Pentair Shares Soar As Q1 Results Exceed Expectations, Manitowoc Ice Boosts Margins

Pentair PLC PNR reported first-quarter FY23 net sales growth of 2.9% year-over-year to $1.0b billion and a core sales decline of 3%, beating the consensus of $997.68 million.

• Adjusted EPS of $0.91 (+7% Y/Y) beat the consensus of $0.77.
• The gross margin expanded by 390 bps to 37.1%, operating income improved by 25.9% Y/Y to $183.6 million, and the margin expanded by 326 bps to 17.8%.
• Industrial & Flow Technologies sales increased by 9% Y/Y to $381.8 million, Segment income of $65 million (+25% Y/Y), and ROS was 16.6%, an increase of 200 bps.
• Water Solutions sales were $272 million (+32% Y/Y), Segment income was $52 million (+136% Y/Y), and ROS was 19.3%, up 850 bps.
• Pool segment sales were $364.3 million (-16% Y/Y), Segment income was flat at $116 million, and ROS was 31.9%, up 520 bps.
• “Transformation initiatives drove greater efficiencies across all three segments through pricing and sourcing while growth in Water Solutions and Industrial and Flow Technologies more than offset expected volume declines in Pool. Integration of our Manitowoc Ice acquisition remains on track and it has performed well with a strong backlog and accretive margins,” Pentair CEO John L. Stauch said.
• Net cash used for operating activities in Q1 was $107 million compared to $132 million in 1Q22. Free cash flow was $123 million compared to $149 million.

2Q23 Outlook: Pentair expects adjusted EPS of $0.94 - $0.96, vs. the consensus of $0.95. It expects sales to be 0% - 1% Y/Y on a reported basis.

FY23 Outlook: Pentair expects adjusted EPS of $3.60 to $3.70 (prior $3.50 - $3.70) vs. the consensus of $3.59. It sees sales growth of (2)% - 0%. 

• Price Action: PNR shares are trading higher by 6.31% at $55.73 on the last check Thursday.