Slide 1: Q2 2018 Earnings Release
Q2 2018 EARNINGS RELEASE JULY 25, 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 3% • ROS Expanded 90 bps to 21.0% Q2’18 • Adjusted EPS Grew 18% to $0.71; Free Cash Flow of $364M • Bought Back $150M of Stock in the Quarter • Expect Core Sales to Grow 3-4% • Expect ROS to Expand ~50 bps to ~18% Outlook 2018 • Price Increases Announced to Help M
Slide 5: Q2'18 Pentair Performance
Q2'18 Pentair Performance Sales Financial Highlights (YoY) $8M $12M $781M Core Sales Up 3% $14M • Aquatic Systems Up 10% ($7M) $754M 4% • Filtration Solutions Down 2% YoY • Flow Technologies Up 2% 2 pts 1 pt (1 pt) 2 pts 4 pts Acq./ (1 pt) Segment Income Up 8% Q2'17 Volume Price FX Q2’18 Divestiture
Slide 6: Q2'18 Pentair Segment Performance
Q2'18 Pentair Segment Performance Aquatic Systems Filtration Solutions Flow Technologies Sales Sales Sales $276M $242M $264M $262M $236M $254M +10% Core +2% -2% Core Core Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Segment Income Segment Income Segment Income $80M $44M $74M $52M $40M $49M +7% +10% +7% ROS 2
Slide 7: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow CASH FLOW ($M) DEBT SUMMARY Q2 YTD $780M Maturity 2018 2018 Net Income - Continuing Ops $ 78 $ 136 Amortization 9 18 Subtotal $ 87 $ 154 ~$690M 88% Fixed 2019 – 2028 Depreciation 12 25 Capital Expenditures (9) (20) Asset Sales (1) (1) Working Capital 207 (8) Other Accrual
Slide 8: Q3'18 Pentair Outlook
Q3'18 Pentair Outlook Q3'18 Q3'17 Q3’18 Financial Outlook (YoY) Sales ~$700M $688M Core Sales Up ~4-5% • Aquatic Systems Up ~8-9% Op. Income ~$110M $102M • Filtration Solutions Up ~1-3% Seg. Income ~$120M $120M • Flow Technologies Up ~2-3% ROS ~17% 17.5% EPS (Rpt.) ~$0.48 $0.27 Segment Income ~Flat
Slide 9: Second Half 2018 Adjusted EPS Outlook
Second Half 2018 Adjusted EPS Outlook Q3 Q4 $0.06 ~$0.60 $0.03 $0.00 $0.07 ~$0.52 $0.49 $0.03 $0.00 $0.10 $0.52 $0.03 +6% +15% YoY YoY ($0.10) ($0.11) Tax, Shares, Tax, Shares, Q3'17 FX Inflation Price Core/Other Q3'18 Q4'17 FX Inflation Price Core/Other Q4'18 Interest Interest Full Year Comments $0
Slide 10: 2018 Pentair Outlook
2018 Pentair Outlook 2018 Sales Outlook 2018 Segment Income Outlook *Non-Cash Intangible Amortization ~$77M ~$43M ~$17M ~$2.95B ~$91M ~$2M $2.85B (~$37M) ~$28M ~$538M $497M $36M * ~4% $37M * (~$80M) ~8% YoY Net of ~$20M Growth Investment YoY ROS Without Investment - ~19% YoY Without Investment - ~+1
Slide 11: Full Year 2018 Pentair Outlook
Full Year 2018 Pentair Outlook FY'18 FY'17 FY'18 Financial Outlook (YoY) Sales ~$2.95B $2.85B Core Sales Up 3-4% • Aquatic Systems Up 8-9% Op. Income ~$452M $378M • Filtration Solutions Up 0-1% Seg. Income ~$538M $497M • Flow Technologies Up 2-3% ROS ~18% 17.5% Segment Income Up ~8% EPS (Rpt.) ~$1.8
Slide 12: 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 13: Focused Strategies
Focused Strategies Advance • Expanding Aftermarket Products Pool Growth • Ample Opportunities in the Fast Growing Automation Segment • Developing Innovative Products Accelerate Residential • Engaging Consumer with Digital Connections & Commercial • Building Brand Strength Treatment • Driving Demand
Slide 14: Pentair Summary
Pentair Summary Delivered Solid Q2 Results Announced Price Increases to Help Mitigate Higher than Anticipated Inflation; Expect Price Increases to be Fully Realized by End of Q4 We have a Large and Installed Base to Serve We have a Strong Capital Structure, Robust FCF Generation, and Plan to be Disc
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 Full In millions, except per-share data Quarter Quarter Quarter Year N
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 June 30, 2018 Actual Q2 Net Sales Growth Acq. / Core Currency Div. Total Total Pentair 2.9% 1.5% (0.9)% 3.5% Aquatic Systems 9.5% 0.3% (0.9)% 8.
Slide 19: ROIC Reconciliation
ROIC Reconciliation Second Third Fourth First Second Quarter Quarter Quarter Quarter Quarter Dollars in millions 2017 2017 2017 2018 2018 Return on Invested Capital (ROIC) Segment Income $ 151.6 $ 120.2 $ 127.7 $ 117.0 $ 164.1 Adjusted Effective Tax rate 20.0% 20.0% 20.0% 18.0% 18.0% NOPAT $ 121.3 $
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) Six months ended June 30, June 30, In millions 2018 2017 Net cash provided by (used for) operating activities of continuing operations $ 177