Slide 1: Q3 2023 Earnings Release
Q3 2023 EARNINGS RELEASE October 24, 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 Social Responsibility Highlights 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 NEW PRODUCTS 2019 baseline – with a goal of 50% reduction by evaluated using our new sustainability s
Slide 8: Executive Summary
Executive Summary Diversified water portfolio driving margin expansion Sales Segment Income ROS Adjusted EPS ✓ Q3’23 Performance: 21.0% − Sales down 4% $1.06B $207M $212M $0.99 19.6% $0.94 − Segment income up 3% $1.01B 3% 140 bps YoY YoY − ROS expanded 140 bps (4%) (5%) YoY YoY − Adjusted EPS decrea
Slide 9: Strategic Focus
Strategic Focus Enabling the right investments to drive growth, profitability and returns Deliver the Core: Make Our Build Our Future: Accelerate Commitments and Build a Performance through Transformation, Higher-Performing Culture Innovation and M&A Profitable Revenue Growth Transformation to AND P
Slide 10: Transformation Update
Transformation Update Early stages of Transformation journey have delivered results Sourcing Operational Excellence Excellence Pricing Organizational Excellence Effectiveness 10 Q3 2023 Earnings Release. @2023 Pentair. All Rights Reserved.
Slide 11: CEO Summary
CEO Summary Building a strong foundation to drive long-term growth and profitability Q3 2023 PERFORMANCE • Q3 delivered another strong quarter with significant ROS expansion • Manitowoc Ice acquisition continued to exceed expectations • Industrial & Flow Technologies and Water Solutions performance
Slide 12: Q3'23 Pentair Performance
Q3’23 Pentair Performance Sales Segment Income $1.06B $29M Flat $24M $7M $1.01B $29M $212M $56M $207M (4%) 3% YoY ($53M) YoY ($133M) ROS ROS (12 pts) 5 pts 2 pts 1 pt (4 pts) 19.6% 3.7% (0.1%) (5.0%) 2.8% 21.0% (1 pt) Growth/ Q3’22 Volume Price Acq./Div. FX Q3’23 Q3’22 FX Inflation Prod. Q3’23 Price
Slide 13: Q3'23 Industrial & Flow Technologies Performance
Move Water Q3’23 Industrial & Flow Technologies Performance Sales Segment Income $19M Flat $6M $400M $18M Flat $390M $18M $78M $66M 3% ($15M) YoY ($24M) 18% YoY ROS ROS (4 pts) 5 pts 0 pts 2 pts 3 pts 16.9% 4.2% (0.2%) (6.1%) 4.6% 19.4% (1 pt) Growth/ Q3’22 Volume Price Acq./Div. FX Q3’23 Q3’22 FX I
Slide 14: Q3'23 Water Solutions Performance
Improve Water Q3’23 Water Solutions Performance Sales Segment Income $26M $24M $1M $299M $10M $69M $275M $8M ($2M) ($9M) 9% $49M ($14M) YoY 40% YoY ROS ROS (3 pts) 3 pts 9 pts 0 pts 9 pts 17.9% 7.2% (0.7%) (5.1%) 3.7% 23.0% (1 pt) Growth/ Q3’22 Volume Price Acq./Div. FX Q3’23 Q3’22 FX Inflation Prod
Slide 15: Q3'23 Pool Performance
Enjoy Water Q3’23 Pool Performance Sales Segment Income $390M $109M Flat $29M Flat Flat $309M $6M $91M ($10M) (21%) ($14M) (17%) ($110M) YoY YoY ROS ROS (28 pts) 7 pts 0 pts 0 pts (21 pts) 28.0% 3.1% 0.0% (3.5%) 1.7% 29.3% (1 pt) Growth/ Q3’22 Volume Price Acq./Div. FX Q3’23 Q3’22 FX Inflation Prod.
Slide 16: Transformation Initiatives
Transformation Initiatives Driving Margin Expansion Around 4 Key Themes 2022 2025T Sales Pricing Excellence Sales Material Material Strategic Sourcing Costs Costs Operations Excellence OCOGS OCOGS Other Organizational Effectiveness Expenses Other Expenses Target ROS ~23% ROS 18.6% 16 Q3 2023 Earning
Slide 17: Transformation Runway
Transformation Runway Driving Margin Expansion Around 4 Key Themes; Target ROS of ~23% in 2025 Transformation Benefits Compound With Each Additional Wave Wave 1 Wave 1 Wave 1 Pricing Wave 2 Wave 2 Excellence Wave 3 Wave 1 Wave 1 Wave 1 Strategic Wave 2 Wave 2 Sourcing Wave 3 Wave 1 Wave 1 Wave 1 Ope
Slide 18: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Debt Summary Cash Flow ($M) $1,994M* Maturity Q3 2023 Q3 2022 YTD 2023 YTD 2022 Net Income - Continuing Ops $132 $115 $415 $387 Amortization 14 19 42 31 $1,100M** 55% Fixed 2025 – 2032 Subtotal $146 $134 $457 $418 Depreciation 15 13 44 40 $894M 45% Variable 2023 – 2027 Ca
Slide 19: Q4 and Full Year 2023 Pentair Outlook
Q4 and Full Year 2023 Pentair Outlook • Confident in our long-term value creation • Updating FY’23 adjusted EPS Q4’23 FY’23 guidance to $3.70-$3.75 Sales • Total Sales down ~3% to 4% • Total Sales down ~1% • Continued execution across all three segments Income • Segment Income up ~3% to 8% • Segment
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 ~10% to 11%; ROS ~
Slide 21: Q3 Progress Summary
Q3 Progress Summary Business continued to execute well; delivered on our commitments Diversified water portfolio and Transformation initiatives have driven significant margin expansion despite Pool’s volume decline Manitowoc Ice acquisition exceeded expectations Performance accountability across the
Slide 22: CEO Closing Comments
CEO Closing Comments Diversified water portfolio AND Transformation drove 1 significant margin expansion Updating full year adjusted EPS guidance reflecting 2 strong results year-to-date and confidence in our strategy Transformation initiatives are continuing to gain 3 momentum with benefits expecte
Slide 23: 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 24: Pentair
> PENTAIR
Slide 25: Appendix: GAAP to Non-GAAP Measurements & Reconciliations
Appendix GAAP TO NON-GAAP MEASUREMENTS & RECONCILIATIONS
Slide 26: 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 Fourth Full In millions, except per-share data Qua
Slide 27: 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 28: 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 29: 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 September 30, 2023 (Unaudited) Q3 Net Sales Growth Core Currency Acq. / Div. Total Total Pentair (7.3)% 0.6 % 2.3 % (4.4)% Industrial & Flow Tech
Slide 30: 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 Three months Nine months ended ended ended ended March 31, June 30, September 30, September 30, In millions 2023 2
Slide 31: ROIC Reconciliation
ROIC Reconciliation Third Fourth First Second Third Quarter Quarter Quarter Quarter Quarter Dollars in millions 2022 2022 2023 2023 2023 Return on Invested Capital (ROIC) Segment income $ 206.9 $ 182.8 $ 211.0 $ 234.2 $ 212.1 Reported effective tax rate 9.6 % 5.0 % 14.6 % 15.0 % 13.6 % Adjusted effe
Slide 32: 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) Fourth First Second Third Last Quarter Quarter Quarter Quarter Twelve In millions 2022 2023 2023 2023 Months Net income from continuin