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Pentair's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Stocks in this article: PNR

From a business reporting structure, our intent is to add the three Tyco Flow businesses, led by their current business leaders, to Pentair’s existing five businesses, and report these eight global business units, or GBUs, in three segments. The three segments are Equipment Protection, Flow Control, and Water and Fluid.

Importantly, the GBU leaders will be focusing on, and held accountable for their business unit performance, while the integration team will work closely with them, and with corporate to help ensure we achieve these synergies.

Shortly, we’ll be filing the preliminary proxy statement in Form F-4 for SEC review. This will contain more detailed information regarding the transaction and the filings expected by early May. Still to come, our other customary regulatory approvals, mainly foreign, and of course, Pentair and Tyco International shareholder approvals.

So we’re off to a good start in the planning for the pending combination with Tyco’s Flow Control business. As we work through these regulatory approvals and SEC filings, we’re limited in further commenting on the transaction. So we’d ask you to keep your questions focused on today’s main topic, our Q1 performance and outlook for the year.

Now let me turn to the focus of this morning’s call; Pentair’s first quarter performance, and let’s start on Slide 4.

The operating performance was solid in the quarter; we grew sales 9%, expanded adjusted operating margins, drove operating profits up 10%, and delivered adjusted EPS of $0.64, which was up 23%.

While lower flood-related pump sales and further weakness in Western Europe tempered top-line growth in the quarter by roughly 4 points, we saw continued strength in many of the sectors we serve; industrial, agricultural, energy and pool, we’re all up double-digits in the quarter, with new products and expanded coverage helping propel our growth.

Fast growth region sales were off to a slower start, but still grew faster than the overall Pentair. We continue to expect double-digit growth for the full-year in fast-growth regions, as we execute and have success with our growth plans. Margins increased another 20 basis points to 11.3% in the first quarter, better than we planned, even if sales were not.

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