Pentair PLC saw profits slip in the second quarter but still beat Wall Street expectations. The pump and filtration maker also signaled slight improvements in the ailing oil and gas sector but ongoing trouble in the agriculture equipment industry.
Officials at the maker of industrial and residential pumps, filters, valves and more said Thursday that they are beginning to get calls and orders from oil customers who have long deferred maintenance projects.
CEO Randy Hogan told analysts during a conference call Thursday morning that new orders were from small- and moderate-sized energy producers that generally have projects of less than $1 million.
Hogan said while the energy sector is becoming "more predictable," Pentair is still wrestling with "the negative impacts of sales mix in both flow and filtration solutions and technical solutions" — mostly related to the agriculture sector, which has curbed equipment orders in the wake of historically low crop prices.
As a result, Pentair narrowed its guidance for the year. The change "reflects further signs of stabilization in our industrial business and what we believe is sequential flattening in our energy business," Hogan said.
Pentair, headquartered in England but largely managed from Golden Valley, saw sales rise 4 percent to $1.73 billion in the quarter ended June 30 and earnings fall 3.4 percent to $142.8 million, or 78 cents a share.
Excluding discontinued and one-time items, adjusted earnings rose 3 percent to $1.11 per share, beating analysts' estimates by 2 cents. Pentair's stock rose 11 cents to close at 63.88 per share Thursday.
"We are pleased with our second-quarter performance, which came in at the high-end of our expectations as we once again executed our commitments," Hogan told analysts.
Pentair, which for years was known mainly as a filtration and pump expert for municipalities, homes, hotels, factories and dairies, added a big energy component when it bought Tyco's valves and controls business in 2012. That exposed Pentair to a sometimes volatile sector, a sector that has endured a global pricing slump for more than two years, hurting equipment suppliers such as Pentair.
Last year, Pentair took an impairment charge of more than $400 million because of its valves and controls business and predicted continued challenges in 2016. Soft industrial and ag sectors have also hurt.
It has been helped by acquisitions, including the $1.8 billion purchase last August of Erico Global Co., an Ohio-based maker of electrical and fastening products. Hogan said Thursday that Erico's integration is "on track" and that Pentair expects to realize $10 million in cost savings from the deal.
Going forward, Pentair forecast that full-year 2016 sales will rise 4 percent to $6.7 billion and that adjusted earnings from continuing operations will reach $4.05 to $4.20 per share. That's up from 2015 results but down from the prior forecast of $4.05 to $4.25 per share.
