Pentair Plc. · NYSE:PNR
Pentair — Merger or Acquisition (May 2012)
32 slides from Pentair's merger presentation, May 9, 2012
Slide 1: Investor Presentation
Filed by Pentair, Inc. pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: Pentair, Inc. Registration Number: 333-181250 PENTAIR Investor Presentation RANDALL J. HOGAN Chairman and Chief Executive Offi
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Caution Concerning Forward-Looking Statements This communication may contain certain statements about Pentair, Inc. (“Pentair”), Tyco Flow Control International Ltd. (“Tyco Flow”) and Tyco International Ltd. (“Tyco”) that are “forward-looking statements” within the meaning
Slide 3: Pentair Winning Right
PENTAIR … WINNING RIGHT • Clear Growth Agenda – Targeted Investments, Focused Resource Allocation and Prioritized Investments • Positioning to Win in the “New” New World – Growing Population & Wealth of Developing Economies Create Tremendous Opportunity for Pentair – Increasing Presence in Fast Grow
Slide 4: Our Vision
OUR VISION A diversifiedindustrialgrowth company… A globalenterpriseandresponsible citizen knownfor operationalexcellence,innovation, toptalentandgrowingby servingcustomers well… Deliveringsuperiorlong-termshareholder value… MakingSignificant Progress TowardsVision PENTAIR 4
Slide 5: A History of Change
A HISTORY OF CHANGE Tools Largest Global Water Business Business, Portfolio of ~25 Product FocusMore Global Filtration Smaller Businesses; Sold Tools, Sales, Acquired Acquired >$1B in Manufacturing A LeadingMembrane Oriented Water Revenues Technology Company Early Mid- Today 2000’s 2000’s Began Lean
Slide 6: A History of Performance
A HISTORY OF PERFORMANCE TOTAL SHAREHOLDER RETURN* OF PENTAIR AND S&P 500 More than a Decade of Differentiated Performance PENTAIR *Total shareholder return of Pentair and S&P 500 from close on 12/31/2000 through close on 3/31/2012 6
Slide 7: A Diverse, Global Company
A DIVERSE, GLOBAL COMPANY2011REVENUEOF$3.5B SALES BY PLATFORM SALES BY GEOGRAPHY SALES BY VERTICAL Infrastructure Technical (~9%) Products Fast Aquatic Growth* (18%) Residential (~36%) United US ~2/3 Developed States Industrial & Flow Non US ~1/3 Non-US (61%) Agriculture (21%) (~44%) Treatment / Pro
Slide 8: 2011 Performance: A Record Year
2011 PERFORMANCE A RECORD … YEAR SALES ($B) ADJ. OPERATING INCOME * ($M) * ($) ADJ. DILUTED EPS RECORD SALES STRONG PROFITS RECORD EARNINGS +13% +25% +28% 2-YR CAGR 2-YR CAGR 2-YR CAGR $3.5 $404 $2.41 $3.0 $334 $2.00 $2.7 $258 $1.47 Adj. Adj. ROS* ROS ROS* 9.6% 11.0% 11.7% 2009 2010 2011 2009 2010 2
Slide 9: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION FREE CASH FLOW ** ANNUALIZED DIVIDENDS * Dividend $248M Payout Ratio $0.88 Currently >30% $207M $211M $0.01 2009 2010 2011 1976 1985 1995 2005 2012 Adj. NI FCF in excess of Adj. NI • Free Cash Flow Conversion • Strong Free Cash Flow Conversion Consistently >100% of Adj. F
Slide 10: Q1'12 Pentair Results
Q1’12 PENTAIR RESULTS * as presented on April 24, 2012 Q1’12 Q1’11 FINANCIAL HIGHLIGHTS Sales $858M $790M Sales Up 9% (Incl. … +9 pts from CPT ** & (1 pt) from FX) • Water & Fluid Up 14% Op Income (Rpt.) $85M $86M • Technical Products Down (1%) Op Income (Adj.) $97M $88M Adj. Op Income Up 10% ROS(Ad
Slide 11: Sales Growth Expectations
SALES GROWTH EXPECTATIONS (FY2012) aspresentedon April 24, 2012 SALES MIX BY SEGMENT (2011) WATER & FLUID SOLUTIONS (FY’12) • Flow (~40% of Water & Fluid Solutions Sales Mix) - Expect W. Europe & Municipal Headwinds to Continue Strength in Breadth of Portfolio & in 1H; Easier Comparisons in 2H Align
Slide 12: Full Year 2012 Pentair Outlook
FULL YEAR 2012 PENTAIR OUTLOOK * as presented on April 24, 2012 FY’12 FY’11 FY’12 FINANCIAL OUTLOOK Sales ~$3.7B $3.46B Sales Up 6%8% - …(incl. ~3pts from CPT Acq.) Op Income (Rpt.) $433M -$458M $169M • Water & Fluid Up 8%10% - Op Income (Adj.) $445M -$470M $404M • Technical Products Up 2% 4%- ROS(A
Slide 13: Positioned to Serve the "New" New World
POSITIONED TO SERVE THE “NEW” NEW WORLD >4 Billion Reaching Increasing Population and Wealth Needs and Wants Are Middle Class Globally Driving Demand of the “New”New World Food Energy Infrastructure/Industry (Transportation and Manufacturing) Resource Scarcity Quality of Life Industrialization Infra
Slide 14: Clear Vision, Consistent Strategy
CLEAR VISION, CONSISTENT STRATEGY STRATEGIC PRIORITIES • Invest in Innovative Technology & Application Expertise • InnovateAround Scarcity, Energy Efficiency and Sustainability • Continue to Build Scale in Fast Growth Regions • Taking PIMS to the Next Level and Leveraging New Rapid GrowthTool Clear
Slide 15: Investing in Innovation
INVESTING IN INNOVATION Salt-less Water Softener, RESEARCH AND DEVELOPMENT featuring Hybrid Deionization Technology Energy-Efficient IntelliFlo Variable Speed Pool Pump $78 $67 $62 Liquid Natural $57 $58 Gas Filtration System Beer Membrane Filtration 2.3% 2.1% 2.2% 1.9% 1.7% O2 Gehaltemeter for Opti
Slide 16: Increasing Our Global Presence
INCREASING OUR GLOBAL PRESENCE GEOGRAPHIC SALES MIX Fast Growth * Fast Growth * 9% 18% • Addressing the Growing Demands of the “New” Developed New World Non-US 18% United • Broad Array of Solutions United Developed States States Non-US with Growing Application 61% 73% 21% Expertise and Regional Focu
Slide 17: Executing Our Proven Strategy
EXECUTING OUR PROVEN STRATEGY Building Growth Capabilities Prioritizing Investments & Innovation Staffing GLOBAL Attracting and Developing Top Talent Rewards PeopleSoft Performance TALENT Development SYSTEM Safety, Quality, Delivery, Cost and Cash Focus LEAN ENTERPRISE PIMS Roadmap Is Key to Value C
Slide 18: Pending Pentair & Tyco Flow Merger
PENDING PENTAIR & TYCO FLOW MERGER, Previously Announced 1 A World-Leading ~$7.7B * Industrial Growth Company - A Global Leader in Flow, Filtration and Equipment Protection 2 Well-Positioned to Serve the “New” New World - Growing Population and Wealth of Developing Economies 3 Strong from the Start
Slide 19: Pending Pentair & Tyco Flow Control Combination
PENDING PENTAIR & TYCO FLOW CONTROL COMBINATION Emerging Presence in IndustrialSTRENGTHENS FLUID A Global Leader in Industrial Fluid Processing Solutions PROCESS SOLUTIONS Valves and Controls A Global Leader in Water Flow EXTENDS WATER Strong Regional Leader in Water and Filtration Applications OFFE
Slide 20: Strong Strategic Fit
STRONG STRATEGIC FIT COMBINED COMPANY SALES 2012 pro forma PROJECTED SALES ~$7.7B* Technical PENTAIR Products, SALES BY SEGMENT ~30% Water & Equipment Fluid Protection Solutions, Projected 2012 Sales: ~$3.7B ~70% Solutions, Water & ~25% Fluid Solutions, ~45% Flow Control, ~30% Water & Environ., TYCO
Slide 21: Serving Highly Attractive Growth Sectors
SERVING HIGHLY ATTRACTIVE GROWTH SECTORS DIVERSE VERTICALS SECULAR TRENDS DRIVING DEMAND COMBINED 2012 pro forma PROJECTED SALES MIX Industrial Performance & Quality Comm’l, Efficiency Hazardous Infrastructure,~10% ~10% Energy Industrial, Efficiency ~35% Unconventional Residential, Technology ~20% E
Slide 22: Expanded Global Reach
EXPANDED GLOBAL REACH ~40% ~25% US & CANADA FAST GROWTH ~35% REGIONS Significant US Residential Installed Base DEVELOPED Rising GDP and US Industrial Sector REST OF WORLD Urbanization Driving Strength Infrastructure, Energy Continued Increase in & Water Demands Demand for Oil and Gas, Robust Industr
Slide 23: Value Creation Potential
VALUE CREATION POTENTIAL ANTICIPATED PRE-TAX SYNERGIES RUN-RATE SYNERGY ESTIMATE • Operating/G&A Cost Synergies: ~$160M – Direct/Indirect Sourcing Opportunities Tax Expected – Lean/PIMS in Factories: Deploy in Tyco Flow Annualized Synergies Tax Rate of – IT/Finance/HR Standardization ~24-26% – Manag
Slide 24: Cost Synergy Drivers
COST SYNERGY DRIVERS EXPECTED Operational Cost SYNERGIES • Direct/Indirect Sourcing – Benefit from Global Procurement and Indirect Sourcing Capabilities – Leverage Company-Wide Standard Vendor Lists ~$200M – Insource/Resource Common Buys Direct/ Indirect • Operations / Lean Sourcing – PIMS Works …Pr
Slide 25: Value Creation Roadmap
VALUE CREATION ROADMAP NEW CLEAR VISION, PERFORM AT A EXECUTE OUR LEVERAGE COMBINED CONSISTENT STRATEGY HIGHER LEVEL PROVEN STRATEGY STRENGTHS Clear, Simple, Global Focus on Key Value Based on the Pentair Shared Vision and Visionbased on “New” CreationMetrics: Integrated Management “Win-Right”Cultur
Slide 26: Integration Leadership
INTEGRATION LEADERSHIP INTEGRATION TEAM Reporting Directly to Chairman/CEO Integration Team Will Consist of INTEGRATION LEADER ~25 –40 Proven Leaders Program Management Office (PMO) Valves & Water & Leaders by FunctionControls Thermal Environ. Pentair • Primary Focus on Structure, Business Standardi
Slide 27: Combined Pentair and Tyco Flow
COMBINED PENTAIR AND TYCO FLOW BY PLATFORM BY GEOGRAPHY BY APPLICATION COMBINED 2012 pro forma PROJECTED SALES MIXCOMBINED 2012 pro forma PROJECTED SALES MIXCOMBINED 2012 pro forma PROJECTED SALES MIX Developed Comm’l, Equipment Non-US, ~10% Protection ~15% Infrastructure, Solutions, Water & US and
Slide 28: Appendix
APPENDIX GAAP to Non-GAAP Measurements & Reconciliations PENTAIR 28
Slide 29: Reported to Adjusted 2012 Reconciliation
REPORTED TO ADJUSTED 2012 RECONCILIATION Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" year ending December 31, 2012 to the "Adjusted" non-GAAP excluding the effect of 2012 adjustments (Unaudited) Total Pentair First Quarter Year In millions, except per-share data 2012 2012
Slide 30: Reported to Adjusted Reconciliations (2011, 2010, 2009)
REPORTED TO ADJUSTED RECONCILIATIONS (2011, 2010, 2009) Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" years ending December 31, 2011, December 31, 2010 and December 31, 2009 to the "Adjusted" non-GAAP excluding the effect of adjustments (Unaudited) Year Year Year In million
Slide 31: Reported to Adjusted 2011 Reconciliation
REPORTED TO ADJUSTED 2011 RECONCILIATION Pentair, Inc. and Subsidiaries Reconciliation of the GAAP "As Reported" year ending December 31, 2011 to the "Adjusted" non-GAAP excluding the effect of 2011 adjustments (Unaudited) Total Pentair First Quarter Second Quarter Third Quarter Fourth Quarter Year
Slide 32: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Pentair, Inc. and Subsidiaries Reconciliation of Free Cash Flows for the years ending December 31, 2011, December 31, 2010 and December 31, 2009 (Unaudited) In millions 2011 2010 2009 Free Cash Flow Net cash provided by (used for) continuing operations $ 320.2 $ 270.4