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Today's webcast is accompanied by a presentation, which can be found in the Investors section of Pentair's website. We will reference these slides throughout our prepared remarks. All references today will be on an adjusted basis unless otherwise indicated, for which non-GAAP financials are reconciled in the appendix of the presentation.I’d like to also point out that the Q2 and full-year outlook does not include any future impact related to the pending Tyco Flow deal that we announced on March 28, as stated in this morning’s release. And we’ll be sure to reserve time for questions and answers after our prepared remarks. With that, Randy. Randy Hogan Thanks, Sara, and good morning, everyone. Before we get in to the Q1 Pentair performance, I’d like to touch on the announced merger with the Tyco Flow Control, beginning with a quick refresher on Slide 3. We’re very excited about the proposed Tyco Flow Control merger announced at the end of March. We believe this transaction is a great strategic fit, increasing our global presence and exposure to high-growth attractive sectors. We’re confident in achieving our previously-announced financial targets, making the transaction very compelling, with $200 million of expected operational cost synergies and enhanced growth prospects and a stronger balance sheet. By any measure, the new Pentair will be a stronger company with exciting platforms for future growth and substantial value creation opportunities for all stakeholders. Let me provide an update on the transaction timeline, what we’ve been up to in the last 26 days, and what’s still to come. From a regulatory perspective, we completed the HSR filing last week, and now we’re in a waiting period with several other regulatory filings under way in foreign jurisdictions. We’ve established a integration management office and announced Todd Gleason, a proven Pentair executive, who many of you know, to drive a global integration planning, reporting directly to me. He will lead a team of approximately 25 to 40, functional and business unit team leaders, including those from Tyco Flow Control, once the transaction closes. These initial integration planning efforts will be critical as we ramp up towards the expected close at the end of September.
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.
Our teams did a nice job driving greater productivity and executing pricing actions to offset material inflation and fund growth investments. I’m particularly proud of our Reynosa, Mexico operations team, who was recently recognized with a silver medallion Shingo prize award, that’s like the Nobel prize for top lean enterprise companies. It’s a great award.Read the rest of this transcript for free on seekingalpha.com