Pentair Reaps Rewards from Improving Markets in Third-Quarter 2013, Expects Growth to Continue into 2014

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Researched by Industrial Info Resources (Sugar Land, Texas)--Pentair Limited (NYSE:PNT) (Schaffhausen, Switzerland), a global water, fluid, thermal management, and equipment protection partner, benefited from a recovering North American residential market and improving worldwide food & beverage markets in third-quarter 2013. Net income was reported to be $172.8 million, compared with $31.4 million in third-quarter 2012.

Net sales stood at $1.82 billion, compared with $865.5 million in the same period last year. In a third-quarter 2013 conference call, Pentair executives offered details on the company's three operating segments: the Water Fluid & Solutions segment, which creates and installs products used in the movement, storage and treatment of water; the Valves & Controls segment, which creates and markets valves, actuators and controls for energy-related industries; and the Technical Solutions segment, which creates and markets heat management solutions and enclosures for electronic and electrical components.

Evidence of the North American residential recovery could be found in the Water & Fluid Solutions segment, where sales in the Residential & Commercial and Food & Beverage businesses grew 12% and 20%, respectively; in the Technical Solutions segment, Residential & Commercial sales grew at a slower pace. Energy businesses, however, yielded mostly mixed results in the Valves & Controls segment, where sales to the mining industry only grew 2%; sales to the oil & gas industry were flat; and sales to the power industry declined 10%. In the Technical Solutions segment, Energy business sales dropped 25%. The quarter's gains also were partly offset by a slow Australian economy.

Capital expenditures for first nine months of 2013 were reported to be $126.3 million, compared with $49.9 million in the same period of 2012. Capital expenditures for third-quarter 2013 were reported to be $38 million, compared with $19 million in third-quarter 2012.

Some of Pentair's most important projects are at fractionation plants in Mont Belvieu, Texas, one of the major U.S. hubs for natural gas processing and fractionation. Pentair has installed most of the front-end technology at these plants. In April 2013, the company received approval on a patent for Polarex, an extractive separation technology that can be used for both liquid and gas process streams, providing clients with stronger separation of entrained and dissolved contaminants. For more information, see June 26, 2013, article - Efficient, Robust Separation Technology by Pentair Separation Systems, a Feature of "Industry Today" on Industrialinfo.com.

"One year ago, we talked about a successful 'Day One' following our merger with Tyco's (NYSE:TYC) Flow Control business," said Randall Hogan, the chairman and chief executive officer of Pentair, in a conference call. "Today, we can look back at a very successful 'Year One.' The integration is ahead of schedule, and we have again seen synergies succeed our plan in the quarter and the full year. Culturally, the two organizations are coming together as one Pentair."

Pentair executives expect full-year 2013 sales to be about $7.4 billion, which would be a 1% increase from 2012. Water & Fluid Solutions is expected to see the strongest increase, at between 3% and 4%. Among the promising signs are indications that the volatile European markets are stabilizing, as well as key industrial businesses. Executives hailed the adoption of the Pentair Integrated Management System (PIMS) as a major factor in the company's continued productivity.

"We continue to see growth in many of our more profitable businesses, including stabilization in the North American electrical distribution channel," Hogan said. "Residential continues to be a bright spot for us, Food & Beverage remains very strong, and encouragingly, we saw modest growth in Western Europe for the second consecutive quarter."

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