Earnings at Pentair beat expectations

Water filtration giant Pentair Inc. reported strong first-quarter earnings Tuesday that beat analysts' expectations thanks to stronger industrial demand and improved results in the United States, Europe and China.

Sales rose 12 percent to $790 million from a year ago. Earnings from continuing operations rose 46 percent to 51 cents a share, beating consensus expectations of 44 cents a share.

The Golden Valley-based maker of industrial, municipal and residential water and pool filtration systems raised full-year guidance to $2.30 to $2.42 per share from its earlier forecast of $2.20 to $2.35 a share.

The new forecast, however, did not include Pentair's pending acquisition of Netherlands-based Clean Process Technologies, a $705 million deal -- its biggest in years -- that will add 1,200 workers and enhanced beverage, industrial purification and desalination filtration systems. Including Clean Process, the 2011 forecast would rise to $2.33 to $2.45, officials said.

Wall Street was pleased. Pentair's stock rose 75 cents to close at $39.67.

Robert W. Baird analyst Mike Halloran praised the "very good first quarter" but said Pentair was probably too modest in its 2011 forecast.

Including various acquisition costs, operating income rose 35 percent to $86 million during the quarter.

In a conference call with analysts CEO Randy Hogan said pool product sales rose 15 percent in the quarter thanks to dealer expansion and demand for new energy-saving controls. The pool segment should continue to grow in the United States and Europe as residents replace old systems with energy saving technology, he said.

The stagnation from the recession is ebbing in residential markets. "People are coming out of the fetal position and investing again and now are finding that they can upgrade and save energy," Hogan said. "We see that as [creating] long-term attractive growth."

The technical products division, which makes thermal management systems and metal enclosures, saw sales jump 20 percent to $275 million thanks to strong demand in industrial, energy and general electronic markets. U.S. sales grew 15 percent from a year ago, while sales in China skyrocketed 70 percent.

Piper Jaffray analyst Michael Cox praised the technical division, noting that it added to a "nice quarter."

Pentair's first quarter is usually the slowest of the year, whereas the second quarter is the peak. The company is expected to again overcome commodity pricing pressures, officials said.