ROBUST STANDARD OPERATING MODEL Pentair Integrated Management System PIMS Growth Lean Talent Enterprise Management Rapid Growth 3D Process Process for Innovation The Way We Drive Our Global Talent Value to Our Process to Select, The Tools and Language Works in Concert with Customers Throughout Develop, and Retain to Drive Above-Average Rapid Growth to Bring All Our Business Top Talent Growth Consistently New Products to Market Processes by Reducing Through Three Key Phases: Waste and • Discover Improving Speed • Develop and Efficiency • Deploy Proven Operating Disciplines 14 2013 Houston Investor & Analyst Event PENTAIR
’01 – ‘13 TOTAL STOCK RETURN AGAINST SELECT INDUSTRIALS 1324% 705% 655% 472% 341% 265% 244% 198% 187% 164% 156% 146% 36% S&P 500 EMR MidCap HON MMM DOV ITW UTX DHR ETN PNR ROP AME 400 (1/1/2001 to 11/07/2013) Pentair Performance is Firmly in the Upper Quartile 15 2013 Houston Investor & Analyst Event PENTAIR
TRANSFORMATION … MORE GLOBAL $8.4B $7.4B 27%+ ~25% ~33% ~35% $2B Fast Growth 5% Other Dev. 15% ~40% 80% ~40% U.S. 2013F 2015T 2001 Portfolio Diversification to “Control Destiny “ 16 2013 Houston Investor & Analyst Event PENTAIR
FAST GROWTH REGIONS Focus Areas For Growth $8.4B+ ~$7.4B $7.3B $2.3B+ Fast • Grow at GDP+ (~10%+ / Year) ~$1.8B $1.7B Growth • More Marketing Talent $5.6B ~$5.7B $6.1B+ Developed • Each Vertical Has Focus Area … Energy = Middle East … 2012 2013F 2015T • Continue to Localize Products Current Strength • Scale and Resource Numbers • More Cross Selling / • Good Manufacturing / Service Footprint Collaboration • Starting to Build Brand Awareness • Win Right Culture Execute on Vision to Make Fast Growth Regions Work 17 2013 Houston Investor & Analyst Event PENTAIR
STANDARDIZATION G&A Reductions Through Lean Key Synergy Initiatives: ~$175M Funnel Enterprise to Fuel Growth • Operating Expense as % of Sales … Goal to Drop ~200 basis points 2013 to 2015 • Drive 2013 Savings (Repositioning) and >22% Standardization Targets for 2014, 2015 Opex. ~22% and Beyond: ~20% − Major Repositioning − Aggressive ERP and Back-office Consolidations (Most Savings 2014+) − G&A: From 8% of Sales to 6% (Legacy PNR Businesses are Under 4%) − ERP: Reduce from ~66 to ~16 2012 2013F 2015T − Reporting Entities Reduced by 65% − Other: Reduce Payroll / Acctg. Centers Significant Savings Opportunity in Operating Expenses 18 2013 Houston Investor & Analyst Event PENTAIR
MARGIN EXPANSION Operating Margins Expanding Margins >16% • Pricing − Execute on Pricing Management ~13% ~11% − Targeting >1% of Sales • Cost Productivity − PIMS: Rapid Adoption / Implementation − Growth While Leveraging Structure − Productivity > Inflation & Mix 2012 2013F 2015T • Standardization (previous slide) Key Drivers 2012 2013 − $90M Cost-Out in 2013 Pricing − 2 Points of G&A Reduction Targeted by 2015 Cost Productivity − Reduce Complexity and Continue Functional Standardization Standardization Robust Margin Expansion Highlights Execution Capabilities 19 2013 Houston Investor & Analyst Event PENTAIR
OUR SUCCESS A Stronger Portfolio… Global Leadership Our Strategies are Working… 2013 a Great Example Trends in Our Favor… Must Seize Opportunities New Growth Framework… to Drive More Organic Growth Cultural Transformation… Energized and Committed Positioned Well to be the Next Great Industrial Company 20 2013 Houston Investor & Analyst Event PENTAIR
OUR FUTURE: POSITIONING FOR DIFFERENTIATED GROWTH • In Strong Position with Mega Trends • Maximize Growth with Platform / Vertical Prioritization • Driving in New Geographies and Growth Capabilities Driving Core Important … But Must Pursue Differentiation 21 2013 Houston Investor & Analyst Event PENTAIR
CURRENT TRENDS Developed Regions Fast Growth Regions US: Steady Recovery (Bright Spot) FGR: Mixed but Slowed in ’12 & ’13 + Housing Back Strong + China 5-yr Plan Attractive + Petrochemical Opportunity +/– China Slow but Still Important – Fiscal Uncertainty – India, Brazil Bouncing Around Europe: Could Be Good Growth Resource Rich: Infrastructure Build + Stabilizing Now + Significant Energy Investment + Could Surprise to Upside + Adding Lots of Jobs – Difficult Decisions Ahead – Mining Slow … For Now In Position to Take Advantage of Trends U.S. Housing Remains Strong and Europe Improving Continuing to Add Talent to Key Growth Regions PIMS Executes on Our Strategies Aggressively Generally Good-To-Improving Environment 22 2013 Houston Investor & Analyst Event PENTAIR
THE TRENDS INFORMING OUR STRATEGIC THINKING The Nexus of Demands Driving “Food – Water – Energy” • Changing Population & Demographics • Increasing Energy Demands • Shifts in Food Consumption • Water Crises Driven by the “New-New” World 23 2013 Houston Investor & Analyst Event PENTAIR
GROWTH* OVER THE NEXT TWO DECADES • More Food/Protein Consumption • Increased Housing Needs • Increased Power Consumption Today: 7B Today: 2B Today: ~55% • Increased Water Consumption 9B 5B 75% • Middle-Class Aspirations World’s Global Middle Population in Population Class APAC & Africa • More Industrial Production • Water / Waste Water Infrastructure • More Cars, Rail, Airplanes Today: $20T Today: $50T Today: 5 out of 10 $60T $110T 7 of 10 • Increased Oil & Gas Demand • Better Living Conditions Middle Class World GDP More People Living in Purchasing than Doubles Urban Areas Power Triples Drives Much of Our Thinking and Strategy 24 2013 Houston Investor & Analyst Event PENTAIR * PNR Estimates
PENTAIR: POSITION TO BENEFIT FOOD WATER ENERGY + Ag Pumps / Spray + Global Pump + Leader in Valves + Aquaculture + Global Filtration + Leader in Thermal + Food & Bev Process + Flood Control + Separations Technology + Food Service + Advanced Systems + Service Model - Not Yet Global Ag - Limited 50Hz Pump - Limited Energy Pumps Well Positioned 25 2013 Houston Investor & Analyst Event PENTAIR
ORGANIZING FOR SUCCESS – CURRENT ALIGNMENT Executive Leadership Team (ELT) CEO + COO + CFO + Growth + HR + Legal/Compliance 3 Reporting Segments Valves & Water & Fluid Solutions Technical Solutions Controls 7 Global Business Units Flow Aquatic Filtration & Valves & Equipment Thermal WES Technologies Systems Process Controls Protection Management 24 Operating Platforms Standard Pumps Water Services Pool Advanced Filtration Quarter Turn Electrical/Cooling Adv. Ind. Solutions Engineered Pumps Water Transmission Aquaculture Oil & Gas Separation Pressure Relief Electronics Bldg. Infra. Solutions Water Purification Ag Spray Water Dynamics Gate, Globe, & Check Mega-Projects Food Service Clean Air Systems Actuation & Controls F & B Processing Fluid Motion Platforms are Where We Serve Customers … GBU’s + ELT Aligned to Improve Growth and Productivity Trajectory 26 2013 Houston Investor & Analyst Event PENTAIR
ALIGNING PLATFORMS TO DRIVE GROWTH Pressure Relief Quarter Turn Adv. Ind. Solutions Oil & Gas Separation Water Transmission ENERGY Actuation & Control Gate, Globe, & Check Mega-Projects Electrical/Cooling Adv. Ind. Solutions Quarter Turn Gate, Globe, & Check Advanced Filtration Water Services INDUSTRIAL Pressure Relief Actuation & Control Electrical/Cooling Clean Air Systems RESI & Standard Pumps Fluid Motion Bldg. Infra. Solutions COMMERCIAL Pool Water Purification INFRA- Water Transmission Water Dynamics Electronics STRUCTURE Engineered Pumps Advanced Filtration FOOD & Aquaculture Food Service BEVERAGE Ag Spray F & B Processing Platforms Aligned with Key Growth Verticals 27 2013 Houston Investor & Analyst Event PENTAIR
MAINTAINING LEADERSHIP IN ENERGY WAYS TO WIN Pressure Relief Actuation & Control Product Innovation for Critical 1 Applications – Sub-sea, Cryogenic Quarter Turn 2013F: ~$2.1B Gate, Globe, & Check Expanded Solutions & Service 2 ~75% Direct Sales Offerings – HRT, HIPPS, Rentals Adv. Ind. Solutions ~25% Indirect Sales ~225 Sales Engineers Mega-Projects Fast Growth Region Expansion – 3 ~600 Distributors Mid-East, China, Russia / CIS, Africa Oil & Gas Separation Electrical/Cooling 4 Global Strategy Serving Local Needs Water Transmission PIMS … Best in Class Quality, 5 Delivery, and Standardization Pentair’s Capabilities and Solutions 28 2013 Houston Investor & Analyst Event PENTAIR
EXPANDING OFFERINGS IN INDUSTRIAL WAYS TO WIN Adv. Ind. Solutions Product Innovation for Severe Electrical/Cooling 1 Service Applications Pressure Relief 2013F: ~$1.9B Quarter Turn Expanded Service Offerings – 2 ~55% Direct Sales Cooling Audits, Plant Services Gate, Globe, & Check ~45% Indirect Sales ~300 Sales Engineers Actuation & Control Fast Growth Region Expansion – ~2000 Distributors 3 Russia, Middle-East, China Clean Air Systems Water Services Maximize NA Distribution Channels 4 Advanced Filtration PIMS … Best in Class Quality, 5 Delivery, and Standardization Led by North American Industrial Recovery 29 2013 Houston Investor & Analyst Event PENTAIR
MAINTAINING LEADERSHIP IN RESIDENTIAL & COMMERCIAL WAYS TO WIN Led by the US Residential Recovery 1 Pool 2013F: ~$1.9B Fast Growth Region Expansion – Standard Pumps 2 ~5% Direct Sales Middle East & Southeast Asia ~95% Indirect Sales Fluid Motion ~500 Sales Engineers Expand Eco-Select Offerings and Water Purification ~1200 Distributors 3 Execute Hybrid DI Bldg. Infra. Solutions Product Innovation – Energy 4 Efficiency PIMS … Best in Class Quality, 5 Delivery, and Standardization Taking Advantage of Residential / Commercial Recovery 30 2013 Houston Investor & Analyst Event PENTAIR
ESTABLISHING LEADERSHIP IN INFRASTRUCTURE WAYS TO WIN Global Flood Control Leadership 1 Water Transmission 2013F: ~$1B Water Dynamics Fast Growth Region Expansion – 2 ~70% Direct Sales Middle East, SE Asia, Africa ~30% Indirect Sales Engineered Pumps ~200 Sales Engineers Establish Membrane Technology Electronics ~900 Distributors 3 Leadership – Nano Filtration Advanced Filtration More Systems / Solutions With Our 4 Products PIMS … Best in Class Quality, 5 Delivery, and Standardization Selectively Choose Where to Play 31 2013 Houston Investor & Analyst Event PENTAIR
EXPANDING LEADERSHIP IN FOOD & BEVERAGE WAYS TO WIN Aquaculture Leadership 1 Aquaculture 2013F: ~$700M Fast Growth Region Expansion – 2 ~60% Direct Sales Ag Spray Lead in Africa ~40% Indirect Sales F & B Processing ~40 Sales Engineers Application Expertise – Breweries, ~60 Distributors 3 Beverage Systems Dairy, etc. Globalize Agriculture Strategy 4 PIMS … Best in Class Quality, 5 Delivery, and Standardization Food & Bev Offers the Fastest Growth for Pentair 32 2013 Houston Investor & Analyst Event PENTAIR
OUR CURRENT LANDSCAPE – FAST GROWTH REGIONS Eastern Europe $200M China Middle East 65 $390M $350M - 2,860 1,150 6 2 Latin America India $360M $100M 3,340 1,340 Africa South East Asia 6 4 $100M $200M 60 400 1 2 Total FGRs - Additional Info: Legend: Sales & Mktg Headcount 950 2013F Ship-to-Sales R&D Headcount 350 Headcount # of Distributors & Agents 1,100 Manufacturing Sites We Have Real & Global Capabilities 33 2013 Houston Investor & Analyst Event PENTAIR
= Priority / Focus Area FOCUS AREAS – BIG BETS Middle Brazil / Eastern China SEA Africa India East LAM Europe ENERGY RESI & COMMERCIAL FOOD & BEVERAGE INFRA- STRUCTURE INDUSTRIAL Several Ways To Win … Increasing Odds by Prioritizing 34 2013 Houston Investor & Analyst Event PENTAIR
= Priority / Focus Area FOCUS AREAS – ADDITIONAL PRIORITIES = Opportunity / Core Middle Brazil / Eastern China SEA Africa India East LAM Europe ENERGY RESI & COMMERCIAL FOOD & BEVERAGE INFRA- STRUCTURE INDUSTRIAL … Without Forgetting the Other Nice Opportunities 35 2013 Houston Investor & Analyst Event PENTAIR
OUR SUCCESS A Stronger Portfolio… Global Leadership Our Strategies are Working… 2013 a Great Example Trends in Our Favor… Must Seize Opportunities New Growth Framework… to Drive More Organic Growth Cultural Transformation… Energized and Committed Positioned Well to be the Next Great Industrial Company 36 2013 Houston Investor & Analyst Event PENTAIR
PENTAIR … DRIVING HIGH PERFORMANCE HOW WE DIFFERENTIATE PENTAIR • Purpose, Vision & Strategic Priorities STRATEGY A • Value Proposition & Competitive Advantage L • Controlling Our Destiny I G HOW WE EXECUTE N PROCESS & • Standard Operating Model … PIMS M STRUCTURE • Organization Design … Corporate, GBUs, Fast Growth Regions E N • Functional Excellence … Standards & Practices T HOW WE WIN RIGHT CULTURE & • Win Right … Pentair Values TALENT • Leadership Behaviors … Top Talent • How We Work Together Three Levers … Aligned To Achieve Our Goals 37 2013 Houston Investor & Analyst Event PENTAIR
PENTAIR … WHAT WE STAND FOR HOW WE MAKE A DIFFERENCE IN THE WORLD Purpose Mission & Vision We Improve the Quality of Life of People Be the Next Great Industrial Company Around the World Destination Company for Customers, Top Talent, & Shareholders HOW WE ACHIEVE OUR VISION Strategic Principles Operating Principles … PIMS • Invest in Attractive Markets … Where We Compete • Growth • Control Our Destiny … How We Compete • Talent Management — “Right-To-Left” Thinking & Actions • Lean Enterprise — Positioning to Win HOW WE WIN RIGHT WIN RIGHT Customer First Positive Energy Accountability for Performance Respect and Teamwork Innovation and Adaptability Absolute Integrity 30,000 People Understand “What”, “How” and “Why” 38 2013 Houston Investor & Analyst Event PENTAIR
ORGANIZING FOR SUCCESS – NEW ALIGNMENT Executive Leadership Team CEO + Executive Officers + Presidents = Aligned Priorities & Agenda 5 Global Business Units Executing the PNR Priorities as Strategic and Operating Leaders 4 Executive Phil Pejovich Karl Frykman Netha Johnson David Dunbar Alok Maskara Officers Driving ~$1.7B* ~$0.7B* ~$1.1B* ~$2.4B* ~$1.7B* PNR-Wide Flow Aquatic Filtration & Valves & Technical Lean Enterprise Technologies Systems Process Controls Solutions Executing Growth & Productivity of Prioritized Platforms John Stauch/CFO/IT ERP’s, Lean Enterprise, and Financial Performance Driving G&A Transformation Todd Gleason/Growth Aligned and Prioritized Strategies for Growth Driving Marketing, Strategy, and Sales Excellence Fred Koury/HR Deployment of Top Talent Against Most Important Priorities Global Talent Management Angela Lageson/Legal Ensuring Global Compliance Global Compliance & Legal Simplified & Aligned to Drive Growth & Productivity 39 2013 Houston Investor & Analyst Event * Estimated 2013 sales. PENTAIR
VALUE CREATION: 2015 GOALS ~$5.00 ~$0.68 ~$1.80 ~$0.80 IST ~$1.00 ~$2.73 ~($0.21) ~$2.52 Base 2012* 2012* 2012* Capital 2015 Pro Forma Performance Pre-Deal Pro Forma Allocation Goal Impact Road Map to ~$5.00 EPS Goal 40 2013 Houston Investor & Analyst Event * 2012 adjusted results and 2013 guidance on an adjusted pro forma basis, see appendix for reconciliation of non GAAP measures. PENTAIR
THERMAL MANAGEMENT PENTAIR INVESTOR & ANALYST EVENT Alok Maskara President, Pentair Thermal Management November 13, 2013 41 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Thermal Management is a Great Addition to the Pentair Portfolio • Heat Tracing is an Attractive Industry with Favorable Mega Trends • Thermal Management Expects to Deliver Above Average Growth and has Mega Project Upside • Integration is Yielding Desired Synergies and PIMS is Expected to Accelerate Margin Expansion Thermal: Proud to be Part of Pentair! 42 PENTAIR 2013 Houston Investor & Analyst Event
WE PROTECT PIPES FROM FREEZING Sometimes Solving Simple Problems …. but Mostly Solving Difficult Challenges Where We Began and Our #1 Application 43 PENTAIR 2013 Houston Investor & Analyst Event
HEAT TRACING: HOW WE PROTECT PIPES Heat-trace Panel (may include circuit breakers, controllers and alarms) Remote Configuration And Monitoring Transformer with DigiTrace Supervisor software Lighted End Seal Heat Tracing Maintains Temperature of Fluids by Insulation Systems Replacing Heat Lost Through Thermal Insulation Power Connection on Pipes, Vessels, and Heating Cable Associated Equipment Pentair Thermal Provides Complete Solution to Customers 44 PENTAIR 2013 Houston Investor & Analyst Event
OUR VALUE PROPOSITION Leading Service and Brand Reputation Global Field Service Network Customer Service Product Brand – Raychem Service Brand – Tracer Leading Product Attributes Product Quality Portfolio to Meet Customer’s Need Innovative Technology Product Reliability Ease of Use A Leader in Brand Equity, Product Quality, Innovation, and Service 45 PENTAIR 2013 Houston Investor & Analyst Event
BUSINESS OVERVIEW By Geography By Product / Service By Vertical 100% = ~$0.7B* 100% = ~$0.7B* 100% = ~$0.7B* Other Other Energy – Fast Growth Power Power Regions Chemical Heat Tracing Energy – Services Residential & & Specialty Oil & Gas Commercial & Developed North America Commercial Cables Residential Non-NA Oil & Gas Control, Industrial – Monitoring, Chemical & Sensing • Service Enables Customer to • North America Growth • Oil & Gas Driven by Process Receive “Warm Pipe Guarantee” Driven by Oil Sands and Temp. & Freeze Protection Bakken • Control Monitoring and Sensing • Chemical Driven by Current Expands Our Core Product • Fast Growth Regions Driven Natural Gas Price Dynamics by Russia, China, Indonesia • Heat Tracing and Specialty • Commercial Driven by Safety Cables Remains Our Core • Developed Non-NA Driven Applications and Luxury Needs Product by Scandinavia & Offshore Attractive Growth Portfolio 46 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
THERMAL: GO-TO-MARKET OVERVIEW By Channel By Sub Platforms 100% = ~$0.7B* 100% = ~$0.7B* Mega Projects Indirect (Distributors, Building & Wholesale) Infrastructure Solutions Advanced Direct Sales Industrial Solutions • Advanced Industrial Solutions: • Direct Sales are Sales Through Our ‒ Oil & Gas 60%, Chemical 20%, Other own Employees or Exclusive Reps. This Industrial 20% is Our Typical Go-to-Market Approach ‒ Green Field 30% vs. MRO 70% • Indirect Sales Through Distributors ‒ EPC 20%, EP 50%, P only 30% are Used for Harder to Reach End • Building & Infrastructure Solutions : Users Such as Light Commercial and ‒ Commercial 50%, Infra 30%, Resi 20% Fast Growth Regions ‒ Mostly Product Only Sales • Mega Projects ‒ Oil & Gas Projects that are $100M+ Broad and Diversified Portfolio 47 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
THERMAL: ADVANCED INDUSTRIAL SOLUTIONS Strong Industrial and Refining Position with Opportunities in Mid/Upstream 48 PENTAIR 2013 Houston Investor & Analyst Event
EXAMPLE: QATARGAS SULPHUR TRANSFER LINE • Application: – 35Km, Dual, 12-inch Sulphur Pipeline to Transfer Molten Sulphur from 11 Producers to a Pelletizer Facility – Temperature Maintain at 135 C with Tight Allowable Range from 125 C to 145 C • Scope: Heating System Design, Specification, Engineering, Procurement, Construction, and Commissioning Sulphur flow • Pentair Sulphur Flow Thermal Technology simulation Includes Fiber Optic Temperature Sensing • Future Opportunities Could Include MRO Services and Leak Detection A World Leader in Heated Sulphur Pipelines 49 PENTAIR 2013 Houston Investor & Analyst Event
THERMAL: BUILDING & INFRASTRUCTURE SOLUTIONS Building & Infrastructure Solutions: Utilizing Pentair Channels 50 PENTAIR 2013 Houston Investor & Analyst Event
EXAMPLE: BEIJING CAPITAL AIRPORT • Application : – 48Km of Heat Tracing to Prevent Snow and Ice from Forming on the Guideway and Running Surfaces of the Automated People Mover • Scope: – Heating System Design, Specification, and Material Supply Snow Melting System for Tracks 51 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Thermal Management is a Great Addition to the Pentair Portfolio • Heat Tracing is an Attractive Industry with Favorable Mega Trends • Thermal Management Expects to Deliver Above Average Growth and has Mega Project Upside • Integration is Yielding Desired Synergies and PIMS is Expected to Accelerate Margin Expansion Thermal: Proud to be Part of Pentair! 52 PENTAIR 2013 Houston Investor & Analyst Event
ATTRACTIVE MEGA TRENDS Energy Infrastructure • Increased Extraction of Heavy Crude • Infrastructure Investments Especially (Oil Sands, Africa, Russia, etc.) Needs in Colder Climate (North China, Heat Tracing Russia / CIS) • Growth in Oil Extraction in Colder • Increased Safety Focus Driving Climate Requires Heat Tracing Demand for Fire Alarm and Fire Sprinkler System Protection • Lower US Natural Gas Prices Increasing Petrochemical Investments Environment Quality of Life • Clean Water and Energy Concerns • Growing Demand for Radiant Floor Pushing More Customers Towards Heating Continues (Electric Small Electrical Heat Tracing vs. Steam Areas / Hydronic Large Areas) • Pipeline Leak Environmental Impact • Commercial Building Construction Driving Growth of More Accurate Driving Demand for Gutter Freeze Wire Based Leak Detection Protection and Hot Water Technology Temperature Applications Global Trends Contribute to Thermal’s Growth Outlook 53 PENTAIR 2013 Houston Investor & Analyst Event
ADVANCED INDUSTRIAL SERVICES LANDSCAPE(TAM) Product TAM = $3.5Bn Services TAM = $14.0Bn Total = $400M $13,950M $1,150M $2,000M $17,500M 100% K 90 ders 100 stem Provi PLC/DCS Sy 80 Small J 818 Regional Providers 713 Small Regional Providers 191 60 Other EPCs, Electrical & Mechanical Contractors 11,950 40 Small Larger Regional Providers 100 Regional C 30 Providers A B 70 922 35 20 A 108 P TM PTM 74 129 0 Heat Steam Electric & Steam HT Services Control, Tracing Monitoring Products & Specialty &Sensing Wiring Pentair Thermal Management Source: PNR Estimates AIS Business More Global in Nature than BIS 54 PENTAIR 2013 Houston Investor & Analyst Event
BUILDING & INFRASTRUCTURE LANDSCAPE (TAM) Electric TAM = $3.4Bn Hydronic TAM = $6.1Bn Total = $1,020M $680M $1,700M $3,050M $3,050M $9,500M 100% Global Installers 350 Small 80 Regional Small Global System Designers Small Regional Providers 1,530 Regional Providers 150 Providers 497 375 60 Hydronic Service Providers 3,050 Regional Installers LDetection 20 U 20 900 Larger Regional Providers 500 T 30 40 S 30 W 40 A 30 Q 42 Q 10 V 370 O 65 O 85 20 N 96 N 64 P 650 Regional System Designers 300 PTM 64 0 Heat Tracing Control, Electric Hydronic Product Hydronic Services & Specialty Monitoring Services Wiring & Sensing Pentair Thermal Management Source: PNR Estimates Highly Fragmented, Services Led By Regional Players 55 PENTAIR 2013 Houston Investor & Analyst Event
KEY COMPETITORS Advanced Industrial Solutions Building & Infrastructure Solutions Fragmented Industry Structure 56 PENTAIR 2013 Houston Investor & Analyst Event
BROAD AND DIVERSIFIED CUSTOMER BASE Top 20 Customers by Type Distributors Oil & Gas Top 20 Customers EPC ~30% Remaining 1000+ Customers Top 20 Customers by Geography ~70% APAC FGR US Canada Gross Margin Average %* W. Europe 41 42.3 Top 20 Customers Total Customer Base * 2013 estimate Top 20 Customers Make up Only 30% of Total Revenues 57 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Thermal Management is a Great Addition to the Pentair Portfolio • Heat Tracing is an Attractive Industry with Favorable Mega Trends • Thermal Management Expects to Deliver Above Average Growth and has Mega Project Upside • Integration is Yielding Desired Synergies and PIMS is Expected to Accelerate Margin Expansion Thermal: Proud to be Part of Pentair! 58 PENTAIR 2013 Houston Investor & Analyst Event
THERMAL: PERFORMANCE OVERVIEW Sales ($M) + mega Drivers of 6% Anticipated Future Growth projects ~6-10% 735+ 669 656 637 • Services (Excluding Mega Projects) Mega Mega • Fast Growth Regions • Innovative New Products 2011 2012 2013F 2015T Operating Income ($M) Future Margin Growth: Operational Excellence + mega projects 150+ • Integration Synergies 105 87 • Material and Labor Productivity 67 • Standardization to Lower G&A - 35% Reduction in the Next 3 Years 2011 2012 2013F 2015T ROS 10.5% 13% 16% 20.5% Strong Earnings Increase, Steady Base Business Growth 59 PENTAIR 2013 Houston Investor & Analyst Event
THERMAL: 2012 – 2015 GROWTH DRIVERS Services Fast Growth Regions Innovation Revenue Revenue Vitality $70M $80M $105M 2012 2015T 2012 2015T 2012 2015T Key Drivers Key Drivers Key Drivers • Engineering Services • Russia / CIS • Applications • Field Construction Services • China • Basic Wire and Cables • MRO Services • Middle East and Africa • Control, Monitoring, and Sensing • Remote Monitoring Services RGP Driven Detailed Growth Playbook 60 PENTAIR 2013 Houston Investor & Analyst Event
THERMAL GLOBAL FOOTPRINT THERMAL GLOBAL FOOTPRINT Pentair Service Center Example: Fort McMurray Year of Construction: 2007 • Employees: 50 Plus up to 500 Field Personnel for Projects • • Size: 24K sq ft • Pentair Annual Revenues: ~ $50 - 100 M • Cross-GBU Opportunities – Currently Shared with Pentair Valves & Controls – Future Opportunity for Water & Fluid Solutions Our Strength: 50+ Global Sales & Service Centers 61 PENTAIR 2013 Houston Investor & Analyst Event
FAST GROWTH REGIONS: RUSSIA / CIS EXAMPLE Revenue ($M) 39.1 34.5 25.6 23.7 18.4 16.2 Tuymen 12.4 5.4 5.1 5.7 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Broad Coverage, Strong Growth 62 PENTAIR 2013 Houston Investor & Analyst Event
HIGHLIGHTS OF POTENTIAL PROJECT FUNNEL NWR - Canada NWR - Canada Fort Hills - Canada Fort Hills - Canada Chevron Gorgon - Australia Chevron Gorgon - Australia 50k bbd Refinery Near Edmonton Suncor Operated Mine with 160k Marine LNG Offloading Facility. Sanctioned in 2012 bpd Bitumen Froth Capacity Liquid Fuel and Water Leak Detection Opportunity Goliat – Korea / Norway Goliat – Korea / Norway Bayer Golden Tiger - China Bayer Golden Tiger - China Seadrill MOSS CS60 - Singapore Seadrill MOSS CS60 - Singapore Heat Management System for Winterized Semi-Submersible Drilling Korean Built Floating Production, Expansion at Bayer Material Rig Built in Singapore for North Storage and Offloading Facility for Science Facility in the Shanghai Atlantic Deployment. Includes Heat Barents Sea. Pentair Supplied Heat Chemical Industry Park Tracing, Anti-Icing and De-Icing Tracing and Anti-Icing/De-Icing Actively Pursuing Global Projects 63 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Thermal Management is a Great Addition to the Pentair Portfolio • Heat Tracing is an Attractive Industry with Favorable Mega Trends • Thermal Management Expects to Deliver Above Average Growth and has Mega Project Upside • Integration is Yielding Desired Synergies and PIMS is Expected to Accelerate Margin Expansion Thermal: Proud to be Part of Pentair! 64 PENTAIR 2013 Houston Investor & Analyst Event
ONE PENTAIR: INTEGRATION UPDATE India Office Consolidation Thermal Site at Legacy Pentair Brazil China Plant Consolidation $400K Annual Savings + Growth Secured $4.8M Petrobras Order $2M Savings in 2014 Moscow Office Consolidation Redwood City Lean Transformation Control Panel Insourcing: Hoffman $~4M Lean Savings in 2013 $2M+ Annual Sales Synergies $500K Annual Savings Plus Growth Eliminated One Shift with Same Output GBU Meeting or Exceeding IST Targets 65 PENTAIR 2013 Houston Investor & Analyst Event
PIMS LEAN EXAMPLE: SCRAP REDUCTION Key Actions: PIMS Playbook • Created Lean Transformation Plan for Scrap Reduction Scrap Before Scrap Now • Created Pareto to Prioritize Opportunities • Held Kaizen to Identify Ways to Reduce Wire Scrap • Implemented Team’s Process Improvement Recommendations • Created Visual Management to Ensure Sustainability • Investigated Various Causes of Wire Breaks (Six Sigma Project) - Addressed Mechanical Defect in Braider Lowering Our Scrap Costs … One Initiative at a Time 66 PENTAIR 2013 Houston Investor & Analyst Event
PIMS EXAMPLE: REDUCING MATERIALS COSTS Direct Materials Savings Indirect Materials Savings • Renegotiated Prices of High Volume Negotiations Polymers by On-Boarding Alternate Rapid Suppliers and Consolidating Purchases • Renegotiated Prices of Raw Metals by Leveraging Pentair Metals’ Expertise • Consolidated Molding Supply Base to Strategic Sourcing Improve Costs, Quality, and JIT Delivery • Freight Savings Using Consolidated Pentair Rate • Cost Modeling to Reduce Conductors’ • Telecommunication Savings Using Fabrication Costs. Qualify Alternates Pentair Renegotiated Contracts • Rationalization of Existing Lighted End • Travel Savings from Policy Changes Engineering Seal Products with Brighter LEDs and and Better Rates Value Unique Lens • Other Miscellaneous Savings Including Office Supplies, Temporary • Reducing Costs While Improving Labor, etc. Performance and Durability $5+M Savings in 2013 $1+M Savings in 2013 Delivering 5%+ Net Material Savings this Year … Strong Funnel for Future Years 67 PENTAIR 2013 Houston Investor & Analyst Event
PIMS RGP – NAM MRO SERVICES EXAMPLE Concept • Offer Tiered MRO Services on an Annuity Contract Basis to Petrochemical Plants in the Gulf Coast Region to a Combination of Small to Large PTM & Competitive Installations through Direct Channels to Plant / Maintenance Managers • US MRO Industrial Market Opportunity Estimated at $150M Annually (2010) Alpha Test Underway 68 PENTAIR 2013 Houston Investor & Analyst Event
PIMS 3D INNOVATION: LOW SHEATH TEMPERATURE MI Product Overview • LSTMI Offers a Lower Sheath Temperature on the Outer Portion of the Heated Section as Compared to the Standard Alloy 825 MI Heating Product • Provides the Customer with Sectional view of Design D LST MI cable Constructible Designs at a Premium Material Price that is Off-Set by Reductions in Field Installation Labor and On-Going Maintenance Costs 3D Project Status Discover Develop Deploy Pre-Charter Start Final Design Complete Complete Development Freeze Product & Process Validation Charter Complete Complete Launch Complete Prototype (3P) Commercialization Plan (Jan/2014) Enhancing Technology Differentiation 69 PENTAIR 2013 Houston Investor & Analyst Event
PIMS: HIGH PERFORMANCE “WIN RIGHT” CULTURE CUSTOMER FIRST ACCOUNTABILITY FOR PERFORMANCE INNOVATION AND ADAPTABILITY We Make it Easy for Customers to We Commit to High Standards We Adapt to Changing Do Business With Pentair of Performance Circumstances and Excel at Applying New Ideas NPS Strategy Deployment 3 D POSITIVE ENERGY RESPECT AND TEAMWORK ABSOLUTE INTEGRITY We Display a Positive Outlook at We Treat Others With Respect / We are Committed to Honest and All Times We Collaborate for Team Success Ethical Business Practices Code of Business Key Leadership Criteria Feedback & Coaching Conduct & Ethics Quick Adoption of Pentair Values 70 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Thermal Management is a Great Addition to the Pentair Portfolio • Heat Tracing is an Attractive Industry with Favorable Mega Trends • Thermal Management Expects to Deliver Above Average Growth and has Mega Project Upside • Integration is Yielding Desired Synergies and PIMS is Expected to Accelerate Margin Expansion Thermal: Proud to be Part of Pentair! 71 PENTAIR 2013 Houston Investor & Analyst Event
VALVES & CONTROLS PENTAIR INVESTOR & ANALYST EVENT David Dunbar President, Pentair Valves & Controls November 13, 2013 72 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Pentair Valves & Controls is a Leading Solution Provider in a Growing, High Demand, Fragmented Segment • We Believe We are Well Positioned to Win Through: — Breadth of Offering — Superior Application Expertise — Strong Global Presence — Project and Aftermarket Opportunities • We Expect to Deliver Shareholder Value Through: — Organic Revenue Growth — Operation Improvements (PIMS) — Simplification and Standardization (Lean Enterprise) Valves & Controls Positioned to Deliver Superior Value 73 PENTAIR 2013 Houston Investor & Analyst Event
WE CONTROL FLOW CONTROLS: The Brains Instruments Used to Monitor, Control, or Diagnose a Valve and Actuator Package VALVE: The Bones A Mechanical Device that ACTUATOR: The Muscles Controls the Flow of a A Mechanical Device Used Liquid, Gas, or Vapor in a to Open and Close a Valve Piping System We are a World Leader in Valves and Controls 74 74 PENTAIR 2013 Houston Investor & Analyst Event
VALVES—CRITICAL TO GLOBAL INFRASTRUCTURE Valves are Highly Critical Components for Energy and Industrial Infrastructure From Oil & Gas … to Relief Valves Being Upstream Applications the Last Line of Defense in FPSO Vessels that are Preventing Catastrophic 6X Larger than an Equipment Failure in Aircraft Carrier… Nuclear Power Plants … and Control Valves in Zero Leakage Valves Preventing Supercritical Steam Power Escape of Hazardous Gases Like Plants to Meet the Ever Phosgene in Petrochem Plants Increasing Electricity Demand in the Emerging World Isolation Valves for … to High Integrity Liquid Natural Gas Isolation Valves at an Terminals Operating at Alumina Refinery with Extremely Low Highly Caustic, High Temperatures of -320 F Temperature Fluids Our Products Enable Safer, More Efficient, and More Sustainable Operations 75 75 PENTAIR 2013 Houston Investor & Analyst Event
VALVES & CONTROLS FAST FACTS • $2.4 Billion in Global Sales* • 140 Years of Experience Fasani Gate Valve • 10,000 Employees • 23 Feet High & e31 Tons • Flare Line Isolation at • 50+ Sales Offices Petrochemical Plant • 42 Manufacturing Sites • 80 Service Centers • 900 Patent Filings in Last 20 Years • 900+ Technical Sales Staff • 1,000+ Application and Customer Service Specialists • Our Products – Sizes Range from 1 Inch to 7 Feet in Diameter – Weights from Ounces to Over 30 Tons – Operate from -370 F to Over 1,100 F FCT Ball Valve – Are Installed on Every Continent on the Planet • Subsea Pipeline Operation • 1,000 Feet Water Depth V&C Offers Significant Experience in a Broad Array of Solutions 76 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
SEGMENT CHARACTERISTICS Industry Geography Valve Manufacturers 100% = ~$38B 100% = ~$38B 100% = ~$38B India Middle East PVC Next 10 Competitors Latin Other Europe Oil & Gas America Other Process Local & ROW Regional Competitors Dev. Asia Chemical N. America Mining Power China Other Competitors • Target Complex, Difficult • Developed Regions Have • PVC is a Leader Applications Large Installed Base and • ~15 True Global Players Aftermarket Activity • Customers are Super-Majors • Thousands of Small Local • / Majors Emerging Markets Building Competitors; Limited Reach New Infrastructure to Support • Requires High Technology & and Range Growth Expertise Diversified Industry and Geographical Presence 77 PENTAIR 2013 Houston Investor & Analyst Event
KEY TRENDS DEMAND TRENDS CUSTOMER TRENDS INDUSTRY TRENDS + Increasing Population + Oil & Gas Growth at + Increasingly Harsh and Growing Middle Record Levels Operating Environments Class Resulting in Greater Demand for + Growth in NA + Increasing Global Energy and Power Petrochemical Coordination of Large Complex Projects Total Primary Energy Demand + Power Industry Seeing Coal to Gas Transition + Growing Focus on Safety Mtoe + Power Growth in Middle + Tightening of East / Asia Environmental Regulations ‒ Mining Investment Slowing in the ‒ Increasing EPC Source: World Energy Outlook 2012 Short Term Competition Presentation by Dr. Fatih Birol, IEA Chief Economist. Source: Citi, JPMorgan, Jefferies, UBS, Morgan Stanley, Deutsche Bank, Bloomberg, BMI Overall Trends Favorable for Strong Growth 78 PENTAIR 2013 Houston Investor & Analyst Event
GROWTH DYNAMICS ARE EXPECTED TO BE SOLID Global V&C Total Addressable Market (TAM) • Global Opportunity for $ Billions Valves has Grown ~5% CAGR Since 2004 5% • Recent Peak to Trough CAGR CAGR 44 Decline of 15% 42 40 38 38 36 • We Expect 4-6% Sales 36 34 32 Growth Through 2016 30 30 25 – Continued Demand for 23 Critical Infrastructure in Developing Markets – Marginal Strengthening in Developed Economies – Increased Project Investments after Minor 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Slowdown in 2013 Source: EIF 2012, PNR Estimates Forecasting Moderate Growth Through Next 3 Years 79 PENTAIR 2013 Houston Investor & Analyst Event
CONSISTENT THROUGH THE CYCLE GROWTH Pentair V&C Sales $M $3,000 $2,500 $2,000 $1,500 6.3% CAGR Through the Cycle $1,000 $500 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 A Result of Product and Industry Breadth 80 PENTAIR 2013 Houston Investor & Analyst Event
VALVES USE ACROSS INDUSTRIES 100% 80 Others Others Others Others Others 60 40 20 Pentair Pentair Pentair Pentair Pentair 0 (Includes Water, Food & Beverage, Pulp & Paper, Oil & Gas Mining Power Chemical HVAC, Marine, etc.) • Total Segment Opportunity: $38B • Pentair Share: ~6% • Fragmentation in Current Segments Points to Continued Growth Opportunities Through Share Gain and Acquisitions Source: EIF 2012, PNR Estimates Pentair is a Leader in Targeted Industry Segments 81 PENTAIR 2013 Houston Investor & Analyst Event
VALVES PROCUREMENT IN PROJECT CYCLE Project Approval to Start-up Time in Months Project • Combined Cycle Power Plant: ~18-24 Start-Up Approval • Ethylene Plant: ~36-48 • Offshore Platform: ~48-60 • FPSO: ~48-60 Construction Detailed PRE-FEED FEED and Operation Design Installation Long Cycle “Mid Cycle” Short Cycle Equipment • Compressors • Control Valves • Manual Valves Ordering • Automation • Automated • Safety Valves System Valves • Standard • Pumps • Special Instruments ~ 12-36 Months from • Heat Exchangers Instruments Project Approval to Valves Orders Valves Procured Late in Large Capital Projects 82 PENTAIR 2013 Houston Investor & Analyst Event
CUSTOMER REQUIREMENTS Customer Key Buying Criteria* Valve Performance Defined: • Cycle Life Valve Performance 32% • Leakage (Both Inside and Outside the Pipe) Lead Time 13% On-Time Delivery 13% Better Performance Provides: Ease of Maintenance 9% • Process Reliability / Uptime Sales Support 9% • Process Safety / Lower Risk • Improved Environmental Technical Support 8% Performance Brand 7% • Lower Capital Costs • Lower Operating Costs After-Market Service 5% *Non-price attributes Source: PV&C market research Customers Value Better Products 83 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Pentair Valves & Controls is a Leading Solution Provider in a Growing, High Demand, Fragmented Segment • We Believe We are Well Positioned to Win Through: — Breadth of Offering — Superior Application Expertise — Strong Global Presence — Project and Aftermarket Opportunities • We Expect to Deliver Shareholder Value Through: — Organic Revenue Growth — Operation Improvements (PIMS) — Simplification and Standardization (Lean Enterprise) Valves & Controls Positioned to Deliver Superior Value 84 PENTAIR 2013 Houston Investor & Analyst Event
VALVES & CONTROLS OFFERINGS SALES BY PRODUCT PLATFORM SALES BY GEOGRAPHY 100% = ~$2.4B* 100% = ~$2.4B* Other Actuation Developed & Controls Quarter Fast Turn GGC & Growth Western Valves Control Europe Valves Pressure U.S. & Management Canada Valves SALES BY VERTICAL SALES BY CHANNEL 100% = ~$2.4B* 100% = ~$2.4B* Industrial Installed Projects Energy Leading Global Valves & Controls Supplier … $2.4B 85 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
QUARTER TURN VALVES PRODUCT SAMPLE CUSTOMERS KEY GROWTH DRIVERS / VERTICALS • Offshore O&G Platforms • Cryogenic Isolation • FPSO (Floating • Corrosive Chemical Production, Storage, Isolation and Offloading) Triple Offset MAJOR BRANDS Valve • Chemical & • Keystone Petrochemical Butterfly • KTM Valve • LNG Terminals Ball • Vanessa Valve • Food & Beverage SALES BY VERTICAL SALES BY CHANNEL SALES BY REGION 100% = ~$1.0B* 100% = ~$1.0B* 100% = ~$1.0B* U.S. & Canada Western Fast Installed Energy Europe Growth Industrial Projects Other Developed ~$1B Estimated Quarter Turn Valves Revenue in 2013 86 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
PRESSURE MANAGEMENT VALVES PRODUCT SAMPLE CUSTOMERS KEY GROWTH DRIVERS / VERTICALS • Steam Power Plants • Power Plant Steam Pilot Boiler Protection • Nuclear Power Plants Operated • Refinery Tank Protection Relief • Oil and Gas Exploration Valve and Refining MAJOR BRANDS • Petrochemical Tank • Anderson Greenwood Farms • Crosby Direct Spring • LNG Terminals Relief Valve • Sempell SALES BY VERTICAL SALES BY CHANNEL SALES BY REGION 100% = ~$0.6B* 100% = ~$0.6B* 100% = ~$0.6B* Other Developed Western Industrial Europe Projects Project Aftermarket U.S. & Installed Energy Canada Fast Growth ~$600M Estimated Pressure Management Valves Revenue in 2013 87 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
GATE, GLOBE, CHECK & CONTROL VALVES PRODUCT SAMPLE CUSTOMERS KEY GROWTH DRIVERS / VERTICALS • Steam Power Plants • Steam Control for Globe Valve Power Plants • Nuclear Power Plants • Mining Tailings Isolation • Copper and Gold Mining MAJOR BRANDS • Alumina Refining • Clarkson • Oil and Gas Exploration • Fasani Knife Gate and Refining • Sempell Valve SALES BY VERTICAL SALES BY CHANNEL SALES BY REGION 100% = ~$0.4B* 100% = ~$0.4B* 100% = ~$0.4B* U.S. & Canada Industrial Installed Fast Western Growth Europe Projects Energy Other Developed ~$400M Estimated Gate, Globe, & Check Valves Revenue in 2013 88 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
ACTUATION & CONTROLS PRODUCT SAMPLE CUSTOMERS KEY GROWTH DRIVERS / VERTICALS • O&G Pipelines • ~30% Captive V&C Valve Actuator • O&G Upstream • ~70% Other Valve Companies • FPSO (Floating Production, Storage, MAJOR BRANDS and Offloading) • Biffi • Chemical & Valve • Morin Petrochemical Positioner • Westlock • LNG Terminals SALES BY VERTICAL SALES BY CHANNEL SALES BY REGION 100% = ~$0.4B* 100% = ~$0.4B* 100% = ~$0.4B* Other Developed U.S. Fast U.S. & Installed Fast Industrial Industrial Energy Growth Canada Growth Energy Projects W. Europe Western Other Europe Developed ~$400M Estimated Actuation & Controls Revenue in 2013 89 PENTAIR 2013 Houston Investor & Analyst Event * 2013 estimated sales.
WINNING THROUGH PRODUCT BREADTH $9B $4B $12B $2B $2B $9B 100% Non-Target Market Non-Target Non-Target Non- Non-Target Target Market Target Market 80 Non-Target Non-Target Target Target Market Market Market Non-Target Market 60 Target Non-Target Market 40 Target Market 20 Pentair Target Market Pentair Pentair Pentair Pentair 0 Pentair PMV QT GGC Other A&C Service Quarter Turn Pressure Gate, Globe, Check A&C Service Other #1 #2 #1 (Includes valve parts (seals, etc.), solenoid valves, (Includes Valve Parts, Management fittings, etc.; Excludes control, pressure reducing, Solenoid Valves, Fittings, etc.) Source: EIF 2012, PNR Estimates plug, and manual diaphragm valves) • Most Product Segments Also Very Fragmented • PVC Targets the Highly Engineered and Technical Segments of Each Product Space ($23B) Pentair Valves & Controls is a Leader in all Segments 90 PENTAIR 2013 Houston Investor & Analyst Event
WINNING THROUGH APPLICATION EXPERTISE CROSBY KEYSTONE • Started in 1874 • Developed the Resilient Seated • Trusted to Protect Butterfly Valve Nuclear Submarines in 1951 and Commercial Nuclear Plants in the • Provides Market US and Across the Leading Cycle Life World ANDERSON GREENWOOD KTM • A Leading Supplier of • 75 Years of Relief Valves with a Track Experience Record of Product • The World’s First Innovations and Supplier of Full Technical Breakthroughs Bore, Split Body to Solve the Toughest Type Ball Valves Application Challenges Leading Brands are Trusted for Critical Applications 91 PENTAIR 2013 Houston Investor & Analyst Event
WINNING THROUGH APPLICATION EXPERTISE BIFFI CLARKSON • A Leading Actuator • Pioneer of the Dual Manufacturer for Over Elastomer Sleeve 50 Years Slurry Valve • Wide Range of Standard • One of the Highest Quality and Custom Designed and Most Technologically Automation Solutions Advanced Slurry Valves on the Market SEMPELL VANESSA • 140 Years of Experience • Developed the Metal Seat Valve with “Zero • Deep Expertise in Power Leakage” Plant Valve Applications for Both Nuclear and • Used in Highly Challenging Isolation Conventional Fuels Applications Leading Brands are Trusted for Critical Applications 92 PENTAIR 2013 Houston Investor & Analyst Event
WINNING WITH GLOBAL PRESENCE 2800 1050 1900 1100 350 675 Service Center Mobile Service Center Major Manufacturing Location 780 Major Sales Office 650 50+ Sales Offices 80 Service Centers 42 Manufacturing Plants # Employees We Can Make Commitments at a Global Level and Execute Consistently Locally 93 PENTAIR 2013 Houston Investor & Analyst Event
WINNING WITH GLOBAL PRESENCE Chevron Wheatstone Project Scope… PVC Involvement • LNG Plant in Western Australia FRANCE Project Management • $29B Project LNG Tank Supplier Sales Offices • 25M Tonnes / Year LNG Production LNG Storage Tanks Plants • 650M / Day Cubic Feet Domestic Gas Service UNITED STATES Downstream EPC 1 Activity Pentair Valves & Controls Supplied: AUSTRALIA Anderson Greenwood & Crosby Relief Valves Downstream EPC 1 Activty Biffi Actuators Upstream EPC 2 Activity Jetty Vanessa Triple Offset Valves Jetty Consortium Richards Ball Valves Pipeline Pipeline Supplier Pentair Provides Global Scale to Serve Our Customers’ Needs 94 PENTAIR 2013 Houston Investor & Analyst Event
WINNING WITH GLOBAL PRESENCE • Local Design & Development to Meet Regional Needs • Local Assembly & Test to Reduce Lead Times Middle East China • KEF Acquisition in UAE • Localized Assembly and • Localized Assembly Test for Actuators, and Test for Gate, Butterfly, Ball, Pressure Globe, Check, and Ball Relief, and Knife Gate Valves Valves India Latin America • Localized Assembly and • Hiter Acquisition in Brazil • Localized Assembly and Test for Actuators, Butterfly, and Slurry Test for Actuators, Pressure Valves Relief, Butterfly, Knife Gate, and Control Valves Using Our Global Footprint to Better Serve Our Customers 95 PENTAIR 2013 Houston Investor & Analyst Event
WINNING WITH PROJECT AND AFTERMARKET Refinery (300,000 Barrels Per Day) LNG Liquefaction Plant (8 MTPA) • ~$200M in Valves for Greenfield Site • ~$150M in Valves for Greenfield Site • ~$7M in Annual Aftermarket Opportunity • ~$12M in Annual Aftermarket Opportunity Alumina Refinery Power Plant (600MW Coal Fired) (5 MTPA) • ~$6M in Valves for Greenfield Site • ~$50M in Valves for Greenfield Site • ~$1M in Annual Aftermarket • ~$5M in Annual Opportunity Aftermarket Opportunity Valve Growth Driven by Infrastructure Expansion and Operation 96 PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES • Pentair Valves & Controls is a Leading Solution Provider in a Growing, High Demand, Fragmented Segment • We Believe We are Well Positioned to Win Through: — Breadth of Offering — Superior Application Expertise — Strong Global Presence — Project and Aftermarket Opportunities • We Expect to Deliver Shareholder Value Through: — Organic Revenue Growth — Operation Improvements (PIMS) — Simplification and Standardization (Lean Enterprise) Valves & Controls Positioned to Deliver Superior Value 97 PENTAIR 2013 Houston Investor & Analyst Event
PNR V&C EXPECTATIONS Sales ($B) 2.7 >4% Top 2014 / 2015 Priorities 2.4 2.4 2.3 1. Drive Organic Revenue Growth Through New Product Developments 2011 2012 2013F 2015T 2. Capture Growth Through Operating Income ($M) Improved Customer Service 400+ and Operations Improvements 295 244 232 3. Simplify Our Business 2011 2012 2013F 2015T ROS 10.2% 10.3% >15% 12.5% Higher Quality of Revenue and Stronger Operating Performance 98 PENTAIR 2013 Houston Investor & Analyst Event
RENEWED PRODUCT INNOVATION New Product Development Funnel Patent Filings 3 Year Run Rate Revenue Estimate ~60 / Year ~60 / Year Discover 23 Projects ~ $50M+ Develop ~28 / Year 25 Projects ~ $80M+ Deploy 17 Projects ~ $50M+ 1990's 2000's 2010's New Product Sales Have Grown from Patent Filings are Back to 1990s $0 in 2010 to an Estimated $40M+ in Levels Showing Reinvestment in 2013 with a Strong Funnel for 2014+ Product Technology PIMS Tools Driving Standardized Approach to Product Development 99 PENTAIR 2013 Houston Investor & Analyst Event
RENEWED PRODUCT INNOVATION Keystone GR Series Butterfly Valves are More Durable Independent Lab Testing Verifies Cycle Life of 2.5X Our • Nearest Competitor • Sizes Ranging from 2” – 72” and 1,000+ Trim Configurations Vonk Choke Valves Last Longer Unique Rotating Disc Technology Provides 3X Longer Cycle Life than • Competing Products Customer Field Testing in Shale Gas Applications have Shown 4X Longer • Cycle Life Leading to Lower Maintenance Costs Clarkson Knife Gate Valve Solves Customer Problem Canadian Oil Sands Customer was Replacing Knife Gate Valves Every 6 Weeks • Pentair Used Computational Fluid Dynamics to Determine Root Cause of • Wear and Designed a New Valve Redesigned Valve now Lasts 2 years—17X Longer than Competing Valve • Pentair Valves are Innovative 100 PENTAIR 2013 Houston Investor & Analyst Event
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