Pentair(US:PNR)2025-02-25 21:39Financial Performance - For the year ended December 31, 2024, consolidated net sales were $4,082.8 million, a decrease of 0.5% compared to $4,104.5 million in 2023[154]. - Gross profit increased to $1,598.8 million, representing 39.2% of net sales, up from 37.0% in 2023, reflecting a 2.2 percentage point increase[154]. - The Flow segment reported net sales of $1,514.0 million, a decrease of 4.3% from $1,582.1 million in 2023, with segment income increasing by 12.7% to $318.1 million[163]. - Water Solutions net sales decreased by 3.9% in 2024, primarily due to a 4.8% decline in volume, despite increased selling prices to mitigate inflation[168]. - Pool segment net sales increased by 6.9% in 2024, driven by a 4.1% increase in volume and higher selling prices[172]. Operational Initiatives - The company implemented a Transformation Program aimed at driving operational excellence and margin expansion, with ongoing costs expected into 2025[152]. - The company expects to continue executing on its key Transformation Program initiatives to drive margin expansion and improve operational performance[152]. - The company identified specific product and geographic market opportunities for growth, focusing on research and development investments[153]. Cost and Pricing Strategies - Inflationary cost increases for raw materials and logistics were noted, prompting the company to take pricing actions across all segments[153]. - Flow segment income increased by 3.2 percentage points as a percentage of net sales in 2024 compared to 2023, driven by productivity improvements and partially offset by inflationary cost increases[166]. - Water Solutions segment income increased by 1.6 percentage points as a percentage of net sales in 2024, supported by productivity gains[170]. - Pool segment income increased by 2.2 percentage points as a percentage of net sales in 2024, despite inflationary cost pressures[174]. Cash Flow and Liquidity - Cash provided by operating activities of continuing operations was $766.9 million in 2024, up from $620.8 million in 2023[180]. - Free cash flow from continuing operations was $693.1 million in 2024, reflecting strong cash generation capabilities[189]. - As of December 31, 2024, total availability under the Senior Credit Facility was $890.5 million, providing significant liquidity for future operations[191]. Debt and Financial Obligations - The Term Loan Facility has an aggregate principal amount of $1.0 billion, with a maturity date of July 28, 2027, and required quarterly installment payments starting at $6.3 million, increasing to $12.5 million in 2024[192]. - As of December 31, 2024, the remaining obligation on the Term Loan Facility is $825.0 million, with no further quarterly installment payments required after 2024[192]. - Total contractual obligations amount to $2,223.0 million, with $156.7 million due in the next twelve months[204]. - The company has variable interest rate debt of $843.8 million at a weighted average interest rate of 5.84% as of December 31, 2024[205]. Shareholder Returns - The company repurchased 1.6 million ordinary shares for $150.0 million during the year ended December 31, 2024, leaving $450.0 million available for future repurchases[197]. - A regular quarterly cash dividend of $0.25 per share was approved, reflecting a 9% increase from the previous year, with total dividends paid per ordinary share of $0.92 in 2024[198]. Tax and Regulatory Matters - The effective tax rate increased to 13.0% in 2024 from a negative 0.6% in 2023, primarily due to changes in uncertain tax positions[154]. - The total gross liability for uncertain tax positions was estimated at $6.0 million as of December 31, 2024[206]. - The company recorded valuation allowances for deferred tax assets, which may be reduced if future taxable income increases[230]. Market Risks - The company is exposed to market risks including changes in interest rates and foreign currency rates, and uses derivative financial instruments to manage these risks[234]. - A 100 basis point increase in interest rates would result in approximately a $42 million decrease in the fair value of total fixed-rate debt outstanding as of December 31, 2024[236]. - A 10% appreciation or depreciation of the U.S. dollar relative to the Euro would result in a change in accumulated other comprehensive income of approximately $68 million[241].