Pentair officials remained upbeat despite reporting third-quarter profits that fell 16% amid flat sales growth, inflation and the discontinuation of select operations.
Pentair, an industrial pump and filtration maker based in England but largely managed from Golden Valley, on Wednesday reported $713.4 million in third-quarter revenue. While net income fell from $110.1 million to $92.3 million, income from continuing operations was essentially flat at $91.3 million, or 54 cents a share. The company benefited as inflated pricing and a soft pool business finally showed signs of moderating.
Pool and pump revenue both fell during the quarter, but filtration sales and profits jumped significantly.
"Our third-quarter results showed further signs of stabilization in our core business and we are encouraged by the segment income growth and the return-on-sales expansion," said CEO John Stauch during a conference call with analysts Wednesday. "We are seeing solid underlying demand in many of our businesses. Throughout the year, we have continued to invest in our strategic growth priorities and we expect to remain positioned to return to core sales growth in 2020."
Excluding one-time expenses and the discontinued Urban Organics aquaponics fish farm business in St. Paul, adjusted earnings reached 58 cents a share, which is 3 cents better than analysts expected, on average.
Pentair's stock rose 5.3% to close at $41.47 a share Wednesday.
Looking forward, Stauch maintained his 2019 full-year forecast and said Pentair continues to see "many paths of growth as we execute our strategy of being a leading water treatment company."
Stauch told analysts that opportunities abound as more residents seek to install water-purifying systems in their homes and as more corporations either update old infrastructure equipment or install better water systems as part of sustainability programs that try to eliminate single-use water bottles.
The company is also targeting programs to increase pool-treatment system sales, a division that has struggled in recent quarters.
Aquatic-system sales are expected to fall 4% to 5% this year but are expected to improve in the future, Stauch said. "We continue to invest in our two key strategic growth priorities — advancing pool growth and accelerating residential and commercial water treatment," he said.
For full-year 2019, Pentair said total sales will be flat or down as much as 1%. Net earnings are expected to reach $2.09 a share, while adjusted earnings are expected to reach $2.35 a share this year when one-time items are excluded.