterprises, Inc. (APOG - Free Report) , Harsco Corporation and Mobile Mini, Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy).
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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