Pentair Plc. · NYSE:PNR
Pentair — Q4 2019 Earnings Presentation
25 slides from Pentair's earnings presentation, Jan 28, 2020
Slide 1: Q4 2019 Earnings Release
Q4 2019 EARNINGS RELEASE JANUARY 28, 2020
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 2020, 2019 and 2018 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 Translatio
Slide 4: Executive Summary
Executive Summary Delivered Fourth Quarter and Full Year Results In Line With Expectations Moving to Two Segments to Better Align Our Businesses with Our Customers Utilizing PIMS to Drive a High Performance Growth Culture Introducing 2020 Guidance … Balance Sheet Remains Strong Building Momentum Ent
Slide 5: Executing a Consistent Strategy
Executing a Consistent Strategy Serving Large and Stable End Markets … • Leading Pool Franchise Serving Large Installed Base with Opportunities to Increase Content • Residential & Commercial Water Services Offer Room for Growth and Expansion • Sustainability Awareness Drives Significant Opportunitie
Slide 6: Evolving to Attain our Vision
Evolving to Attain our Vision Execution of Our Strategy Requires Different Growth and Aligning Our Organization With Our Strategies Operations Support for Our Different Businesses Moving Faster in Supporting the Needs of Our Aligning With Our Customer Base Differing Customers Aquatic Systems (Pool)
Slide 7: Q4'19 Pentair Performance
Q4’19 Pentair Performance Sales Financial Highlights (YoY) $25M $755M Core Sales Down 1% $741M $16M ($5M) • Aquatic Systems Up 1% ($22M) 2% • Filtration Solutions Down 2% YoY • Flow Technologies Down 1% (3 pts) 2 pts 3 pts 0 pts 2 pts Acq./ (1 pt) Segment Income Up 5% Q4’18 Volume Price FX Q4’19 Div
Slide 8: Full Year 2019 Pentair Performance
Full Year 2019 Pentair Performance Sales Financial Highlights (YoY) Core Sales Down 1% $2.97B $74M $78M $2.96B ($43M) • Aquatic Systems Down 3% ($117M) Flat • Filtration Solutions Down 1% YoY • Flow Technologies Flat (4 pts) 3 pts 3 pts (2 pts) 0 pts Acq./ (1 pt) Segment Income Down 4% 2018 Volume P
Slide 9: Q4'19 Pentair Segment Performance
Q4’19 Pentair Segment Performance Aquatic Systems Filtration Solutions Flow Technologies Sales Sales Sales $277M $276M $269M $217M $211M 1% $247M -2% Core Core -1% Core Q4'18 Q4'19 Q4'18 Q4'19 Q4'18 Q4'19 Segment Income Segment Income Segment Income $85M $78M $44M $43M $29M $26M 9% -4% 10% ROS 28.2%
Slide 10: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow CASH FLOW ($M) DEBT ROLL-FORWARD ($M) FY FY FY FY 2018 2019 Use of Cash: 2018 2019 Net Income - Continuing Ops $ 322 $ 362 Beginning Debt $ 1,441 $ 788 Amortization 35 32 Used (Generated) Cash (386) (295) Subtotal $ 357 $ 394 Share Repurchase 500 150 Depreciation 50 48 Di
Slide 11: Q1'20 Pentair Outlook
Q1’20 Pentair Outlook • Total PNR Up ~3 to 5% (Core Sales Up ~4 to 6%) ‒ Consumer Solutions Core Sales Up ~9 to 11% Sales ‒ Industrial & Flow Technologies Core Sales Down ~1% to Up ~1% ‒ FX Down ~1%; Acq./Div. ~Flat • Segment Income Up ~9 to 13% Income and EPS • Adjusted EPS ~$0.48 to $0.51 • Corp.
Slide 12: Full Year 2020 Pentair Outlook
Full Year 2020 Pentair Outlook • Total PNR Up ~1 to 3% (Core Sales Up ~2 to 4%) ‒ Consumer Solutions Core Sales Up ~5 to 7% Sales ‒ Industrial & Flow Technologies Core Sales Down ~1% to Up ~1% ‒ FX ~Flat; Acq./Div. Down ~1% • Segment Income Up ~3 to 6% Income and EPS • Adjusted EPS ~$2.50 to $2.55 •
Slide 13: Appendix
APPENDIX GAAP TO NON-GAAP MEASUREMENTS & RECONCILIATIONS AND NEW SEGMENT INFORMATION
Slide 14: 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 15: 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) First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quarter Quarter Year Ne
Slide 16: 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 and Year Ended December 31, 2019 (Unaudited) Q4 Net Sales Growth Full Year Net Sales Growth Core Currency Acq. / Div. Total Core Currency Acq. / Div. T
Slide 17: ROIC Reconciliation
ROIC Reconciliation Fourth First Second Third Fourth Quarter Quarter Quarter Quarter Quarter Dollars in millions 2018 2019 2019 2019 2019 Return on Invested Capital (ROIC) Segment Income $ 133.9 $ 98.7 $ 154.1 $ 122.8 $ 140.7 Reported Effective Tax rate 11.0% 17.1% 16.1% 9.8% 2.8% Adjusted Effective
Slide 18: 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) Years ended December 31 In millions 2019 2018 Net cash provided by operating activities of continuing operations $ 345.2 $ 458.1 Capital exp
Slide 19: Reported To Adjusted 2020 Reconciliation
Reported To Adjusted 2020 Reconciliation Pentair plc and Subsidiaries Reconciliation of the GAAP year ending December 31, 2020 to the non-GAAP excluding the effect of 2020 adjustments (Unaudited) Forecast First Full In millions, except per-share data Quarter Year Net sales approx Up 3 - 5 % approx U
Slide 20: Consumer Solutions
Consumer Solutions (All Information Reflects Historical 2019 Sales of $1.6B) REVENUE VERTICAL Commercial Water ~25% Solutions Pool ~40% ~60% Residential ~75% CHANNEL GEOGRAPHY Other Developed ~5% Western Europe ~10% Direct/OEM ~25% Developing ~10% US Installed/Aftermarket ~75% ~75% Q4 2019 Earnings
Slide 21: Industrial & Flow Technologies
Industrial & Flow Technologies (All Information Reflects Historical 2019 Sales of $1.3B) REVENUE VERTICAL Commercial Industrial ~15% Filtration Residential & ~30% Irrigation Flow Industrial ~40% ~50% Residential Commercial & ~35% Infrastructure Flow ~30% CHANNEL GEOGRAPHY Service ~5% Other Developed
Slide 22: Supplemental Financial Data – New Segmentation
Supplemental Financial Data – New Segmentation Pentair plc and Subsidiaries Supplemental Financial Information by Reportable Segment - New Segmentation (Unaudited) 2019 First Second Third Fourth Full In millions Quarter Quarter Quarter Quarter Year Net sales Consumer Solutions $ 358.2 $ 437.1 $ 377.
Slide 23: Supplemental Financial Data – New Segmentation
Supplemental Financial Data – New Segmentation Pentair plc and Subsidiaries Supplemental Financial Information by Reportable Segment - New Segmentation (Unaudited) 2018 First Second Third Fourth Full In millions Quarter Quarter Quarter Quarter Year Net sales Consumer Solutions $ 380.5 $ 419.5 $ 366.
Slide 24: Supplemental Financial Data – New Segmentation
Supplemental Financial Data – New Segmentation Pentair plc and Subsidiaries Supplemental Financial Information by Reportable Segment - New Segmentation (Unaudited) 2017 First Second Third Fourth Full In millions Quarter Quarter Quarter Quarter Year Net sales Consumer Solutions $ 357.2 $ 398.3 $ 347.
Slide 25: Supplemental Financial Data – New Segmentation
Supplemental Financial Data – New Segmentation Pentair plc and Subsidiaries Reconciliation of Net Sales Growth to Core Net Sales Growth by New Segmentation For the Quarters and Years Ended December 31 (Unaudited) 2019 Q1 Net Sales Growth 2018 Q1 Net Sales Growth Core Currency Acq. / Div. Total Core