Pentair announced that its first quarter 2003 earnings per share (EPS) of $0.56 gained 30 percent over EPS of $0.43 in the same period last year. This performance exceeded analysts' EPS expectations by $0.02. Pentair's first quarter net sales totaled $637.5 million, up six percent from $603.1 million in the same period a year ago. Excluding recent acquisitions, sales were flat compared to the first quarter of 2002. Operating income for the first quarter 2003 totaled $52.2 million, 14 percent greater than the $45.7 million reported in the first quarter of 2002.
"Pentair turned a six percent sales gain into a 30 percent EPS improvement during the first quarter and recorded its fourth consecutive favorable quarter-over-quarter comparison," said Randall J. Hogan, Pentair chairman and CEO. "These results demonstrate that we continue to improve our performance in the midst of difficult market conditions."
In the Tools Group, first quarter 2003 sales of $251.8 million were flat compared to the same period last year and down in the mid single digits, excluding the recent acquisition. These results reflect weak consumer confidence and reduced spending in the quarter, both of which were aggravated by concerns over the war in Iraq. The soft market led to increased price pressure and higher promotional costs. In addition, the loss of some air compressor placements in the home center channel unfavorably affected the first quarter; however, compressor sales are expected to rebound in subsequent quarters. Operating income of $17.7 million was six percent ahead of the same period last year, and margins of seven percent were 40 basis points higher on the same comparison due primarily to supply chain, lean enterprise, and cost reduction initiatives. The Tools Group announced plans to close its Tupelo, Mississippi operation and consolidate the manufacture of Delta woodworking products into its Jackson, Tennessee, and Asian joint venture facilities. The consolidation, scheduled to be complete in 2004, is expected to generate annual savings of more than $3 million.
In the Water Technologies Group, first quarter 2003 sales of $246.4 million increased 17 percent versus the same period last year and were up in the mid single digits excluding the Plymouth Products acquisition. These results were driven by growth in retail pumps, pool products, and our international businesses, which more than offset the effects of continued weakness in commercial and industrial pumps, and water treatment markets. The Group's operating income of $29.5 million was down slightly compared to the same period last year due to sales mix, expenses related to workforce reductions, and strategic investments to drive growth. Margin improvement efforts are focused on continued productivity improvements in the pump business, headcount reductions, and product line rationalization and pruning.
In the Enclosures Group, sales of $139.3 million in the first quarter of 2003 were flat compared to the same period in 2002, as sales in new markets offset continued weakness in base markets. First quarter operating income of $9.9 million was more than double that of the previous year's first quarter, again reflecting the benefits of ongoing restructuring, lean enterprise practices, and supply chain management. The first quarter was the Enclosure Group's fifth consecutive quarter of margin improvement on flat sales, gaining 20 basis points over fourth quarter 2002 margins.
"Our short-term targets are to reinforce sales in the Tools Group and increase margins in Water Technologies, while continuing to invest in growth initiatives," Hogan said. "With progress in these areas, we are reaffirming our EPS guidance for 2003 of between $2.90 and $3.05, and are targeting second quarter 2003 EPS of between $0.85 and $0.95."
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