SCHAFFHAUSEN, Switzerland, April 23, 2013 /PRNewswire/ -- Pentair Ltd. (NYSE: PNR) today announced first quarter 2013 sales of $1.8 billion. Sales were flat compared to pro forma sales for the same period last year excluding the unfavorable impact from foreign exchange. Adjusted first quarter 2013 earnings per diluted share ("EPS") were $0.58, up 7 percent from adjusted pro forma EPS of $0.54 in the first quarter of last year. On a GAAP basis, the company reported EPS of $0.25 compared to EPS of $0.62 in the first quarter last year. Adjusted EPS and operating income exclude acquisition-related expenses, repositioning costs, gain on sale of business, and certain tax items.
(Logo: http://photos.prnewswire.com/prnh/20120307/CG65728LOGO)
First quarter 2013 adjusted operating income was $179 million, up 4 percent compared to adjusted pro forma operating income for first quarter 2012, and adjusted operating margins were 10.1 percent, an expansion of 40 basis points when compared to adjusted pro forma 2012 operating margins. On a GAAP basis, the company reported operating income of $74 million.
Free cash flow in the quarter was a usage of $29 million, reflecting normal seasonality and timing of cash flows. The company expects to deliver full year free cash flow greater than 100 percent of net income.
The quarterly dividend effective for the first and second quarters of 2013 is $0.23 per share per quarter. The company is seeking authorization from its shareholders at its 2013 annual general meeting of shareholders to increase the dividend to $0.25 per share per quarter for each of the third and fourth quarters of 2013 and the first and second quarters of 2014. If approved by shareholders, the 2013 dividend increase will mark the 37th consecutive year in which Pentair has increased its dividend.
"We continue to see signs of a North American residential recovery and global energy remains strong, while infrastructure and industrial markets continue to be mixed," said Randall J. Hogan, Pentair chairman and chief executive officer. "Despite these varied market conditions, Pentair delivered another quarter of strong operating performance led by pricing and productivity, which demonstrates the power of the Pentair Integrated Management System, in addition to the benefits of integration and standardization synergies which are beginning to read through."
First Quarter Business Highlights
All year over year comparisons against 2012 adjusted results on a pro forma basis for the Flow Control acquisition. See attached reconciliations of these Non-GAAP measures.
Water & Fluid Solutions first quarter sales grew to $782 million, up 5 percent versus the prior year quarter, excluding a 1 percent unfavorable impact from foreign exchange. In fast growth regions, Water & Fluid Solutions sales grew 18 percent driven by strength in Latin America and the Middle East.
- Residential & Commercial sales, which accounted for roughly 45 percent of Water & Fluid Solution revenue, grew 10 percent. The North American residential business continued to show signs of a recovery, which more than offset ongoing declines in western Europe.
- Infrastructure sales, which includes the former Flow Control WES business, and which accounted for roughly 20 percent of Water & Fluid Solutions revenue, were down 12 percent. North America backlog grew once again, but Europe remains challenged.
- Food & Beverage sales, which accounted for nearly 20 percent of Water & Fluid Solutions revenue, grew 17 percent. Agriculture once again showed strong double-digit gains and Beverage projects that were delayed last quarter were shipped.
Water & Fluid Solutions first quarter adjusted operating income of $83 million represented a 14 percent increase as compared to $73 million in the same period last year. Adjusted operating margins increased by 90 basis points to 10.6 percent. Price and productivity more than offset inflation in the quarter. Including repositioning and other charges, Water & Fluid Solutions reported a GAAP operating income of $75 million.
Valves & Controls delivered first quarter 2013 sales of $586 million, down 3 percent versus the prior year quarter excluding a 1 percent unfavorable impact from foreign exchange. Backlog increased 1 percent to $1.4 billion compared to fourth quarter 2012.
- Energy sales, which accounted for roughly 60 percent of Valves & Controls revenue, declined 3 percent. Sales to the oil & gas and mining industries both grew 2 percent while sales to the power industry declined 6 percent.
- Industrial sales, which accounted for roughly 40 percent of Valves & Controls revenue, declined 9 percent on continued weakness in Asia.
Valves & Controls delivered first quarter adjusted operating income of $59 million, down 2 percent compared to $61 million in the same quarter last year. First quarter 2013 adjusted operating margins increased 10 basis points to 10.1 percent. Price and productivity more than offset inflation during the quarter. Including inventory step-up and customer backlog, repositioning and other charges, Valves & Controls reported a GAAP operating loss of $19 million in the first quarter.
Technical Solutions delivered first quarter 2013 sales of $410 million, down 2 percent versus the prior year quarter excluding a 1 percent unfavorable impact of foreign exchange.
- Industrial sales, which accounted for roughly 45 percent of Technical Solutions revenue, declined 3 percent.
- Energy sales, which accounted for roughly 25 percent of Technical Solutions revenue, grew 3 percent.
- Residential & Commercial sales, which accounted for roughly 10 percent of Technical Solutions revenue, grew 3 percent.
Technical Solutions delivered first quarter adjusted operating income of $70 million, up 13 percent compared to $62 million in the same quarter last year. First quarter 2013 adjusted operating margins increased 230 basis points to 17.0 percent. Pricing and productivity gains driven by a better mix of standard products more than offset material and labor inflation. Including inventory step-up and customer backlog, repositioning and other charges, Technical Solutions' first quarter reported GAAP operating income was $53 million.
Outlook
Pentair continues to expect full year 2013 adjusted EPS to be between $3.10 and $3.30, which represents an increase of approximately 22 to 30 percent from 2012 adjusted pro forma EPS of $2.54. The company anticipates full year 2013 sales to approximate $7.6 billion, or up approximately 3 to 5 percent over 2012 adjusted pro forma sales. The company expects to generate free cash flow in excess of 100 percent of net income once again.
"As the company enters its seasonally strongest quarters, we are seeing signs of top line acceleration," further commented Hogan. "Based on our early success in integration and standardization, we have raised our targets on 2013 synergies, and margins in our core business should continue to expand."
Pentair is initiating second quarter 2013 adjusted EPS guidance of $0.88 to $0.91. This compares to second quarter 2012 adjusted pro forma EPS of $0.77 and reported GAAP EPS of $0.72. The company expects second quarter 2013 revenue to be approximately $1.9 billion, which is up slightly compared to second quarter 2012 adjusted pro forma revenue and up significantly versus historical second quarter 2012 revenue of $942 million. Synergies driven by repositioning actions and functional standardization efforts are on track to deliver $100 million for the full year of 2013 and are expected to ramp to $35 million by fourth quarter 2013.
Earnings Conference Call
Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the company's performance and first quarter 2013 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 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 ability to successfully integrate Pentair, Inc. and the Flow Control business and achieve expected benefits from the Merger; overall global economic and business conditions; 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, including in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 30, 2013, and our 2012 Annual Report on Form 10-K. All forward-looking statements speak only as of the date of this communication. Pentair Ltd. assumes no obligation, and disclaims any obligation, to update the information contained in this communication.
About Pentair Ltd.
Pentair Ltd. (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 pro forma revenues of $7.3 billion, Pentair employs more than 30,000 people worldwide.
Pentair Contacts:
Investors:
Jim Lucas, Vice President of Investor Relations
Direct: 763-656-5575
Email: jim.lucas@pentair.com
Media:
Betsy Day, Corporate Communications Manager
Direct: 763-656-5537
Email: betsy.day@pentair.com
|
Pentair Ltd. and Subsidiaries
|
|
Condensed Consolidated Statements of Operations (Unaudited)
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
March 30,
|
March 31,
|
|
In millions, except per-share data
|
2013
|
2012
|
|
Net sales
|
$
|
1,774
|
$
|
858
|
|
Cost of goods sold
|
|
1,250
|
|
577
|
|
Gross profit
|
|
524
|
|
281
|
|
% of net sales
|
|
29.5%
|
|
32.7%
|
|
Selling, general and administrative
|
416
|
|
174
|
|
% of net sales
|
|
23.4%
|
|
20.3%
|
|
Research and development
|
|
34
|
|
21
|
|
% of net sales
|
|
1.9%
|
|
2.4%
|
|
Operating income
|
|
74
|
|
86
|
|
% of net sales
|
|
4.2%
|
|
10.0%
|
|
Other (income) expense:
|
|
|
|
|
|
Equity income of unconsolidated subsidiaries
|
|
—
|
|
(2)
|
|
Gain on sale of business
|
|
(17)
|
|
—
|
|
Net interest expense
|
|
17
|
|
15
|
|
% of net sales
|
|
1.0%
|
|
1.7%
|
|
Income before income taxes and noncontrolling interest
|
74
|
|
73
|
|
Provision for income taxes
|
|
21
|
|
10
|
|
effective tax rate
|
|
28.4%
|
|
13.7%
|
|
Net income before noncontrolling interest
|
|
53
|
|
63
|
|
Noncontrolling interest
|
|
1
|
|
1
|
|
Net income attributable to Pentair Ltd.
|
$
|
52
|
$
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share attributable to Pentair Ltd.
|
|
|
|
|
|
Basic
|
$
|
0.25
|
$
|
0.63
|
|
Diluted
|
$
|
0.25
|
$
|
0.62
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
Basic
|
|
204.8
|
|
98.6
|
|
Diluted
|
|
208.2
|
|
100.4
|
|
|
|
|
|
|
|
Cash dividends paid per common share
|
$
|
0.23
|
$
|
0.22
|
|
Pentair Ltd. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets (Unaudited)
|
|
|
|
|
|
|
March 30,
|
December 31,
|
|
In millions
|
2013
|
2012
|
|
Assets
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
215
|
$
|
261
|
|
Accounts and notes receivable, net
|
|
1,404
|
|
1,295
|
|
Inventories
|
|
1,327
|
|
1,379
|
|
Other current assets
|
|
344
|
|
324
|
|
Total current assets
|
|
3,290
|
|
3,259
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
1,222
|
|
1,224
|
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
Goodwill
|
|
4,867
|
|
4,895
|
|
Intangibles, net
|
|
1,859
|
|
1,910
|
|
Other non-current assets
|
|
483
|
|
487
|
|
Total other assets
|
|
7,209
|
|
7,292
|
|
Total assets
|
$
|
11,721
|
$
|
11,775
|
|
|
|
|
|
|
Liabilities and Equity
|
|
Current liabilities
|
|
|
|
|
|
Current maturities of long-term debt
|
$
|
6
|
$
|
3
|
|
Accounts payable
|
|
580
|
|
570
|
|
Employee compensation and benefits
|
|
264
|
|
294
|
|
Other current liabilities
|
|
633
|
|
672
|
|
Total current liabilities
|
|
1,483
|
|
1,539
|
|
|
|
|
|
|
Other liabilities
|
|
|
|
|
|
Long-term debt
|
|
2,592
|
|
2,454
|
|
Pension and other post-retirement compensation and benefits
|
|
370
|
|
378
|
|
Deferred tax liabilities
|
|
481
|
|
488
|
|
Other non-current liabilities
|
|
452
|
|
437
|
|
Total liabilities
|
|
5,378
|
|
5,296
|
|
|
|
|
|
|
Equity
|
|
6,343
|
|
6,479
|
|
Total liabilities and equity
|
$
|
11,721
|
$
|
11,775
|
|
Pentair Ltd. and Subsidiaries
|
|
Condensed Consolidated Statements of Cash Flows (Unaudited)
|
|
|
Three months ended
|
|
March 30,
|
March 31,
|
|
In millions
|
2013
|
2012
|
|
Operating activities
|
|
|
|
|
|
Net income before noncontrolling interest
|
$
|
53
|
$
|
63
|
|
Adjustments to reconcile net income before noncontrolling interest to net cash provided by (used for) operating activities
|
|
|
|
|
|
Equity income of unconsolidated subsidiaries
|
|
—
|
|
(2)
|
|
Depreciation
|
|
38
|
|
16
|
|
Amortization
|
|
42
|
|
10
|
|
Deferred income taxes
|
|
2
|
|
—
|
|
Gain on sale of business
|
|
(17)
|
|
—
|
|
Share-based compensation
|
|
10
|
|
5
|
|
Excess tax benefits from share-based compensation
|
|
—
|
|
(1)
|
|
Gain on sale of assets
|
|
—
|
|
(1)
|
|
Changes in assets and liabilities, net of effects of business acquisitions
|
|
|
|
|
|
Accounts and notes receivable
|
|
(129)
|
|
(100)
|
|
Inventories
|
|
29
|
|
(20)
|
|
Other current assets
|
|
(22)
|
|
3
|
|
Accounts payable
|
|
21
|
|
(4)
|
|
Employee compensation and benefits
|
|
(24)
|
|
(24)
|
|
Other current liabilities
|
|
9
|
|
15
|
|
Other non-current assets and liabilities
|
|
8
|
|
(28)
|
|
Net cash provided by (used for) operating activities
|
|
20
|
|
(68)
|
|
Investing activities
|
|
|
|
|
|
Capital expenditures
|
|
(50)
|
|
(16)
|
|
Proceeds from sale of property and equipment
|
|
1
|
|
2
|
|
Proceeds from sale of business, net
|
|
30
|
|
—
|
|
Other
|
|
—
|
|
(3)
|
|
Net cash provided by (used for) investing activities
|
|
(19)
|
|
(17)
|
|
Financing activities
|
|
|
|
|
|
Net receipts of short-term borrowings
|
|
3
|
|
15
|
|
Net receipts of commercial paper and revolving long-term debt
|
|
140
|
|
102
|
|
Repayments of long-term debt
|
|
(2)
|
|
(13)
|
|
Debt issuance costs
|
|
(1)
|
|
—
|
|
Excess tax benefits from share-based compensation
|
|
—
|
|
1
|
|
Shares issued to employees, net of shares withheld
|
|
11
|
|
7
|
|
Repurchases of common shares
|
|
(140)
|
|
—
|
|
Dividends paid
|
|
(47)
|
|
(22)
|
|
Distribution to noncontrolling interest
|
|
(2)
|
|
—
|
|
Net cash provided by (used for) financing activities
|
|
(38)
|
|
90
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(9)
|
|
—
|
|
Change in cash and cash equivalents
|
|
(46)
|
|
5
|
|
Cash and cash equivalents, beginning of year
|
|
261
|
|
50
|
|
Cash and cash equivalents, end of year
|
$
|
215
|
$
|
55
|
|
|
|
|
|
|
Free cash flow
|
|
|
|
|
|
Net cash provided by (used for) operating activities
|
$
|
20
|
$
|
(68)
|
|
Capital expenditures
|
|
(50)
|
|
(16)
|
|
Proceeds from sale of property and equipment
|
|
1
|
|
2
|
|
Free cash flow
|
$
|
(29)
|
$
|
(82)
|
|
Pentair Ltd. and Subsidiaries
|
|
Supplemental Financial Information by Reportable Segment (Unaudited)
|
|
|
|
|
|
|
First Quarter
|
First Quarter
|
|
In millions
|
2013
|
2012
|
|
Net sales
|
|
|
|
|
|
Water & Fluid Solutions
|
$
|
782
|
$
|
587
|
|
Valves & Controls
|
|
586
|
|
—
|
|
Technical Solutions
|
|
410
|
|
273
|
|
Other
|
|
(4)
|
|
(2)
|
|
Consolidated
|
$
|
1,774
|
$
|
858
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
|
|
|
Water & Fluid Solutions
|
$
|
75
|
$
|
64
|
|
Valves & Controls
|
|
(19)
|
|
—
|
|
Technical Solutions
|
|
53
|
|
50
|
|
Other
|
|
(35)
|
|
(28)
|
|
Consolidated
|
$
|
74
|
$
|
86
|
|
|
|
|
|
|
Operating income as a percent of net sales
|
|
|
|
|
|
Water & Fluid Solutions
|
|
9.6%
|
|
10.9%
|
|
Valves & Controls
|
|
(3.2%)
|
|
—
|
|
Technical Solutions
|
|
13.0%
|
|
18.3%
|
|
Consolidated
|
|
4.2%
|
|
10.0%
|
|
Pentair Ltd. and Subsidiaries
|
|
Reconciliation of the GAAP "As Reported" year ended December 31, 2013 to the "Adjusted" non-GAAP
|
|
excluding the effect of 2013 adjustments (Unaudited)
|
|
|
|
|
|
|
|
|
|
First Quarter
|
Forecast
Second Quarter
|
Forecast
Year
|
|
In millions, except per-share data
|
2013
|
2013
|
2013
|
|
Total Pentair
|
|
|
|
|
|
|
Net sales
|
|
|
$ 1,774
|
approx $1,900
|
approx $7,600
|
|
|
|
|
|
|
|
Operating income - as reported
|
|
74
|
approx 257
|
approx 837
|
|
% of net sales
|
|
|
4.2%
|
approx 13.5%
|
approx 11.0%
|
|
Adjustments:
|
|
|
|
|
|
|
Inventory step-up and customer backlog
|
77
|
approx 8
|
approx 85
|
|
Restructuring and other
|
|
|
28
|
—
|
approx 28
|
|
Operating income - as adjusted
|
|
179
|
approx 265
|
approx 950
|
|
% of net sales
|
|
|
10.1%
|
approx 13.6%
|
approx 12.5%
|
|
|
|
|
|
|
|
Net income attributable to Pentair Ltd. - as reported
|
52
|
approx 179
|
approx 581
|
|
Gain on sale of business, net of tax
|
(12)
|
—
|
approx (12)
|
|
Adjustments, net of tax
|
|
|
80
|
approx 6
|
approx 86
|
|
Net income from attributable
|
|
|
|
|
|
|
to Pentair Ltd. - as adjusted
|
|
|
120
|
approx 185
|
approx 655
|
|
|
|
|
|
|
|
Earnings per common share attributable to Pentair Ltd. - diluted
|
|
|
|
Diluted earnings per common share - as reported
|
$ 0.25
|
$0.85-$0.88
|
$2.74-$2.94
|
|
Adjustments
|
|
|
0.33
|
0.03
|
0.36
|
|
Diluted earnings per common share - as adjusted
|
$ 0.58
|
$0.88-$0.91
|
$3.10-$3.30
|
|
Pentair Ltd. and Subsidiaries
|
|
Reconciliation of the GAAP "As Reported" year ended December 31, 2013 to the "Adjusted" non-GAAP
|
|
excluding the effect of 2013 adjustments (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Forecast
|
Forecast
|
|
First Quarter
|
Second Quarter
|
Year
|
|
In millions
|
2013
|
2013
|
2013
|
|
Water & Fluid Solutions
|
|
|
|
|
Net sales
|
$ 782
|
approx $940
|
approx $3,412
|
|
|
|
|
|
Operating income - as reported
|
75
|
approx 147
|
approx 442
|
|
% of net sales
|
9.6%
|
approx 15.6%
|
approx 13.0%
|
|
Adjustments:
|
|
|
|
|
Restructuring
|
7
|
—
|
approx 7
|
|
Inventory step-up and customer backlog
|
1
|
—
|
approx 1
|
|
Operating income - as adjusted
|
83
|
approx 147
|
approx 450
|
|
% of net sales
|
10.6%
|
approx 15.6%
|
approx 13.2%
|
|
|
|
|
|
Valves & Controls
|
|
|
|
|
Net sales
|
$ 586
|
approx $635
|
approx $2,463
|
|
|
|
|
|
Operating income (loss) - as reported
|
(19)
|
approx 75
|
approx 206
|
|
% of net sales
|
(3.2%)
|
approx 11.8%
|
approx 8.4%
|
|
Adjustments:
|
|
|
|
|
Restructuring
|
8
|
—
|
approx 8
|
|
Inventory step-up and customer backlog
|
70
|
approx 8
|
approx 78
|
|
Operating income - as adjusted
|
59
|
approx 83
|
approx 292
|
|
% of net sales
|
10.1%
|
approx 13.1%
|
approx 11.9%
|
|
|
|
|
|
Technical Solutions
|
|
|
|
|
Net sales
|
$ 410
|
approx $409
|
approx $1,715
|
|
|
|
|
|
Operating income - as reported
|
53
|
approx 71
|
approx 310
|
|
% of net sales
|
13.0%
|
approx 17.4%
|
approx 18.1%
|
|
Adjustments:
|
|
|
|
|
Restructuring
|
11
|
—
|
approx 11
|
|
Inventory step-up and customer backlog
|
6
|
—
|
approx 6
|
|
Operating income - as adjusted
|
70
|
approx 71
|
approx 327
|
|
% of net sales
|
17.0%
|
approx 17.4%
|
approx 19.1%
|
|
Pentair Ltd. and Subsidiaries
|
|
Reconciliation of the GAAP "As Reported" year ended December 31, 2012 to the "Adjusted" non-GAAP
|
|
excluding the effect of 2012 adjustments (Unaudited)
|
|
|
|
|
|
First Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
Year
|
|
In millions, except per-share data
|
2012
|
2012
|
2012
|
2012
|
2012
|
|
Total Pentair
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$ 858
|
$ 942
|
$ 865
|
$ 1,751
|
$ 4,416
|
|
|
|
|
|
|
|
|
|
Operating income (loss) - as reported
|
86
|
119
|
55
|
(304)
|
(44)
|
|
% of net sales
|
|
|
10.1%
|
12.7%
|
6.4%
|
(17.4%)
|
(1.0%)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Deal related costs and expenses
|
11
|
7
|
53
|
12
|
83
|
|
Inventory step-up and customer backlog
|
—
|
—
|
—
|
180
|
180
|
|
Restructuring
|
|
|
—
|
10
|
1
|
55
|
66
|
|
Trade name impairment
|
|
|
—
|
—
|
—
|
61
|
61
|
|
Change in accounting method - pension and post-retirement
|
(1)
|
(1)
|
(1)
|
145
|
142
|
|
Operating income - as adjusted
|
|
96
|
135
|
108
|
149
|
488
|
|
% of net sales
|
|
|
11.2%
|
14.3%
|
12.4%
|
8.5%
|
11.1%
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Pentair Ltd. - as reported
|
62
|
73
|
31
|
(273)
|
(107)
|
|
Bond redemption and interest expense
|
(1)
|
—
|
2
|
52
|
53
|
|
Adjustments, net of tax
|
|
|
3
|
11
|
32
|
321
|
367
|
|
Net income from attributable
|
|
|
|
|
|
|
|
|
to Pentair Ltd. - as adjusted
|
|
|
64
|
84
|
65
|
100
|
313
|
|
|
|
|
|
|
|
|
|
Earnings per common share attributable to Pentair Ltd. - diluted
|
|
|
|
|
|
Diluted earnings (loss) per common share - as reported
|
$ 0.62
|
$ 0.72
|
$ 0.31
|
$ (1.31)
|
$ (0.84)
|
|
Adjustments
|
|
|
0.02
|
0.11
|
0.33
|
1.78
|
3.23
|
|
Diluted earnings per common share - as adjusted
|
$ 0.64
|
$ 0.83
|
$ 0.64
|
$ 0.47
|
$ 2.39
|
|
Pentair Ltd. and Subsidiaries
|
|
Reconciliation of the GAAP "As Reported" year ended December 31, 2012 to the "Adjusted" non-GAAP
|
|
excluding the effect of 2012 adjustments (Unaudited)
|
|
|
|
|
|
|
|
First Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
Year
|
|
In millions
|
2012
|
2012
|
2012
|
2012
|
2012
|
|
Water & Fluid Solutions
|
|
|
|
|
|
|
Net sales
|
$ 587
|
$ 675
|
$ 605
|
$ 772
|
$ 2,639
|
|
|
|
|
|
|
|
Operating income (loss) - as reported
|
64
|
$ 92
|
$ 69
|
$ (57)
|
$ 168.0
|
|
% of net sales
|
10.9%
|
13.6%
|
11.4%
|
(7.4%)
|
6.4%
|
|
Adjustments:
|
|
|
|
|
|
|
Restructuring
|
—
|
7
|
1
|
43
|
51
|
|
Inventory step-up and customer backlog
|
—
|
—
|
—
|
23
|
23
|
|
Trade name impairment
|
—
|
—
|
—
|
49
|
49
|
|
Operating income - as adjusted
|
64
|
99
|
70
|
58
|
291
|
|
% of net sales
|
10.9%
|
14.8%
|
11.6%
|
7.5%
|
11.0%
|
|
|
|
|
|
|
|
Valves & Controls
|
|
|
|
|
|
|
Net sales
|
$ —
|
$ —
|
$ —
|
$ 549
|
$ 549
|
|
|
|
|
|
|
|
Operating income (loss) - as reported
|
—
|
—
|
—
|
(77)
|
(77)
|
|
% of net sales
|
0.0%
|
0.0%
|
0.0%
|
(14.0%)
|
(14.0%)
|
|
Adjustments:
|
|
|
|
|
|
|
Restructuring
|
—
|
—
|
—
|
5
|
5
|
|
Inventory step-up and customer backlog
|
—
|
—
|
—
|
114
|
114
|
|
Operating income - as adjusted
|
—
|
—
|
—
|
42
|
42
|
|
% of net sales
|
0.0%
|
0.0%
|
0.0%
|
7.6%
|
7.6%
|
|
|
|
|
|
|
|
Technical Solutions
|
|
|
|
|
|
|
Net sales
|
$ 273
|
$ 268
|
$ 261
|
$ 434
|
$ 1,236
|
|
|
|
|
|
|
|
Operating income - as reported
|
51
|
51
|
52
|
11
|
165
|
|
% of net sales
|
18.5%
|
18.8%
|
20.0%
|
2.7%
|
13.3%
|
|
Adjustments:
|
|
|
|
|
|
|
Restructuring
|
—
|
3
|
—
|
10
|
13
|
|
Inventory step-up and customer backlog
|
—
|
—
|
—
|
43
|
43
|
|
Trade name impairment
|
—
|
—
|
—
|
11
|
11
|
|
Operating income - as adjusted
|
51
|
54
|
52
|
75
|
232
|
|
% of net sales
|
18.5%
|
20.1%
|
20.0%
|
17.2%
|
18.9%
|
|
Pro Forma Reconciliation
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
2012 Total Pentair
(in millions, except EPS)
|
Historical Adjusted Results
|
Historical Flow Control Acquisition
|
Depreciation & Amortization
|
Other Adjustments
|
Adjusted Pro Forma Results
|
|
First Quarter
|
|
|
|
|
|
|
Sales
|
$ 858
|
$ 996
|
$ —
|
$ (74)
|
$ 1,780
|
|
Operating Income
|
97
|
125
|
(17)
|
(32)
|
172
|
|
Net Income
|
64
|
94
|
(13)
|
(28)
|
117
|
|
Diluted EPS
|
0.64
|
0.44
|
(0.06)
|
(0.48)
|
0.54
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
|
Sales
|
942
|
981
|
—
|
(33)
|
1,889
|
|
Operating Income
|
135
|
144
|
(17)
|
(24)
|
237
|
|
Net Income
|
84
|
108
|
(13)
|
(14)
|
164
|
|
Diluted EPS
|
0.83
|
0.50
|
(0.06)
|
(0.50)
|
0.77
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
|
|
|
Sales
|
866
|
1,020
|
—
|
(16)
|
1,869
|
|
Operating Income
|
108
|
120
|
(17)
|
6
|
216
|
|
Net Income
|
66
|
90
|
(13)
|
6
|
149
|
|
Diluted EPS
|
0.64
|
0.42
|
(0.06)
|
(0.31)
|
0.69
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
|
|
|
Sales
|
1,751
|
—
|
—
|
(7)
|
1,744
|
|
Operating Income
|
150
|
—
|
—
|
17
|
166
|
|
Net Income
|
100
|
—
|
—
|
13
|
112
|
|
Diluted EPS
|
0.47
|
—
|
—
|
0.06
|
0.53
|
|
|
|
|
|
|
|
Full Year
|
|
|
|
|
|
|
Sales
|
4,416
|
2,997
|
—
|
(130)
|
7,282
|
|
Operating Income
|
489
|
388
|
(52)
|
(34)
|
791
|
|
Net Income
|
313
|
291
|
(39)
|
(23)
|
542
|
|
Diluted EPS
|
2.39
|
1.36
|
(0.18)
|
(1.03)
|
2.54
|
|
|
Note: "Other adjustments represent the elimination of certain large projects and sales to sanctioned countries (which were terminated prior to the completion of the Flow Control acquisition), changes in corporate allocation assumptions, income taxes and share count.
|
|
Pro Forma Reconciliation
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
2012 Water & Fluid Solutions Segment
(in millions)
|
Historical Adjusted Results
|
Historical Flow Control Acquisition
|
Depreciation & Amortization
|
Other Adjustments
|
Adjusted Pro Forma Results
|
|
First Quarter
|
|
|
|
|
|
|
Sales
|
$ 587
|
$ 163
|
$ —
|
$ —
|
$ 750
|
|
Operating Income
|
64
|
11
|
—
|
(2)
|
73
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
|
Sales
|
675
|
202
|
—
|
—
|
877
|
|
Operating Income
|
99
|
24
|
—
|
(2)
|
121
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
|
|
|
Sales
|
605
|
202
|
—
|
—
|
808
|
|
Operating Income
|
70
|
15
|
—
|
1
|
86
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
|
|
|
Sales
|
772
|
—
|
—
|
—
|
772
|
|
Operating Income
|
58
|
—
|
—
|
14
|
72
|
|
|
|
|
|
|
|
Full Year
|
|
|
|
|
|
|
Sales
|
2,639
|
568
|
—
|
—
|
3,207
|
|
Operating Income
|
291
|
50
|
—
|
11
|
352
|
|
Note: "Other" adjustments represent changes in corporate allocation assumptions
|
|
Pro Forma Reconciliation
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
2012 Valves & Controls Segment
(in millions)
|
Historical Adjusted Results
|
Historical Flow Control Acquisition
|
Depreciation & Amortization
|
Other Adjustments
|
Adjusted Pro Forma Results
|
|
First Quarter
|
|
|
|
|
|
|
Sales
|
$ —
|
$ 621
|
$ —
|
$ (13)
|
$ 609
|
|
Operating Income
|
—
|
84
|
(12)
|
(11)
|
61
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
|
Sales
|
—
|
602
|
—
|
(5)
|
597
|
|
Operating Income
|
—
|
93
|
(12)
|
(10)
|
71
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
|
|
|
Sales
|
—
|
630
|
—
|
(10)
|
620
|
|
Operating Income
|
—
|
71
|
(13)
|
11
|
70
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
|
|
|
Sales
|
549
|
—
|
—
|
—
|
549
|
|
Operating Income
|
42
|
—
|
—
|
—
|
42
|
|
|
|
|
|
|
|
Full Year
|
|
|
|
|
|
|
Sales
|
549
|
1,853
|
—
|
(27)
|
2,375
|
|
Operating Income
|
42
|
248
|
(37)
|
(9)
|
244
|
|
Note: "Other adjustments represent the elimination of sales to sanctioned countries (which were terminated prior to the completion of the Flow Control acquisition), and changes in corporate allocation assumptions.
|
|
Pro Forma Reconciliation
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
2012 Technical Solutions Segment
(in millions)
|
Historical Adjusted Results
|
Historical Flow Control Acquisition
|
Depreciation & Amortization
|
Other Adjustments
|
Adjusted Pro Forma Results
|
|
First Quarter
|
|
|
|
|
|
|
Sales
|
$ 273
|
$ 211
|
$ —
|
$ (61)
|
$ 423
|
|
Operating Income
|
51
|
36
|
(5)
|
(20)
|
62
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
|
Sales
|
268
|
176
|
—
|
(28)
|
416
|
|
Operating Income
|
54
|
28
|
(5)
|
(12)
|
65
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
|
|
|
Sales
|
261
|
188
|
—
|
(7)
|
443
|
|
Operating Income
|
52
|
39
|
(5)
|
(6)
|
80
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
|
|
|
Sales
|
434
|
—
|
—
|
(7)
|
427
|
|
Operating Income
|
75
|
—
|
—
|
2
|
77
|
|
|
|
|
|
|
|
Full Year
|
|
|
|
|
|
|
Sales
|
1,236
|
575
|
—
|
(103)
|
1,708
|
|
Operating Income
|
232
|
103
|
(14)
|
(37)
|
284
|
|
Note: "Other" adjustments represent the elimination of certain large projects and changes in corporate allocation assumptions
|
SOURCE Pentair