Slide 1: Q4 2018 Earnings Release
Q4 2018 EARNINGS RELEASE JANUARY 29, 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements CAUTION CONCERNING 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 F
Slide 3: Key Definitions
Key Definitions • Except as Otherwise Noted All References to 2019, 2018, and 2017 Represent Our Results from Continuing Operations for the Period Indicated, Presented on an Adjusted Basis • "Core Sales" Refers to GAAP Revenue from Continuing Operations Excluding (1) the Impact of Currency Translati
Slide 4: Executive Summary
Executive Summary Successfully Completed nVent Separation in 2018 Delivered on 2018 Commitments Returned Nearly $700M to Shareholders Through Buybacks and Dividends Recently Announced Agreements for Two Strategic Acquisitions to Further Our Residential & Commercial Water Treatment Strategy A Success
Slide 5: Financial Highlights
Financial Highlights • Core Sales Grew 6%; ROS of 18.1% (Up 40 bps) • Adjusted EPS Grew 15% to $0.60 Q4’18 • Free Cash Flow of $145M • Purchased $100M of Shares • Core Sales Grew 5%; ROS of 18.1% (Up 60 bps) • Adjusted EPS Grew 21% to $2.35 Full Year 2018 • Free Cash Flow of $410M • Purchased $500M
Slide 6: Full Year 2018 Pentair Performance
Full Year 2018 Pentair Performance Sales Financial Highlights (YoY) $35M $17M $2.97B Core Sales Up 5% $101M ($33M) • Aquatic Systems Up 11% $2.85B 4% • Filtration Solutions Up 1% YoY • Flow Technologies Up 3% 3 pts 1 pt (1 pt) 1 pt 4 pts Acq./ (1 pt) Segment Income Up 8% 2017 Volume Price FX 2018 Di
Slide 7: Q4'18 Pentair Performance
Q4'18 Pentair Performance Sales Financial Highlights (YoY) $16M Core Sales Up 6% $26M $741M $721M ($12M) ($10M) • Aquatic Systems Up 13% 3% • Filtration Solutions Flat YoY • Flow Technologies Up 4% 4 pts 2 pts (2 pts) (1 pt) 3 pts Acq./ (1 pt) Segment Income Up 5% Q4'17 Volume Price FX Q4’18 Divesti
Slide 8: Q4'18 Pentair Segment Performance
Q4'18 Pentair Segment Performance Aquatic Systems Filtration Solutions Flow Technologies Sales Sales Sales $277M $215M $217M $252M $254M +13% $247M Core +4% Flat Core Core Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 Segment Income Segment Income Segment Income $78M $44M $71M $41M $28M +10% +7% $26M -7% ROS
Slide 9: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow CASH FLOW ($M) DEBT ROLL-FORWARD ($M) Q4 FY Q4 FY 2018 2018 Use of Cash: 2018 2018 Net Income - Continuing Ops $ 94 $ 322 Beginning Debt $ 799 $ 1,441 Amortization 8 35 Used (Generated) Cash (141) (386) Subtotal $ 102 $ 357 Share Repurchase 100 500 Depreciation 13 50 Divi
Slide 10: Full Year 2019 Pentair Outlook
Full Year 2019 Pentair Outlook • Total PNR Up ~5-6% (Core Sales Up ~4-5%) ‒ Aquatic Systems Core Sales Up ~5-7% Sales ‒ Filtration Solutions Core Sales Up ~1-4% ‒ Flow Technologies Core Sales Up ~4-6% ‒ FX Down ~1%; Acq./Div. Up ~2% • Segment Income Up ~8-12% Income and EPS • Adjusted EPS ~$2.50-$2.
Slide 11: Seasonality Expected to Continue
Seasonality* Expected to Continue Sales (% of FY) Adjusted EPS (% of FY) 31% 27% 25% 26% 24% 24% 24% 19% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ROS 25.1% ROS 25.7% *Historical 2 year average Seasonality Consistent Last Two Years Q4 2018 Earnings Release | ©2019 Pentair | Confidential property of Pentair. Do not re
Slide 12: Q1'19 Pentair Outlook
Q1'19 Pentair Outlook • Total PNR Up ~0-1% (Core Sales Up ~4-5%) ‒ Aquatic Systems Core Sales Up ~4-6% Sales ‒ Filtration Solutions Core Sales Up ~0-1% ‒ Flow Technologies Core Sales Up ~3-6% ‒ FX Down ~2%; Acq./Div. Down ~2% • Segment Income Up ~2-5% Income and EPS • Adjusted EPS ~$0.52-$0.55 • Tax
Slide 13: Pentair Strategy Summary
Pentair Strategy Summary Our Vision: To be the Leading A Pure Play Residential & Commercial Water Value Creation Through: Water Company Treatment Company Sales by Segment* $3B of Revenue* Revenue Growth Flow Aquatic 18.1% ROS* Technologies Systems Targeting Free Cash Flow = • Base Core Growth
Slide 14: Two Strategic Acquisitions
Two Strategic Acquisitions Core Competencies • Strong, Profitable Core in Premium • National, Affiliated Dealer Network • Direct-to-Consumer Model through Components for Whole-Home Proprietary E-Commerce Platform Water Treatment Systems and in • Diverse Line of Premium Whole- POE/POU Commercial Syst
Slide 15: Pentair Summary
Pentair Summary Solid Performance in 2018 Announced Agreements for Two Strategic Acquisitions We Have a Large and Installed Base to Serve We Continue to Invest in Our Prioritized Growth Initiatives We Have a Strong Capital Structure, Robust FCF Generation, and Will be Disciplined with Our Capital St
Slide 16: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
APPENDIX GAAP TO NON-GAAP MEASUREMENTS & RECONCILIATIONS
Slide 17: Reported To Adjusted 2018 Reconciliation
Reported To Adjusted 2018 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP year ended December 31, 2018 to the non-GAAP excluding the effect of 2018 adjustments (Unaudited) First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quarter Quarter Year Ne
Slide 18: Reported To Adjusted 2017 Reconciliation
Reported To Adjusted 2017 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP year ended December 31, 2017 to the non-GAAP excluding the effect of 2017 adjustments (Unaudited) First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quarter Quarter Year Ne
Slide 19: 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 Ending December 31, 2018 (Unaudited) Q4 Net Sales Growth Full Year Net Sales Growth Core Currency Acq. / Div. Total Core Currency Acq. / Div.
Slide 20: Other Reconciliations
Other Reconciliations Fourth First Second Third Fourth Quarter Quarter Quarter Quarter Quarter Dollars in millions 2017 2018 2018 2018 2018 Return on Invested Capital (ROIC) Segment Income $ 127.7 $ 117.0 $ 164.1 $ 121.8 $ 133.9 Reported Effective Tax rate 10.6% 20.5% 21.1% 10.4% 11.0% Adjusted Effe
Slide 21: Reported To Adjusted 2019 Reconciliation
Reported To Adjusted 2019 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP year ended December 31, 2019 to the non-GAAP excluding the effect of 2019 adjustments (Unaudited) Forecast First Full In millions, except per-share data Quarter Year Net sales approx Up 0 - 1 % approx Up