Slide 1: Q2 2023 Earnings Release
Q2 2023 EARNINGS RELEASE July 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 net sales from continuing operations excluding: (1) the impact of currency translation and (2) the impact of net sales from
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: Making Better Essential
Making Better Essential Spotlighting Key Newly Released Social Responsibility Highlights Report Programs and Results 2022 CR Report Highlights (pentair.com) Making Progress in our Operations Innovating Solutions for a Better Planet 29% REDUCTION in Scope 1 and 2 GHG emissions compared to a 100% of N
Slide 8: Executive Summary
Executive Summary Diversified water portfolio drove record Q2 results* Sales Segment Income ROS Adjusted EPS ✓ Q2’23 Performance: 21.6% $234M $1.08B $1.03 − Sales growth of 2% $1.06B $1.02 19.3% $206M − Segment income up 14% 2% YoY 14% YoY 230 bps YoY 1% YoY − ROS expanded 230 bps − Adjusted EPS inc
Slide 9: Q2 Segment Highlights
Q2 Segment Highlights Sales growth in IFT and Water Solutions more than offset lower Pool volume Industrial & Flow Technologies Water Solutions Pool ✓ Record segment sales and ROS ✓ Strong growth in core sales and ✓ Significant margin expansion significant margin expansion driven by price, cost acti
Slide 10: CEO Summary
CEO Summary Building a strong foundation to drive long-term growth and profitability opportunities Strong First Half of 2023 • Record* Q2 results driven by our diverse water portfolio, strong execution and Transformation • Industrial & Flow Technologies and Water Solutions performance helped offset
Slide 11: Q2'23 Pentair Performance
Q2’23 Pentair Performance Sales Segment Income $95M $1.08B $65M $1.06B ($1M) ($1M) $4M $234M $80M $206M ($40M) 2% YoY 14% YoY ($155M) ROS ROS (14 pts) 7 pts 9 pts 0 pts 2 pts 19.3% 5.6% 0.0% (3.7%) 0.4% 21.6% (1 pt) Growth/ Q2’22 Volume Price Acq./Div. FX Q2’23 Q2’22 FX Inflation Prod. Q2’23 Price/A
Slide 12: Q2'23 Industrial & Flow Technologies Performance
Move Water Q2’23 Industrial & Flow Technologies Performance Sales Segment Income $38M Flat Flat $412M Flat $35M $377M $2M $75M ($3M) 9% $59M ($21M) YoY 27% YoY ROS ROS (1 pt) 10 pts 0 pts 0 pts 9 pts 15.7% 7.5% (0.1%) (5.5%) 0.6% 18.2% (1 pt) Growth/ Q2’22 Volume Price Acq./Div. FX Q2’23 Q2’22 FX In
Slide 13: Q2'23 Water Solutions Performance
Improve Water Q2’23 Water Solutions Performance Sales Segment Income $95M $336M $47M $8M $75M ($1M) ($1M) $7M 51% ($12M) $222M $13M 130% YoY $33M YoY ROS ROS 6 pts 3 pts 43 pts (1 pt) 51 pts 14.6% 10.1% (0.4%) (5.6%) 3.5% 22.2% (1 pt) Growth/ Q2’22 Volume Price Acq./Div. FX Q2’23 Q2’22 FX Inflation
Slide 14: Q2'23 Pool Performance
Enjoy Water Q2’23 Pool Performance Sales Segment Income $464M $137M Flat $35M Flat Flat $334M ($17M) $105M ($5M) (28%) ($10M) (23%) ($165M) YoY YoY ROS ROS (36 pts) 8 pts 0 pts 0 pts (28 pts) 29.5% 5.1% 0.0% (1.1%) (2.1%) 31.4% (1 pt) Growth/ Q2’22 Volume Price Acq./Div. FX Q2’23 Q2’22 FX Inflation
Slide 15: Pentair Pool Sell-in vs. Estimated Industry Sell-through
Pentair Pool Sell-in vs. Estimated Industry Sell-through Sell-in and Sell-through imbalance due to high pandemic demand and supply chain disruption 2024 Expectations Inventory correction Sell-in and Sell-through rebalance • Record inflation and supply chain ~$150M disruption drove unique inventory l
Slide 16: Transformation Initiatives
Transformation Initiatives Driving Margin Expansion Around 4 Key Themes 2022 2025T Sales Pricing Excellence Sales Material Material Strategic Sourcing Costs Costs Operations Excellence OCOGS OCOGS Other Organizational Effectiveness Expenses Other Expenses Target ROS ~23% ROS 18.6% 16 Q2 2023 Earning
Slide 17: Transformation Runway
Transformation Runway Driving Margin Expansion Around 4 Key Themes; Target ROS of ~23% in 2025 Transformation Benefits Compound With Each Additional Wave Wave 1 Wave 1 Wave 1 Pricing Wave 2 Wave 2 Excellence Wave 3 Wave 1 Wave 1 Wave 1 Strategic Wave 2 Wave 2 Sourcing Wave 3 Wave 1 Wave 1 Wave 1 Ope
Slide 18: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Debt Summary Cash Flow ($M) Q2 2023 Q2 2022 $2,115M* Maturity Net Income - Continuing Ops $154 $153 Amortization 14 6 $1,099M** 52% Fixed 2025 – 2032 Subtotal $168 $159 Depreciation 14 14 Capital Expenditures (18) (22) $1,016M 48% Variable 2023 – 2027 Asset Sales 5 3 Work
Slide 19: Q3 and Full Year 2023 Pentair Outlook
Q3 and Full Year 2023 Pentair Outlook • Confident in our long-term value creation • Increasing full year guide at Q3’23 FY’23 midpoint to $3.70 from $3.65 Sales • Total Sales down ~7% • Total Sales down ~2% to flat • Continued execution across all three segments Income • Segment Income down ~1% to 6
Slide 20: FY'23 Guidance at Midpoint
FY’23 Guidance at Midpoint* Sales Segment Income $4.1B ~5% ~Flat ~$4.1B ~5% ~$850M (~1%) $768M YoY (~10%) ~11% YoY ROS ROS ROS 18.6% ~20.9% (1 pt) Growth/ FY’22 Volume Price Acq./Div. FX FY’23 FY’22 FX Inflation Prod. FY’23 Price/Acq. Total Pentair sales down ~1% Segment Income up ~11%; ROS ~20.9% •
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 water portfolio Transformation initiatives to drive operational efficiencies and margin expansion ESG focus on People, Planet and Governance to provide smart, sustainable water solutions Favor
Slide 22: CEO Closing Comments
CEO Closing Comments Diversified water portfolio AND Transformation drove 1 record* Q2 sales and income, with margin expansion across all three segments Raised the midpoint of our full year adj. EPS guidance 2 reflecting our confidence in the sustainability of our performance Transformation initiati
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 Third Full In millions, except per-share data Quarter Qu
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 June 30, 2023 (Unaudited) Q2 Net Sales Growth Core Currency Acq. / Div. Total Total Pentair (7.0)% (0.2)% 8.9 % 1.7 % Industrial & Flow Technolog
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 Six months ended ended ended March 31, June 30, June 30, In millions 2023 2023 2023 Net cash (used for) provided b
Slide 30: ROIC Reconciliation
ROIC Reconciliation Second Third Fourth First Second Quarter Quarter Quarter Quarter Quarter Dollars in millions 2022 2022 2022 2023 2023 Return on Invested Capital (ROIC) Segment income $ 205.9 $ 206.9 $ 182.8 $ 211.0 $ 234.2 Reported effective tax rate 15.7 % 9.6 % 5.0 % 14.6 % 15.0 % Adjusted eff
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) Third Fourth First Second Last Quarter Quarter Quarter Quarter Twelve In millions 2022 2022 2023 2023 Months Net income from continuin