PENTAIR Investor Presentation November 2017 November 2017 Investor Presentation
FORWARD-LOOKING STATEMENTS C AUTION C ONCERNING F ORWARD -L OOKING S TATEMENTS 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 , ANY STATEMENTS PRECEDED OR FOLLOWED BY OR THAT INCLUDE THE WORDS " TARGETS ," " PLANS ," " BELIEVES ," " EXPECTS ," " INTENDS ," " WILL ," " LIKELY ," " MAY ," " ANTICIPATES ," " ESTIMATES ," " PROJECTS ," " SHOULD ," " WOULD ," " POSITIONED ," " STRATEGY ," " FUTURE " OR WORDS , PHRASES OR TERMS OF SIMILAR SUBSTANCE OR THE NEGATIVE THEREOF , ARE FORWARD - LOOKING STATEMENTS . THESE FORWARD - LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO RISKS , UNCERTAINTIES , ASSUMPTIONS AND OTHER FACTORS , SOME OF WHICH ARE BEYOND OUR CONTROL , WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD - LOOKING STATEMENTS . THESE FACTORS INCLUDE THE ABILITY TO SATISFY THE NECESSARY CONDITIONS TO CONSUMMATE THE PLANNED SEPARATION OF OUR WATER BUSINESS AND ELECTRICAL BUSINESS INTO TWO INDEPENDENT , PUBLICLY - TRADED COMPANIES ( THE " PROPOSED SEPARATION ") ON A TIMELY BASIS OR AT ALL ; THE ABILITY TO SUCCESSFULLY SEPARATE THE WATER AND ELECTRICAL BUSINESSES AND REALIZE THE ANTICIPATED BENEFITS FROM THE PROPOSED SEPARATION ; ADVERSE EFFECTS ON THE WATER AND ELECTRICAL BUSINESS OPERATIONS OR FINANCIAL RESULTS AND THE MARKET PRICE OF OUR SHARES AS A RESULT OF THE ANNOUNCEMENT OR CONSUMMATION OF THE PROPOSED SEPARATION ; UNANTICIPATED TRANSACTION EXPENSES , SUCH AS LITIGATION OR LEGAL SETTLEMENT EXPENSES ; FAILURE TO OBTAIN TAX RULINGS OR CHANGES IN TAX LAWS ; CHANGES IN CAPITAL MARKET CONDITIONS ; THE IMPACT OF THE PROPOSED SEPARATION ON OUR EMPLOYEES , CUSTOMERS AND SUPPLIERS ; OVERALL GLOBAL ECONOMIC AND BUSINESS CONDITIONS IMPACTING THE WATER AND ELECTRICAL BUSINESSES ; FUTURE OPPORTUNITIES THAT OUR BOARD MAY DETERMINE PRESENT GREATER POTENTIAL TO INCREASE SHAREHOLDER VALUE ; THE ABILITY OF THE WATER AND ELECTRICAL BUSINESSES TO OPERATE INDEPENDENTLY FOLLOWING THE PROPOSED SEPARATION ; THE ABILITY TO ACHIEVE THE BENEFITS OF OUR RESTRUCTURING PLANS ; THE ABILITY TO SUCCESSFULLY IDENTIFY , FINANCE , COMPLETE AND INTEGRATE ACQUISITIONS ; COMPETITION AND PRICING PRESSURES IN THE MARKETS WE SERVE ; THE STRENGTH OF HOUSING AND RELATED MARKETS ; VOLATILITY IN CURRENCY EXCHANGE RATES AND COMMODITY PRICES ; INABILITY TO GENERATE SAVINGS FROM EXCELLENCE IN OPERATIONS INITIATIVES CONSISTING OF LEAN ENTERPRISE , SUPPLY MANAGEMENT AND CASH FLOW PRACTICES ; INCREASED RISKS ASSOCIATED WITH OPERATING FOREIGN BUSINESSES ; THE ABILITY TO DELIVER BACKLOG AND WIN FUTURE PROJECT WORK ; FAILURE OF MARKETS TO ACCEPT NEW PRODUCT INTRODUCTIONS AND ENHANCEMENTS ; THE IMPACT OF CHANGES IN LAWS AND REGULATIONS , INCLUDING THOSE THAT LIMIT U . S . TAX BENEFITS ; THE OUTCOME OF LITIGATION AND GOVERNMENTAL PROCEEDINGS ; AND THE ABILITY TO ACHIEVE OUR LONG - TERM STRATEGIC OPERATING GOALS . ADDITIONAL INFORMATION CONCERNING THESE AND OTHER FACTORS IS CONTAINED IN OUR FILINGS WITH THE SEC , INCLUDING OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2017. ALL FORWARD - LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS PRESENTATION . PENTAIR PLC ASSUMES NO OBLIGATION , AND DISCLAIMS ANY OBLIGATION , TO UPDATE THE INFORMATION CONTAINED IN THIS PRESENTATION . 2 November 2017 Investor Presentation
SEPARATION OF PENTAIR INTO TWO PUBLICLY-TRADED COMPANIES WATER ELECTRICAL CONNECTION SUSTAINABILITY & PROTECTION Maximizing the Use of Connecting & Protecting the Resources People Critical Processes, People, Rely on Most and the Environment A Leading Global Water Company Focused A High-Performance Electrical Company on Smart, Sustainable Water and Fluid Focused on Improving Utilization, Lowering Processing Applications Costs, and Maximizing Customer Uptime 2017F Revenue: ~$2.8B 2017F Revenue: ~$2.1B 2017F ROS: ~19% 2017F ROS: ~22% Industry-Leading, Pure-Play Companies; Strong Financial Profiles 3 November 2017 Investor Presentation
RATIONALE OF SEPARATION RATIONALE STRATEGIC FOCUS Improved Clarity into Performance and Growth Opportunities FINANCIAL STRENGTH CAPITAL ALLOCATION FLEXIBILITY Supports Plan to be Successful, Unique Strategies to Deliver Profitable, and Sustainable Growth for Each FOUNDATION MANAGEMENT TEAM PIMS CAPITAL STRUCTURE Mix of Current & New Executives Pentair’s “Business System” Expect Strong Balance Sheet and and Board Members to Lead Investment Grade Metrics The Next Step in the Evolution of Pentair 4 November 2017 Investor Presentation
SEPARATION UPDATE May 2017 Announced Plan to Separate Water and Electrical October 2017 Filed Form 10 for nVent January 2018 Report Q4’17 Results and Initial 2018 Outlook February 2018 Pentair and nVent Investor Meetings April 2018 Report Q1’18 Earnings Results Q2 2018 Expect nVent Spin to be Complete We are Prepared to Stand Up Two Well Positioned Companies 5 November 2017 Investor Presentation
PIMS IS KEY TO DRIVING HIGH PERFORMANCE - GROWTH - Rapid Growth Process 3D Innovation Commercial Excellence PIMS PENTAIR INTEGRATED MANAGEMENT Standard Work Talent Mgmt. SYSTEM Creating Flow Org. Development Strategy Deployment “Win Right” Values - LEAN ENTERPRISE - - TALENT & CULTURE - Our Standard Operating Model Across the Enterprise 6 November 2017 Investor Presentation
DRIVING SHAREHOLDER VALUE ORGANIC GROWTH Being in the Right Markets to Drive Sustainable & Predictable Growth FCF & CAPITAL MARGIN ALLOCATION EXPANSION Dividends, Productivity Through Accretive Acquisitions, PIMS and Sustainable and Opportunistic EPS Growth Buybacks Pulling All Levers to Create Shareholder Value 7 November 2017 Investor Presentation
WATER BUSINESS Company Characteristics 2017 Forecast Leadership • Industry-Leading Positions and ~$2.8B David Jones, Chairman Strong Brands John Stauch, President & CEO Revenue • Focused on Smart, Karl Frykman, COO Sustainable Water and Fluid Mark Borin, CFO Processing Applications 19% • Attractive Margin Profile ROS • Strong Free Cash Flow Generation Strategic Business Groups Vertical Markets Geographies Industrial 6% 8% 5% 35% 56% Infrastructure Other Developed Infrastructure 65% 11% Filtration & Residential 32 % 13% US & 17% Process Flow Canada Industrial Western Technologies Europe 17% 19% Developing Commercial 33% Aquatic Systems A Leader in Residential & Commercial Water Treatment 8 November 2017 Investor Presentation
FILTRATION & PROCESS Description 2017 Forecasted Financials ~$1.0B Provides Innovative and Sustainable Solutions that Improve Water Quality, Revenue Beverage Systems, and Environmental Efficiency in a World with Limited Access High Teens to Healthy Sources of Drinking and Process Water ROS Geographies Vertical Markets Industrial 6% 6% Infrastructure Other Developed 45% 20% 11% 21% US & Commercial Canada Western Europe 42% Industrial & Infrastructure 38% 28% Residential Developing A Leader in Residential & Commercial Filtration with Niche Industrial 9 November 2017 Investor Presentation
AQUATIC SYSTEMS Description 2017 Forecasted Financials ~$900M Provides Advanced, Efficient Technology, Revenue Expertise, and Service to Build Intimacy with Pool Professionals and Ensure Pool Owners Maximize Their Enjoyment >20% ROS Geographies Vertical Markets 2% Industrial 4% 6% Other Developed 11% Infrastructure Western Europe 8% 11% Commercial Developing 86% 89% US & Residential Canada A Leader in North America Pool 10 November 2017 Investor Presentation
FLOW TECHNOLOGIES Description 2017 Forecasted Financials ~$900M Provides a Full Range of Best in Class Revenue Solutions for Water Supply, Disposal, and Movement Through a Dedicated Global Mid Teens Network of Sales, Service, and Support ROS Geographies Vertical Markets Industrial 6% 6% Infrastructure Other Developed 64% 17% 11% 15% US & Specialty Canada Western Europe 50% Residential/ Irrigation 33% 15% Commercial & Developing Infrastructure A Leader in Residential & Commercial Flow 11 November 2017 Investor Presentation
TOP STRATEGIC PRIORITIES COMPANY STRATEGY PROTECT & GROW AQUATICS • Increase Pool Content through New Product Introductions • Increase Connected Products • Build Further Channel Intimacy EXPAND RESIDENTIAL & COMMERCIAL FILTRATION • Create Water Filtration Franchise • Increase Connected Products • Look to Build/Add Service Capabilities ACCELERATE CHINA & SE ASIA INVESTMENT • Grow Point of Use Sales in China • Expand Foodservice Presence in China • Target Hospitality Market in SE Asia Investing in our Strengths 12 November 2017 Investor Presentation
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