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Pentair (PNR) Q1 Earnings Meet, Sales Surpass Estimates

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Pentair plc (PNR - Free Report) posted first-quarter 2019 adjusted earnings per share (EPS) of 43 cents, which met the Zacks Consensus Estimate. However, earnings were down 12% from the year-ago quarter’s figure of 49 cents and also fell short of the company’s guidance of 47-50 cents. Wet and cold weather delayed pool construction activities in several key markets, and impacted the higher-margin specialty agricultural spray business within the Flow Technologies segment.

Including one-time items, the company posted earnings of 30 cents per share compared with 32 cents reported in the year-ago quarter.

Net sales declined 6% year over year to $689 million. The figure surpassed the Zacks Consensus Estimate of $687 million.  Excluding the impact of acquisitions, divestitures and currency translation, core sales were down 4% in the reported quarter. Pentair’s earlier guidance of core sales growth was 4-5% year over year.

Pentair plc Price, Consensus and EPS Surprise

 

Cost of sales declined 5.4% to $453 million from $479 million in the year-ago quarter. Gross profit in the reported quarter was $236 million, down 7% from $253 million in the prior-year quarter.

Selling, general and administrative expenses amounted to $147 million, up from $142 million in the year-ago quarter. Research and development expenses went up 10% year over year to $21 million. Adjusted segmental operating income declined 16% year over year to $99 million.

Segmental Performance

Net sales in the Aquatic Systems segment declined around 8% year over year to $221 million. Operating earnings decreased 12.7% to $52 million.
Net sales in the Filtration Solutions segment totaled $239 million, down 5% from the prior-year quarter. Operating earnings remained flat at $34 million.

Net sales in the Flow Technologies segment totaled $229 million, down 5% from the year-earlier quarter. Segmental operating earnings declined 22% year over year to $30 million.

Financial Update

Pentair had cash and cash equivalents of $79 million as of Mar 31, 2019, up from $74.3 million as of Dec 31, 2018. The company used $257 million of cash in operations during the first quarter of 2019 compared with $194 million in the prior-year quarter.

During the reported quarter, Pentair’s board of directors approved a 3% hike in the regular annual cash dividend rate for 2019 to 72 cents. This marks the 43rd consecutive year of hike in the dividend by the company.

Guidance

Considering the preliminary first-quarter results, on Apr 9, Pentair slashed earnings and sales guidance for the current year. The company reiterated adjusted EPS guidance of $2.30-$2.35. EPS, including special items, is expected to be $2.04-$2.09. Sales in 2019 will likely be up 1-2% on a reported basis and sales growth will be flat to up 1% on a core basis.

Pentair provided second-quarter 2019 adjusted earnings per share guidance at 63-66 cents. Sales in the quarter are anticipated to increase 1-2% on a reported basis and approximately flat to up 1 percent on a core basis compared with the prior-year quarter.

Price Performance

 

 

Pentair stock has dipped 44% in the past year compared with the industry’s 6% decline.

Zacks Rank & Stocks to Consider

Pentair currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are DMC Global Inc. (BOOM - Free Report) , DXP Enterprises, Inc. (DXPE - Free Report) and Cintas Corporation (CTAS - Free Report) . While DMC Global and DXP Enterprises currently sport a Zacks Rank #1 (Strong Buy), Cintas carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DMC Global has an earnings growth rate of 60% for 2019. The stock has rallied 139% in a year.

DXP Enterprises has an earnings growth rate of 22% for 2019. Its shares have moved up 15% in the past year.

Cintas has an earnings growth rate of 25.6% for 2019. The company’s shares have gained 20% in the past year.

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