Slide 1: Q3 2018 Earnings Release
Q3 2018 EARNINGS RELEASE OCTOBER 23, 2018
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 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 Translation and
Slide 4: Executive Summary
Executive Summary • Core Sales Grew 6%; ROS of 17.1% Q3’18 • Adjusted EPS Grew 10% to $0.54; Free Cash Flow of $108M • Purchased $100M of Shares in the Quarter; $400M YTD • Expect Core Sales to Grow 4-5% • Expect ROS to Expand ~50 bps to ~18% Outlook 2018 • Adjusted EPS Expected to be ~$2.33 … Targe
Slide 5: Q3'18 Pentair Performance
Q3'18 Pentair Performance Sales Financial Highlights (YoY) $36M $7M Core Sales Up 6% $711M $688M ($13M) ($7M) • Aquatic Systems Up 12% 3% • Filtration Solutions Up 2% YoY • Flow Technologies Up 5% 5 pts 1 pt (2 pts) (1 pt) 3 pts Acq./ (1 pt) Segment Income Up 1% Q3'17 Volume Price FX Q3’18 Divestitu
Slide 6: Q3'18 Pentair Segment Performance
Q3'18 Pentair Segment Performance Aquatic Systems Filtration Solutions Flow Technologies Sales Sales Sales $233M $212M $238M $242M $240M $233M +12% Core +5% +2% Core Core Q3'17 Q3'18 Q3'17 Q3'18 Q3'17 Q3'18 Segment Income Segment Income Segment Income $60M $40M $39M $37M $53M $38M +13% -5% -7% ROS 2
Slide 7: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow CASH FLOW ($M) DEBT SUMMARY Q3 YTD $799M Maturity 2018 2018 Net Income - Continuing Ops $ 91 $ 228 Amortization 9 27 Subtotal $ 100 $ 255 $690M 87% Fixed 2019 – 2025 Depreciation 12 37 Capital Expenditures (13) (34) Working Capital (14) (23) Other Accruals/Other 14 10 Fre
Slide 8: Q4'18 Pentair Outlook
Q4'18 Pentair Outlook Q4'18 Q4'17 Q4’18 Financial Outlook (YoY) Sales ~$736M $721M Core Sales Up ~4-5% • Aquatic Systems Up ~10-12% Op. Income ~$125M $85M • Filtration Solutions Up ~1-2% Seg. Income ~$135M $128M • Flow Technologies Up ~2-3% ROS ~18% 17.7% EPS (Rpt.) ~$0.55 $0.30 Segment Income Up ~6
Slide 9: 2018 Pentair Outlook
2018 Pentair Outlook 2018 Sales Outlook 2018 Segment Income Outlook *Non-Cash Intangible Amortization ~$90M ~$39M ~$20M ~$2.96B ~$94M ~$2M $2.85B (~$34M) ~$26M ~$538M $497M $36M * ~4% $36M * (~$81M) ~8% YoY YoY ROS ROS ~3 pts ~ 1pt (~1 pt) ~1 pt ~4(1pts pt) 17.5% ~2.4% ~Flat (~2.8%) ~0.9% ~18% Acq./
Slide 10: Full Year 2018 Pentair Outlook
Full Year 2018 Pentair Outlook FY'18 FY'17 FY'18 Financial Outlook (YoY) Sales ~$2.96B $2.85B Core Sales Up 4-5% • Aquatic Systems Up ~10% Op. Income ~$449M $378M • Filtration Solutions Up ~1-2% Seg. Income ~$538M $497M • Flow Technologies Up ~2-3% ROS ~18% 17.5% Segment Income Up ~8% EPS (Rpt.) ~$1
Slide 11: 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 ~18% ROS* Filtration Technologies Solutions Targeting Free Cash Flow = • Base Core Gro
Slide 12: Focused Strategies
Focused Strategies • Penetration of Connected Pools/Products Advance • New Product Introductions Inclusive of “Smart” Technologies Pool Growth • Seeking Bolt-On & Tuck-In Acquisitions • Engaging Consumers Through Digital Marketing that Builds Brand Strength and Drives Demand Through Our Dealer Netwo
Slide 13: Long-Term Value Creation Goals
Long-Term Value Creation Goals (As introduced at the Electrical Products Group Conference on May 21, 2018) +2-4% Core Revenue Sales Growth + Operating Leverage / PIMS = +6-8% Segment Income ~$150M Annual Share Buyback = +8-10%* Adj. EPS + Incremental Capital Allocation = Value Creation Opportunity *
Slide 14: Pentair Summary
Pentair Summary Delivered Solid Q3 Results … Core Growth Accelerated 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 Plan to be Disciplined with Our Capital Plan to Provide 2019 Gui
Slide 15: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
APPENDIX GAAP TO NON-GAAP MEASUREMENTS & RECONCILIATIONS
Slide 16: 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) Actual Forecast First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quarter
Slide 17: 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 18: 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 Ending September 30, 2018 (Unaudited) Actual Q3 Net Sales Growth Acq. / Core Currency Div. Total Total Pentair 6.4% (1.0)% (1.9)% 3.5% Aquatic Systems
Slide 19: ROIC Reconciliation
ROIC Reconciliation Third Fourth First Second Third Quarter Quarter Quarter Quarter Quarter Dollars in millions 2017 2017 2018 2018 2018 Return on Invested Capital (ROIC) Segment Income $ 120.2 $ 127.7 $ 117.0 $ 164.1 $ 121.8 Adjusted Effective Tax rate 20.0% 20.0% 18.0% 18.0% 18.0% NOPAT $ 96.2 $ 1
Slide 20: 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) Nine months ended September 30, September 30, In millions 2018 2017 Net cash provided by (used for) operating activities of continuing opera