Pentair's Q1 Performance: Margins Surge Despite Revenue Dip, CEO Confident In Future Growth

Pentair plc PNR reported a first-quarter 2024 net sales decline of 1.11% year-over-year to $1.02 billion and a core sales decline of 1% year-over-year, beating the consensus of $1.01 billion.

The gross margin expanded to 38.4% from 37.1%. Operating income declined 1.53% YoY to $180.8 million, and the operating margin expanded to 17.8% from 17.9% a year ago.

On an adjusted basis, ROS expanded 90 bps to 21.4%.

Adjusted EPS was 94 cents, up from 91 cents YoY, beating the consensus of 90 cents.

Flow sales decreased by 2% YoY to $384.3 million, Segment income of $77.3 million (+19% Y/Y), and ROS was 20.1%, an increase of 350 bps YoY.

Water Solutions sales were $273.1 million (flat), Segment income was $55.6 million (+6% Y/Y), and ROS was 20.4%, up 110 bps YoY.

Pool segment sales were $359.5 million (-1% YoY), Segment income was $110.8 million (+6% Y/Y), and ROS was 30.8%, up 110 bps YoY.

For the quarter, net cash provided by operating activities of continuing operations was $107 million, and free cash flow from continuing operations was $127 million.

"Order rates remained solid and our backlog and lead times have been normalizing,” Pentair CEO John L. Stauch.

“Our Transformation initiatives remained on track and continue to fuel our return on sales goal of 24 percent with potential upside by the end of fiscal 2026 as we highlighted at our recent Investor Day," Stauch added.

Second quarter 2024 Outlook: Pentair sees GAAP EPS of $1.08 to $1.10 and an adjusted EPS of $1.15 to $1.17 versus consensus of $1.16. It expects Sales to be up ~1%-2% YoY.

2024 Outlook: Pentair expects FY24 GAAP EPS of $3.76 to $3.86 (prior $3.82-$3.92) and adjusted EPS of $4.15-$4.25 vs. consensus of $4.20; sees sales increase of 2%-3% on a reported basis.

Price Action: PNR shares are trading higher by 2.08% at $80.89 at the last check Tuesday.

Now Read: Private Sector Growth Unexpectedly Slows In April, Marks Lowest Increase In 4 Months

Image: Shutterstock