After months of post-merger integrations, Pentair Ltd. beat Wall Street expectations Tuesday with solid first-quarter earnings that exceeded estimates by 2 cents a share.
The maker of industrial and residential pumps, filtration systems and valves reported flat sales for the quarter of nearly $1.8 billion. But adjusted earnings rose 4 percent to $179 million, or 58 cents a share. On average, analysts had expected 56 cents a share.
Including integration costs from the 2012 acquisition of Tyco Flow Controls and other one-time items, first-quarter earnings were 25 cents a share.
The upbeat results follow what had been a complicated fourth quarter that stemmed from Pentair’s September merger with the Swiss-based Tyco controls business. That deal created a $7.7 billion behemoth but resulted in substantial integration costs and a $303 million fourth-quarter operating loss.
On Tuesday, analysts and stockholders were generally upbeat about first-quarter results.
“It’s a nice, clean quarter,” noted Citi Research analyst Dean Dray. Pentair shares closed up 5.8 percent, or $2.89, at $52.94.
Pentair, now based in Switzerland but managed from Golden Valley, saw a bump in North American pool and home equipment sales for the quarter. But sales fell at its energy-related valves and controls business. While oil, gas and mining equipment sales rose, it was not enough to offset larger sales declines to power companies.
CEO Randy Hogan told analysts during a conference call Tuesday that “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. Despite these varied market conditions, Pentair delivered another quarter of strong operating performance led by price and productivity.”
Hogan said Pentair is going into Tyco factories around the world and implementing Pentair’s standard lean processes. Such moves, combined with the severance of certain Tyco divisions and personnel, are expected to achieve $100 million in savings by the end of this year. That’s up from the previous goal of $90 million, Hogan said.
Hogan forecast that full year 2013 will deliver sales of $7.6 billion and adjusted earnings of $3.10 and $3.30, up 22 to 33 percent from combined 2012 results. Adjusted earnings for the second quarter are expected to rise at least 14 percent to 88 and 91 cents a share.