Pentair Plc. · NYSE:PNR
Pentair — Q1 2023 Earnings Presentation
31 slides from Pentair's earnings presentation, Apr 27, 2023
Slide 1: Q1 2023 Earnings Release
Q1 2023 EARNINGS RELEASE April 27, 2023
Slide 2: Forward-Looking Statements
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 forward-looking statements. Without limitation
Slide 3: Key Definitions
Key Definitions • Except as otherwise noted, our results represent 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 (2) the impact of revenue from acqu
Slide 4: Strategic Framework
Strategic Framework OUR PURPOSE: To create a better world for people and the planet through smart, sustainable water solutions. OUR MISSION: We help the world sustainably move, improve and enjoy water, life’s most essential resource. Industrial & Flow Technologies Water Solutions Pool Flow Businesse
Slide 5: Pentair at a Glance
Pentair at a Glance We Help the World Sustainably Move, Improve and Enjoy Water, Life’s Most Essential Resource Employees Sales (2022) Focus on Profitability (2022) ~11K $4.1B 18.6% ROS Strong Cash Flow Large Installed Base Dividend Aristocrat and Solid Returns ~75%+ Replacement Annual Dividend High
Slide 6: Pentair Overview
Pentair Overview A Leader in Helping the World Sustainably Move, Improve and Enjoy Water, Life’s Most Essential Resource Pentair Industrial & Flow Technologies Water Solutions Pool Smart, Sustainable, Water Solutions Move Water Improve Water Enjoy Water $4,122M $1,501M $987M $1,572M $1,633M $3,765M
Slide 7: Executive Summary
Executive Summary Sales Segment Income ROS Adjusted EPS ✓ Strong financial results for $1.03B $211M 20.5% Q1’23 $1.00B $0.91 $172M − Sales growth of 3% 3% 23% 17.2% 330 bps $0.85 7% YoY YoY YoY YoY − Segment income up 23% − ROS expanded 330 bps − Adjusted EPS increased 7% Q1'22 Q1'23 Q1'22 Q1'23 Q1'
Slide 8: Q1 Highlights
Q1 Highlights Diversified portfolio; all segments contributed to strong Q1 results Industrial & Flow Technologies Water Solutions Pool ✓ Commercial, Industrial and ✓ Growth in core sales and ✓ Significant margin expansion Residential drove growth significant margin expansion driven by price and Tran
Slide 9: Making Better Essential
Making Better Essential • Published our 2022 Corporate Responsibility Report on April 18, 2023 • Made significant progress toward our Strategic Targets 9 Q1 2023 Earnings Release. @2023 Pentair. All Rights Reserved.
Slide 10: Social Responsibility Strategic Targets
Social Responsibility Strategic Targets 2022 Highlights Carbon Footprint Water Product Design for Reduction Reduction Sustainability 29% WATER 100% of NEW REDUCTION WITHDRAWAL PRODUCTS in Scope 1 and 2 DECREASE evaluated using our GHG emissions represents a 9.3% new sustainability compared to a 2019
Slide 11: Positive Impacts from Our Products and Solutions
Positive Impacts from Our Products and Solutions 83% of Pentair solutions 37% of our 71% of Pentair solutions SUPPORT ENERGY ELECTRICITY usage came SUPPORT WATER from renewable energy sources, EFFICIENCY by requiring less representing 18% of our total EFFICIENCY helping to reduce, energy to operate*
Slide 12: CEO Summary
CEO Summary Q1 performance drives FY update; Diversification and Transformation driving shareholder value Solid Start to 2023 • Strong Q1 results driven by diverse water portfolio and Transformation • Manitowoc Ice has assimilated well and contributed ahead of expectations • ROS expansion increased
Slide 13: Q1'23 Pentair Performance
Q1’23 Pentair Performance Sales Segment Income $66M $1.03B $93M $1.00B $93M ($11M) ($2M) $6M $211M $14M* 3% $172M ($58M) $7M* YoY 23% ($119M) YoY ROS ROS (12 pts) 9 pts 7 pts (1 pt) 3 pts 17.2% 8.5% 0.0% (5.8%) 0.6% 20.5% (1 pt) Growth/ Q1’22 Volume Price Acq./Div. FX Q1’23 Q1’22 FX Inflation Prod.
Slide 14: Q1'23 Industrial & Flow Technologies Performance
Move Water Q1’23 Industrial & Flow Technologies Performance Sales Segment Income $36M Flat $392M $36M ($7M) ($1M) $3M $65M $358M $5M 9% $1M* $52M ($25M) YoY $2M* 25% YoY ROS ROS 1 pt 10 pts 0 pts (2 pts) 9 pts 14.6% 8.1% (0.1%) (6.9%) 0.9% 16.6% (1 pt) Growth/ Q1’22 Volume Price Acq./Div. FX Q1’23 Q
Slide 15: Q1'23 Water Solutions Performance
Improve Water Q1’23 Water Solutions Performance Sales Segment Income $66M $272M $39M ($3M) ($1M) $4M $52M $11M* $206M $10M 32% ($12M) YoY 136% ($7M) $22M YoY $3M* ROS ROS (3 pts) 5 pts 32 pts (2 pts) 32 pts 10.8% 13.1% (0.6%) (5.7%) 1.7% 19.3% (1 pt) Growth/ Q1’22 Volume Price Acq./Div. FX Q1’23 Q1’
Slide 16: Q1'23 Pool Performance
Enjoy Water Q1’23 Pool Performance Sales Segment Income $435M $19M Flat $47M Flat $364M $116M $1M $116M $2M* $2M* ($1M) ($20M) (16%) ($117M) YoY Flat ROS ROS (27 pts) 11 pts 0 pts 0 pts (16 pts) 26.7% 9.6% 0.0% (4.5%) 0.1% 31.9% (1 pt) Growth/ Q1’22 Volume Price Acq./Div. FX Q1’23 Q1’22 FX Inflation
Slide 17: Transformation Expectations
Transformation Expectations Driving Margin Expansion 2022 2025T Around 4 Key Themes Pricing Excellence Material Costs Strategic Material Costs Sourcing OCOGS Operations Excellence OCOGS Other Organizational Other Expenses Effectiveness Expenses ROS Target ROS 18.6% ~23% 17 Q1 2023 Earnings Release.
Slide 18: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Debt Summary Cash Flow ($M) Q1 2022 Q1 2023 $2,492M* Maturity Net Income - Continuing Ops $119 $129 Amortization 7 14 $798M 32% Fixed 2025 – 2032 Subtotal $126 $143 Depreciation 13 15 Capital Expenditures (18) (17) $1,694M 68% Variable 2023 – 2027 Asset Sales - - Working
Slide 19: Q2 and Full Year 2023 Pentair Outlook
Q2 and Full Year 2023 Pentair Outlook • Confident in our long-term value creation Q2’23 FY’23 • Continued execution and implementation of our multi- Sales • Total Sales down ~1% to flat • Total Sales down ~2% to flat year Transformation initiatives • Full year outlook incorporates Income • Segment I
Slide 20: FY'23 Guidance at Midpoint
FY’23 Guidance at Midpoint* Sales Segment Income $4.1B ~5% ~Flat ~$4.1B ~5% ~$835M (~1%) $768M YoY (~10%) ~9% YoY ROS ROS 18.6% ~20.5% (1 pt) Growth/ FY’22 Volume Price Acq./Div. FX FY’23 FY’22 FX Inflation Prod. FY’23 Price/Acq. Total Pentair down ~1% Segment Income up ~9%; ROS ~20.5% • Industrial
Slide 21: We Believe Pentair is a Compelling Investment Opportunity
We Believe Pentair is a Compelling Investment Opportunity An industry leader with a diversified, innovative brand portfolio Transformation strategy to drive operational efficiencies and margin expansion ESG focus on People, Planet and Governance to provide smart, sustainable water solutions Favorabl
Slide 22: CEO Closing Comments
CEO Closing Comments ✓ Diversified portfolio and Transformation initiatives drove Q1 sales growth with margin expansion across all three segments ✓ We expect strength in our Industrial & Flow Technologies and Water Solutions segments as well as Transformation efficiencies to drive upside ✓ Raised th
Slide 23: Pentair
> PENTAIR
Slide 24: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
Appendix GAAP TO NON-GAAP MEASUREMENTS & RECONCILIATIONS
Slide 25: Reported to Adjusted 2023 Reconciliation
Reported to Adjusted 2023 Reconciliation Pentair plc and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Measures for the Year Ending December 31, 2023 Excluding the Effect of 2023 Adjustments (Unaudited) Actual Forecast First Second Full In millions, except per-share data Quarter Quarter
Slide 26: Reported to Adjusted 2022 Reconciliation
Reported to Adjusted 2022 Reconciliation Pentair plc and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Measures for the Year Ended December 31, 2022 Excluding the Effect of 2022 Adjustments (Unaudited) First Second Third Fourth Full In millions, except per-share data Quarter Quarter Quar
Slide 27: Reported to Adjusted 2019-2021 Reconciliations
Reported to Adjusted 2019-2021 Reconciliations Pentair plc and Subsidiaries Reconciliation of GAAP to Non-GAAP Financial Measures for the Years Ended December 31, 2019, 2020, and 2021 Excluding the Effect of Adjustments (Unaudited) In millions, except per-share data 2019 2020 2021 Net sales $ 2,957.
Slide 28: 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 Ended March 31, 2023 (Unaudited) Q1 Net Sales Growth Core Currency Acq. / Div. Total Total Pentair (2.6)% (1.1)% 6.6 % 2.9 % Industrial & Flow Technolo
Slide 29: 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 Three months ended ended March 31, March 31, In millions 2023 2022 Net cash used for operating activities $ (106.6) $ (131.5) C
Slide 30: ROIC Reconciliation
ROIC Reconciliation First Second Third Fourth First Quarter Quarter Quarter Quarter Quarter Dollars in millions 2022 2022 2022 2022 2023 Return on Invested Capital (ROIC) Segment income $ 172.1 $ 205.9 $ 206.9 $ 182.8 $ 211.0 Reported effective tax rate 15.4 % 15.7 % 9.6 % 5.0 % 14.6 % Adjusted effe
Slide 31: Last Twelve Months Adjusted EBITDA Reconciliation
Last Twelve Months Adjusted EBITDA Reconciliation Pentair plc and Subsidiaries Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA (Unaudited) Second Third Fourth First Last Quarter Quarter Quarter Quarter Twelve In millions 2022 2022 2022 2023 Months Net income from continuin