Slide 1: Q2 2017 Earnings Release
Q2 2017 EARNINGS RELEASE July 25, 2017 Q2 2017 Earnings Release
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 2017 and 2016 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 Translation and
Slide 4: Executive Summary
EXECUTIVE SUMMARY Strong Operating Delivered Adjusted Operating Results Ahead of Guidance; Performance Offsets Return on Sales Expanded 170 Basis Points to 20.2%; Higher Interest Costs Adjusted EPS Grew 14% Debt Tender Balance Sheet Significantly Improved and Ongoing Interest Successfully Completed
Slide 5: Q2'17 Pentair Performance
Q2'17 PENTAIR PERFORMANCE SALES FINANCIAL HIGHLIGHTS (YoY) $1.30B $6M $1.27B ($13M) Adjusted Core Sales Down 1% (YTD Up 1%) ($19M) ($10M) 2016 Large Jobs (3%) • Water Down 1% (YTD Up 1%) ($34M) YoY • Electrical Up 1% (YTD Up 2%) (1 pt) 0 pts (1 pt) (1 pt) (3(1pts) pt) Segment Income Up 6% Acq./ Q2'1
Slide 6: Q2'17 Water Segment Performance
Q2'17 WATER SEGMENT PERFORMANCE SALES CORE SALES AND HIGHLIGHTS (YoY) $762M $6M $6M $754M Filtration & Process Down 3% (YTD Down 2%) ($16M) ($4M) 2016 Large Jobs ($4M) (1%) • Foodservice and Residential Strength YoY • Beer Industry Spending Muted (2 pts) 1 pt 1 pt (1 pt) (1(1pt) pt) Acq./ Flow Techn
Slide 7: Q2'17 Electrical Segment Performance
Q2'17 ELECTRICAL SEGMENT PERFORMANCE SALES CORE SALES AND HIGHLIGHTS (YoY) $541M $3M $0M $513M Enclosures Down 1% (YTD Flat) ($25M) ($6M) 2016 Large Jobs (5%) • Industrial Strength Continued ($30M) YoY • Telecom Headwinds Persisted 1 pt 0 pts (5 pts) (1 pt) (5 pts) Acq./ Thermal Management Down 12%
Slide 8: Separation Update
SEPARATION UPDATE Separation Activities Managed Under a Dedicated Project Management Office First Level Organization Structures Under CEOs Completed ... Next Level Work Underway Initial Form 10 Filing Targeted for Fourth Quarter… Significant Preparation Activities in Progress Capital Structures to b
Slide 9: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW CASH FLOW DEBT SUMMARY Q2 YTD ($M) 2017 2017 Maturity Avg Rate Net Income - Continuing Ops $ 68 $ 149 Amortization 25 49 Subtotal $ 93 $ 198 $1.7B* 100% Fixed '17 – '25 ~3.5% Depreciation 21 42 Capital Expenditures (14) (38) Asset Sales 4 4 Working Capital 155 (39) Other
Slide 10: 2017 Cost Out Update
2017 COST OUT UPDATE $25M • Actions Were $24M Completed in Q2 $20M • Forecast >$80M Net Cost Out in 2017 $11M • Expect $100M Net Cost Removed Entering 2018 Q1 Q2 Q3 Q4 2017 Net Cost Out Realization (YoY) Cost Out Actions Completed and Full Year Benefits Remain on Track Q2 2017 Earnings Release 10
Slide 11: 2017 Guidance Update
2017 GUIDANCE UPDATE FY’17 FY’18 Previous Guidance (at mid-point) $3.50 -- Q1 Operating Performance $0.04 -- Q2 Operating Performance $0.03 -- Interest/Shares ($0.07) >$0.15 Current Guidance ~$3.50 -- Tightening 2017 EPS Guidance … 2018 Interest Expense Tailwind Q2 2017 Earnings Release 11
Slide 12: Q3'17 Pentair Outlook
Q3'17 PENTAIR OUTLOOK Q3'17 Q3'16 Q3’17 FINANCIAL OUTLOOK (YoY) Sales ~$1.22B $1.21B Adjusted Core Sales Up ~4% Op. Income ~$202M $183M • Water Up ~4% Seg. Income ~$227M $216M • Electrical Up ~4% ROS ~19% 17.9% Segment Income Up ~5% EPS (Rpt.) $0.80 - $0.82 $0.64 ROS ~19% … Up ~70 bps EPS (Adj.) $0.
Slide 13: Full Year 2017 Pentair Outlook
FULL YEAR 2017 PENTAIR OUTLOOK FY'17 FY'16 FY'17 FINANCIAL OUTLOOK (YoY) Sales ~$4.9B $4.9B Adjusted Core Sales Up ~2% Op. Income ~$752M $701M • Water Up ~2% Seg. Income ~$890M $840M • Electrical Up ~3% ROS ~18% 17.2% Segment Income Up ~6% EPS (Rpt.) ~$2.47 $2.47 ROS ~18% … Up ~100 bps EPS (Adj.) ~$
Slide 14: Appendix
APPENDIX GAAP to Non-GAAP Measurements & Reconciliations Q2 2017 Earnings Release 14
Slide 15: Reported to Adjusted 2017 Reconciliation
REPORTED TO ADJUSTED 2017 RECONCILIATION Q2 2017 Earnings Release 15
Slide 16: Q2 2017 Core Sales Growth Reconciliation
Q2 2017 CORE SALES GROWTH RECONCILIATION Q2 2017 Earnings Release 16
Slide 17: YTD 2017 Core Sales Growth Reconciliation
YTD 2017 CORE SALES GROWTH RECONCILIATION Q2 2017 Earnings Release 17
Slide 18: Other Reconciliations
OTHER RECONCILIATIONS Q2 2017 Earnings Release 18
Slide 19: Reported to Adjusted 2016 Reconciliation
REPORTED TO ADJUSTED 2016 RECONCILIATION Q2 2017 Earnings Release 19
Slide 20: Shipping Days
SHIPPING DAYS YEAR Q1 Q2 Q3 Q4 FY 2014 62 63 63 63 251 2015 61 63 63 64 251 2016 63 64 64 60 251 2017 64 63 63 60 250 2018 63 64 63 61 251 Q2 2017 Earnings Release 20