Pentair Plc. · NYSE:PNR
Pentair — Q4 2023 Earnings Presentation
37 slides from Pentair's earnings presentation, Jan 30, 2024
Slide 1: Q4 2023 Earnings Release
- Picture to be updated Q4 2023 EARNINGS RELEASE January 30, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains statements that we believe to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements. Without limitation
Slide 3: Key Definitions
Key Definitions • Except as otherwise noted, our results represent continuing operations for the period indicated, presented on an adjusted basis • "Core sales" refers to GAAP net sales from continuing operations excluding: (1) the impact of currency translation and (2) the impact of net sales from
Slide 4: Strategic Framework
Strategic Framework OUR PURPOSE: To create a better world for people and the planet through smart, sustainable water solutions. OUR MISSION: We help the world sustainably move, improve and enjoy water, life’s most essential resource. Flow Water Solutions Pool We help the world We help the world We h
Slide 5: Pentair at a Glance
Pentair at a Glance We Help the World Sustainably Move, Improve and Enjoy Water, Life’s Most Essential Resource Employees Sales (2023) Focus on Profitability (2023) ~10.5K $4.1B 20.8% ROS Strong Cash Flow Large Installed Base Dividend Aristocrat and Solid Returns (2023) ~75%+ Replacement 48 YEARS An
Slide 6: Pentair Overview
Pentair Overview A Leader in Helping the World Sustainably Move, Improve and Enjoy Water, Life’s Most Essential Resource PENTAIR FLOW WATER SOLUTIONS POOL Smart, Sustainable, Water Solutions MOVE Water IMPROVE Water ENJOY Water $1,572 $1,633 $4,122 $4,105 $1,582 $1,177 $3,765 $1,501 $1,344 $1,421 $1
Slide 7: We Believe Pentair Is a Compelling Investment Opportunity
We Believe Pentair Is a Compelling Investment Opportunity An industry leader with a balanced, innovative water portfolio Transformation initiatives to drive operational efficiencies and margin expansion ESG focus on People, Planet and Governance to provide smart, sustainable water solutions Favorabl
Slide 8: Executive Summary – Q4'23
Executive Summary – Q4’23 Balanced Water Portfolio and Transformation Drove Record* Q4 Segment Income and ROS Sales Segment Income ROS Adjusted EPS Q4’23 Performance: 20.1% − Sales down 2% $1,003M $985M $198M $0.87 − Segment income up 8% $183M 190 bps $0.82 8% 18.2% YoY (2%) YoY 6% − ROS expanded
Slide 9: Executive Summary – FY'23
Executive Summary – FY’23 Resilient Water Portfolio Led to Record* Segment Income, ROS and Adjusted EPS Sales Segment Income ROS Adjusted EPS FY’23 Performance: $3.75 $4.1B $4.1B $855M 20.8% $3.68 − Sales flat $768M 11% − Segment income up 11% YoY 220 bps 18.6% YoY Flat 2% − ROS expanded 220 bps Y
Slide 10: Balanced Water Portfolio
Balanced Water Portfolio ~$1.6B in Sales ~$1.2B in Sales ~$1.3B in Sales ~18% ROS ~21% ROS ~31% ROS MOVE Water IMPROVE Water ENJOY Water Helping our Customers Move, Improve and Enjoy Water, Life’s Most Essential Resource Note: Sales and ROS reflect 2023 performance. 10 Q4 2023 Earnings Release. @202
Slide 11: Q4'23 Pentair Performance
Q4’23 Pentair Performance Sales Segment Income $1.00B $34M $7M $985M $21M $29M $198M $183M ($2M) Flat ($54M) (2%) 8% YoY ($35M) YoY ROS ROS (5 pts) 3 pts 0 pts 0 pts (2 pts) 18.2% 2.5% (0.1%) (3.4%) 2.9% 20.1% (1 pt) Growth/ Q4’22 Volume Price Acq./Div. FX Q4’23 Q4’22 FX Inflation Prod. Q4’23 Price/
Slide 12: FY'23 Pentair Performance
FY’23 Pentair Performance Sales Segment Income $4.1B $182M $1M $4.1B $208M $262M ($2M) $67M $855M Flat YoY $768M 11% ($462M) ($186M) YoY ROS ROS (11 pts) 6 pts 4 pts 1 pt 0 pts 18.6% 5.2% (0.1%) (4.5%) 1.6% 20.8% (1 pt) Growth/ FY’22 Volume Price Acq./Div. FX FY’23 FY’22 FX Inflation Prod. FY’23 Pri
Slide 13: Flow at a Glance
Flow at a Glance We Help the World Sustainably Move Water, Life’s Most Essential Resource Sales & ROS Sales by Region Sales by Channel Sales by Solution (2023) (2023) (2023) $1,582 Other $1,421 $1,501 $1,344 $1,274 17.8% EMEA Residential 16.1% Separation 15.0% US Technologies 14.8% Pumps Non 12.9% R
Slide 14: Q4'23 Flow Performance
Move Water Q4’23 Flow Performance Sales Segment Income $11M Flat $376M $14M Flat $6M $379M $65M $4M $65M 1% ($15M) Flat ($17M) YoY YoY ROS ROS (5 pts) 4 pts 0 pts 2 pts 1 pt 17.4% 2.8% (0.2%) (4.0%) 1.2% 17.2% (1 pt) Growth/ Q4’22 Volume Price Acq./Div. FX Q4’23 Q4’22 FX Inflation Prod. Q4’23 Price/
Slide 15: FY'23 Flow Performance
Move Water FY’23 Flow Performance Sales Segment Income $107M Flat $5M $1.58B $97M $1.50B ($1M) 5% $28M $282M ($31M) YoY $242M 17% ($84M) YoY ROS ROS (2 pts) 7 pts 0 pts 0 pts 5 pts 16.1% 5.6% (0.1%) (5.6%) 1.8% 17.8% (1 pt) Growth/ FY’22 Volume Price Acq./Div. FX FY’23 FY’22 FX Inflation Prod. FY’23
Slide 16: Water Solutions at a Glance
Water Solutions at a Glance We Help the World Sustainably Improve Water, Life’s Most Essential Resource Sales & ROS Sales by Region Sales by Vertical Sales by Activity (2023) (2023) (2023) $1,177 Service EMEA $987 $770 21.0% New $626 $619 ROW Residential 16.8% 15.8% 15.1% US Commercial Installed/AM
Slide 17: Q4'23 Water Solutions Performance
Improve Water Q4’23 Water Solutions Performance Sales Segment Income $284M $6M $1M $270M $6M $11M $52M ($2M) $45M ($19M) (5%) ($1M) 15% YoY ($9M) YoY ROS ROS (6 pts) 2 pts (1 pt) 0 pts (5 pts) 15.9% 2.9% (0.5%) (3.0%) 3.8% 19.1% (1 pt) Growth/ Q4’22 Volume Price Acq./Div. FX Q4’23 Q4’22 FX Inflation
Slide 18: FY'23 Water Solutions Performance
Improve Water FY’23 Water Solutions Performance Sales Segment Income $182M $1.18B $120M ($3M) $32M $248M ($6M) 19% ($47M) $987M $30M YoY 66% $149M YoY ($19M) ROS ROS (2 pts) 3 pts 18 pts 0 pts 19 pts 15.1% 7.8% (0.5%) (4.7%) 3.3% 21.0% (1 pt) Growth/ FY’22 Volume Price Acq./Div. FX FY’23 FY’22 FX In
Slide 19: Pool at a Glance
Pool at a Glance We Help the World Sustainably Enjoy Water, Life’s Most Essential Resource Sales & ROS Sales by Region Sales by State Sales by Activity (2023) (2023) (2023) $1,633 $1,572 $1,344 ROW $1,124 Other New/ $985 Remodel 31.0% 28.8% Installed 28.6% 27.8% 28.3% Top 5 Sun US Belt** 2019 2020 2
Slide 20: Q4'23 Pool Performance
Enjoy Water Q4’23 Pool Performance Sales Segment Income $343M $14M $336M $6M $8M $105M Flat Flat $100M Flat ($21M) (2%) ($9M) 5% YoY YoY ROS ROS (6 pts) 4 pts 0 pts 0 pts (2 pts) 29.1% 2.5% (0.1%) (2.6%) 2.4% 31.3% (1 pt) Growth/ Q4’22 Volume Price Acq./Div. FX Q4’23 Q4’22 FX Inflation Prod. Q4’23 P
Slide 21: FY'23 Pool Performance
Enjoy Water FY’23 Pool Performance Sales Segment Income $1.63B $462M ($3M) ($1M) $6M $417M $125M Flat $1.34B ($47M) ($1M) (18%) (10%) ($413M) YoY YoY ROS ROS (26 pts) 8 pts 0 pts 0 pts (18 pts) 28.3% 5.3% 0.0% (2.9%) 0.3% 31.0% (1 pt) Growth/ FY’22 Volume Price Acq./Div. FX FY’23 FY’22 FX Inflation
Slide 22: Transformation Initiatives
Transformation Initiatives Driving Margin Expansion Around 4 Key Themes 2022 2025T Sales Pricing Excellence Sales Material Material Strategic Sourcing Costs Costs Operations Excellence OCOGS OCOGS Other Organizational Effectiveness Expenses Other Expenses FY’25 Target FY’23 ROS ROS 20.8% ~23% FY’22
Slide 23: Transformation Runway
Transformation Runway Driving Margin Expansion Around 4 Key Themes; Target ROS of ~23% in 2025 Transformation Benefits Expected to Compound With Each Additional Wave Wave 1 Wave 1 Wave 1 Pricing Wave 2 Wave 2 Excellence Wave 3 Wave 1 Wave 1 Wave 1 Strategic Wave 2 Wave 2 Sourcing Wave 3 Wave 1 Wave
Slide 24: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Debt Summary Cash Flow ($M) $1,988M* Maturity FY 2023 FY 2022 Net Income – Continuing Ops $623 $483 Amortization 55 53 $1,100M** 55% Fixed 2025 – 2032 Subtotal $678 $536 Depreciation 60 54 Capital Expenditures (76) (85) $888M 45% Variable 2023 – 2027 Asset Sales 6 4 Worki
Slide 25: Q1 and Full Year 2024 Pentair Outlook & Expectations
Q1 and Full Year 2024 Pentair Outlook & Expectations • Balanced water portfolio and focused growth strategy • Recovery of Pool drives top-line Q1’24 FY’24 growth • Total Sales up ~2% to 3% Sales Sales • Total Sales down ~2% to 3% • Flow up ~LSD, WS ~flat, Pool up ~7% • Introducing FY’24 adjusted EPS
Slide 26: 2023 Reflection
2023 Reflection Continued to Execute Well; Delivered on our Commitments and Outperformed Expectations Balanced water portfolio and Transformation drove significant margin expansion despite lower Pool volume Manitowoc Ice exceeded expectations and contributed to strong margins Performance accountabil
Slide 27: CEO Closing Comments
CEO Closing Comments Balanced water portfolio AND Transformation drove 1 significant margin expansion in 2023 Initiating 2024 guidance reflecting confidence in our 2 strategy and expect to achieve new performance records Transformation initiatives have continued to gain 3 momentum and expected to dr
Slide 28: Pentair
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Slide 29: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
Appendix GAAP TO NON-GAAP MEASUREMENTS & RECONCILIATIONS
Slide 30: Reported To Adjusted 2023 Reconciliation
Reported To Adjusted 2023 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP Year Ended December 31, 2023 to the Non-GAAP Excluding the Effect of 2023 Adjustments (Unaudited) First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quarter Quarter Year Ne
Slide 31: Reported To Adjusted 2022 Reconciliation
Reported To Adjusted 2022 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP Year Ended December 31, 2022 to the Non-GAAP Excluding the Effect of 2022 Adjustments (Unaudited) First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quarter Quarter Year Ne
Slide 32: Core Sales Growth Reconciliation
Core Sales Growth Reconciliation Pentair plc and Subsidiaries Reconciliation of Net Sales Growth to Core Net Sales Growth by Segment For the Quarter and Year Ended December 31, 2023 (Unaudited) Q4 Net Sales Growth Full Year Net Sales Growth Core Currency Acq. / Div. Total Core Currency Acq. / Div. T
Slide 33: ROIC Reconciliation
ROIC Reconciliation Fourth First Second Third Fourth Quarter Quarter Quarter Quarter Quarter Dollars in millions 2022 2023 2023 2023 2023 Return on Invested Capital (ROIC) Segment income $ 182.8 $ 211.0 $ 234.2 $ 212.1 $ 197.8 Reported effective tax rate 5.0 % 14.6 % 15.0 % 13.6 % (55.3)% Adjusted e
Slide 34: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP Operating Activities Cash Flow to the Non-GAAP Free Cash Flow (Unaudited) Three months Three months Three months Three months Twelve months ended ended ended ended ended March 31, June 30, September 30, December 31
Slide 35: Last Twelve Months EBITDA Reconciliation
Last Twelve Months EBITDA Reconciliation Pentair plc and Subsidiaries Reconciliation of Net Income from Continuing Operations to EBITDA for the Year Ended December 31, 2023 (Unaudited) In millions FY 2023 Net income from continuing operations $ 622.9 Adjustments: Restructuring and other 3.4 Transfor
Slide 36: Reported To Adjusted 2024 Reconciliation
Reported To Adjusted 2024 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP Year Ending December 31, 2024 to the Non-GAAP Excluding the Effect of 2024 Adjustments (Unaudited) Forecast First Full In millions, except per-share data Quarter Year Net sales approx Down 2% - 3% approx
Slide 37: 2024 EBITDA Reconciliation
2024 EBITDA Reconciliation Pentair plc and Subsidiaries Reconciliation of Net Income from Continuing Operations to EBITDA for the Year Ending December 31, 2024 (Unaudited) Full Year at Midpoint of In millions Outlook Net income from continuing operations approx $ 645 Adjustments: Intangible amortiza