Slide 1: Q1 2017 Earnings Release
Q1 2017 EARNINGS RELEASE April 25, 2017 Q1 2017 Earnings Release
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS CAUTION CONCERNING FORWARD-LOOKING STATEMENTS This communication 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
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 • Solid Start to 2017 as Both Segments Delivered Ahead of Their Commitments • Adjusted Core Sales Increased 3%; Operating Margins Expanded 50 Basis Points to 15.5%; Adjusted EPS Grew 7% and Exceeded High End of Guidance • Sale of Valves & Controls Expected to Close Soon … Balance S
Slide 5: Q1'17 Pentair Performance
Q1'17 PENTAIR PERFORMANCE SALES FINANCIAL HIGHLIGHTS (YoY) $1.19B $28M $13M $1.18B Adjusted Core Sales Up 3% ($43M) ($4M) 2016 Large Jobs (1%) • Water Up 4% ($49M) YoY • Electrical Up 3% 2 pts 1 pt (4 pts) 0 pts (1(1ptpt) ) Segment Income Up 3% Acq./ Q1'16 Volume Price FX Q1’17 Large Jobs ROS 15.5%
Slide 6: Q1'17 Water Segment Performance
Q1'17 WATER SEGMENT PERFORMANCE SALES CORE SALES AND HIGHLIGHTS (YoY) $666M $16M $10M $683M Filtration & Process Flat ($7M) ($2M) 2016 Large Jobs ($10M) 3% • Strength in Residential & Commercial YoY • Union Engineering Integration Progressing 2 pts 2 pts (1 pt) 0 pts (1 3 pts pt) Acq./ Flow Technolo
Slide 7: Q1'17 Electrical Segment Performance
Q1'17 ELECTRICAL SEGMENT PERFORMANCE SALES CORE SALES AND HIGHLIGHTS (YoY) $525M $13M $3M $502M Enclosures Up 1% ($37M) ($2M) 2016 Large Jobs (4%) • Hoffman Sales Grew First Time in 9 Quarters ($39M) YoY • Telecom Headwinds Persisted 2 pts 1 pt (7 pts) 0 pts (4 pts) Acq./ Thermal Management Down 17%
Slide 8: V&C Update
V&C UPDATE • Expect Closing of Valves & Controls Sale in Coming Days* • Upon Closing of Transaction, Remain on Track to Strengthen Balance Sheet Through Debt Retirement • Balance Sheet Optionality Returning … We Remain Focused on Our Disciplined Capital Allocation Strategy * Subject to Customary Reg
Slide 9: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW CASH FLOW DEBT SUMMARY Q1 Q1 $4.5B* Maturity ($M) 2017 2016 Net Income - Continuing Ops $ 81 $ 92 Amortization 24 24 $3.3B Fixed '17 – '25 Subtotal $ 105 $ 116 Depreciation 21 21 Capital Expenditures (24) (33) Asset Sales - 5 $1.2B Variable '19 Working Capital (195) (108)
Slide 10: Expected Impact of V&C Delay
EXPECTED IMPACT OF V&C DELAY FY’17 FY’18 Previous Guidance (at mid-point) $3.50 -- Q1 Performance $0.04 -- Q2 Timing of V&C Close ($0.04) ~$0.15 Current Guidance (at mid-point) $3.50 -- Q1 Upside Offsets V&C Delay … Will Assess Guidance After Q2 Q1 2017 Earnings Release 10
Slide 11: 2017 Cost Out Update
2017 COST OUT UPDATE $25M • All Actions Expected $24M by End of Q2 $20M • Forecast >$75M Net Cost Out in 2017 $11M • Expect $100M Net Cost Removed Entering 2018 Q1 Q2 Q3 Q4 2017 Net Cost Out Realization (YoY) Cost Actions On Target to Prior Commitment Q1 2017 Earnings Release 11
Slide 12: Q2'17 Pentair Outlook
Q2'17 PENTAIR OUTLOOK Q2'17 Q2'16 Q2’17 FINANCIAL OUTLOOK (YoY) Sales ~$1.24B $1.30B Adjusted Core Sales Down ~1% Op. Income ~$227M $203M • Water ~Flat Seg. Income ~$250M $241M • Electrical Down ~1% ROS ~20% 18.5% Segment Income Up ~4% EPS (Rpt.) $0.87 - $0.89 $0.73 EPS (Adj.) $0.97 - $0.99 $0.88 RO
Slide 13: Full Year 2017 Pentair Outlook
FULL YEAR 2017 PENTAIR OUTLOOK FY'17 FY'16 FY'17 FINANCIAL OUTLOOK (YoY) Sales ~$4.8B $4.9B Adjusted Core Sales ~Flat Op. Income ~$765M $701M • Water Up ~1% Seg. Income ~$880M $840M • Electrical ~Flat ROS ~18% 17.2% Segment Income Up ~5% EPS (Rpt.) $2.95 - $3.05 $2.47 EPS (Adj.) $3.45 - $3.55 $3.05
Slide 14: Appendix
APPENDIX GAAP to Non-GAAP Measurements & Reconciliations Q1 2017 Earnings Release 14
Slide 15: Reported to Adjusted 2017 Reconciliation
REPORTED TO ADJUSTED 2017 RECONCILIATION Q1 2017 Earnings Release 15
Slide 16: Q1 2017 Core Sales Growth Reconciliation
Q1 2017 CORE SALES GROWTH RECONCILIATION Pentair plc and Subsidiaries Reconciliation of Net Sales Growth to Core Net Sales Growth by Strategic Business Group for the quarter ended March 31, 2017 (Unaudited) Q1 Net Sales Growth Acq./ Adjusted Core Large Jobs Core Currency Div Total Water 3.9% (1.5%)
Slide 17: Other Reconciliations
OTHER RECONCILIATIONS Q1 2017 Earnings Release 17
Slide 18: Reported to Adjusted 2016 Reconciliation
REPORTED TO ADJUSTED 2016 RECONCILIATION Q1 2017 Earnings Release 18