Pentair plc (NYSE: PNR) today announced third quarter 2018 sales of $711 million. Sales were up 3 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 6 percent in the third quarter. Third quarter 2018 earnings per diluted share from continuing operations (“EPS”) were $0.52 compared to $0.27 in the third quarter of 2017. On an adjusted basis, the company reported EPS of $0.54 compared to $0.49 in the third quarter of 2017. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.
Third quarter 2018 operating income was $108 million, up 6 percent compared to operating income for the third quarter of 2017, and return on sales (“ROS”) was 15.2 percent, an increase of 40 basis points when compared to the third quarter of 2017. On an adjusted basis, the company reported segment income of $122 million for the third quarter, up 1 percent compared to segment income for the third quarter of 2017, and ROS was 17.1 percent, a decrease of 40 basis points when compared to the third quarter of 2017.
Net cash provided by operating activities of continuing operations was $121 million and free cash flow from continuing operations was $108 million for the quarter.
Pentair paid a regular cash dividend of $0.175 per share in the third quarter of 2018. Pentair previously announced on September 18, 2018 that its Board of Directors approved a regular cash dividend of $0.175 per share for the fourth quarter of 2018. Adjusted for the spin-off of nVent Electric plc, 2018 marks the 42nd consecutive year that Pentair has increased its dividend.
“Pentair delivered another strong operating quarter consistent with expectations, led by 6 percent core growth and double-digit adjusted EPS growth,” said John L. Stauch, Pentair President and Chief Executive Officer. “All three of our segments contributed to the strong top line performance with Aquatic Systems setting a new standard of core growth driven by new product introductions and further penetration of connected products within the five million installed in-ground pools. We generated strong free cash flow, purchased another $100 million of shares, and still have a very healthy balance sheet for potential tuck-in and bolt-on acquisitions aligned with our key growth initiatives of advancing pool growth and accelerating residential and commercial water treatment.”
OUTLOOK
The company updates its estimated 2018 GAAP EPS from continuing operations to approximately $1.83 and on an adjusted EPS basis to approximately $2.33. The company updates its full year 2018 sales guidance to $2.96 billion, up 4 to 5 percent on a reported and core basis, respectively, over 2017. The company is targeting to deliver full year free cash flow of approximately 100 percent of adjusted net income.
In addition, the company introduces fourth quarter 2018 GAAP EPS from continuing operations guidance of approximately $0.55 and on an adjusted EPS basis of approximately $0.59. The company expects fourth quarter sales to be approximately $736 million, up 1 to 2 percent on a reported basis and up 4 to 5 percent on a core basis compared to fourth quarter 2017. This full year and fourth quarter 2018 outlook reflects the separation of the Electrical business on April 30, 2018 and the reporting of Electrical’s results as discontinued operations.
EARNINGS CONFERENCE CALL
Pentair President and CEO John L. Stauch and Chief Financial Officer Mark C. Borin will discuss the company’s third quarter 2018 results on a two-way conference call with investors at 8:00 a.m. Eastern today. A live audio webcast of the call, along with the related presentation, can be accessed in the Investor Relations 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 presentations, each of which can be found on Pentair’s website. The webcast and presentations will be archived at the company’s website following the conclusion of the event.
