Pentair Plc. · NYSE:PNR
Pentair — Q1 2020 Earnings Presentation
22 slides from Pentair's earnings presentation, Apr 30, 2020
Slide 1: Q1 2020 Earnings Release
Q1 2020 EARNINGS RELEASE April 30, 2020 ©2020 Pentair. All Rights Reserved. Confidential property of Pentair. Do not reproduce or distribute without express permission of Pentair. 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements CAUTION CONCERNING FORWARD-LOOKING STATEMENTS THIS PRESENTATION CONTAINS STATEMENTS THAT WE BELIEVE TO BE "FORWARD-LOOKINGSTATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORMACT OF 1995. ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT ARE FOR
Slide 3: Key Definitions
Key Definitions • Except as Otherwise Noted All References to 2020 and 2019 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 Delivered first quarter results in line with expectations, inclusive of COVID-19 challenges Actively responded to challenges of COVID-19 pandemic with key focus on employee safety and well being Announced new CFO and leadership of segments as expected Planning for significa
Slide 5: COVID-19 Update & Focus
COVID-19 Update & Focus We continue to focus on the health and safety of our employees, our customers, and our businesses while delivering the best results possible Began to see softening demand in most businesses in April … actions underway to reduce bottom line impact Focused on cost reducti
Slide 6: Consumer Solutions
Consumer Solutions Segment Breakdown All Information Reflects Historical 2019 Sales of $1.6B Commercial Direct/OEM Water ~25% ~25% Solutions ~40% Pool ~60% Residential Installed/Aftermarket ~75% ~75% Pool Water Solutions A leader in North America pool equipment serving Residential & Commercial Compo
Slide 7: Industrial & Flow Technologies
Industrial & Flow Technologies Segment Breakdown All Information Reflects Historical 2019 Sales of $1.3B Service ~5% Commercial Industrial Residential ~15% Filtration & Irrigation Direct/OEM ~30% Industrial ~30% Installed/ Flow ~50% Aftermarket ~40% Residential ~65% Commercial & ~35% Infrastructure
Slide 8: Cost Structure and Actions
Cost Structure and Actions 2019 Cost Structure % of Sales 2020 Cost Management / Mitigation Actions • Materials are a real variable cost … revenue decline drops through at ~60% before Materials ~40% cost actions • Engaged in supplier rapid re-negotiations to reduce input costs Manufacturing Costs Mf
Slide 9: Balance Sheet and Access to Liquidity
Balance Sheet and Access to Liquidity Debt Maturity Profile (3/31/2020) Senior USD Notes Term Loan Revolving Credit Facility – Drawn Borrowings Credit Facility $1,200 $900M $1,000 $800 $600 $574M $400 $200 $400M $200M $19M $74M $104M $88M $0 2020 2021 2022 2023 2024 2025 … 2029 LIQUIDITY PRIORITIES
Slide 10: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Cash Flow ($M) Debt Roll-Forward ($M) Q1 Q1 Q1 Q1 2020 2019 Use of Cash: ($M) 2020 2019 Net Income - Continuing Ops $ 73 $ 52 Beginning Debt $ 1,029 $ 788 Amortization 8 8 Used (Generated) Cash 181 273 Subtotal $ 81 $ 60 Share Repurchase 115 - Depreciation 12 12 Dividends
Slide 11: Q1'20 Pentair Performance
Q1’20 Pentair Performance Sales Financial Highlights (YoY) $9M Core Sales Up 3% $11M $710M $8M ($7M) • Consumer Solutions Up 7% $689M 3% YoY • Industrial & Flow Technologies Down 2% 1 pt 2 pts 1 pt (1 pt) 3 pts Segment Income Up 13% (1 pt) Acq./ Q1’19 Volume Price FX Q1’20 Divestitures ROS 15.7% … U
Slide 12: Q1'20 Consumer Solutions Performance
Q1’20 Consumer Solutions Performance Sales Financial Highlights (YoY) Pool $9M $389M $18M $6M ($2M) • Grew sales low double digits against easy $358M 9% comp and more normal weather patterns YoY Water Solutions 5 pts 2 pts 3 pts (1 pt) 9 pts Acq./ (1 pt) • Grew sales high single digits as positive Q
Slide 13: Q1'20 Industrial & Flow Technologies Performance
Q1’20 Industrial & Flow Technologies Performance Sales Financial Highlights (YoY) Residential & Irrigation Flow $330M $5M Flat $321M • Sales flat on modest growth in pricing ($10M) ($4M) Commercial & Infrastructure Flow -3% YoY • Sales down mid single digits driven by (3 pts) 1 pt 0 pts (1 pt) (3 pt
Slide 14: 2020 Current Planning Assumptions
2020 Current Planning Assumptions Planning for recessionary environment for balance of 2020 Aligning costs with lower volumes Additional cost levers available and plan to pull if necessary; maintaining our investments in our focused and prioritized businesses Solid liquidity and cash flow, and balan
Slide 15: Our Strategy Remains Unchanged
Our Strategy Remains Unchanged Serving Large and Stable End Markets … • Leading Pool franchise serving large installed base with opportunities to increase content • Residential & Commercial Water Solutions offer room for growth and expansion • Sustainability awareness drives significant opportunitie
Slide 16: Q1 2020 Earnings Release | ©2020 Pentair
Q1 2020 Earnings Release | ©2020 Pentair
Slide 17: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
APPENDIX GAAP TO NON-GAAP MEASUREMENTS & RECONCILIATIONS
Slide 18: Reported To Adjusted 2020 Reconciliation
Reported To Adjusted 2020 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP quarter ended March 31, 2020 to the non-GAAP excluding the effect of 2020 adjustments (Unaudited) Actual First In millions, except per-share data Quarter Net sales $ 710.0 Operating income 100.7 % of net
Slide 19: 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) First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quarter Quarter Year Ne
Slide 20: 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 March 31, 2020 (Unaudited) Actual Q1 Net Sales Growth Core Currency Acq. / Div. Total Total Pentair 2.7% (1.0)% 1.4% 3.1% Consumer Solutions 6.6
Slide 21: ROIC Reconciliation
ROIC Reconciliation First Second Third Fourth First Quarter Quarter Quarter Quarter Quarter Dollars in millions 2019 2019 2019 2019 2020 Return on Invested Capital (ROIC) Segment Income $ 98.7 $ 154.1 $ 122.8 $ 140.7 $ 111.5 Reported Effective Tax Rate 17.1% 16.1% 9.8% 2.8% 21.5% Adjusted Effective
Slide 22: 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 ended March 31, March 31, In millions 2020 2019 Net cash used for operating activities of continuing operations $ (162.4) $ (25