PENTAIR 2015 Investor & Analyst Day
PENTAIR 2020
RANDY HOGAN
Chairman and CEO November 6, 2015
PENTAIR 2020 RANDY HOGAN Chairman and CEO November 6, 2015 2015 - - PowerPoint PPT Presentation
PENTAIR 2020 RANDY HOGAN Chairman and CEO November 6, 2015 2015 Investor & Analyst Day PENTAIR FORWARD-LOOKING STATEMENTS C AUTION C ONCERNING F ORWARD -L OOKING S TATEMENTS This communication contains statements that we believe to be
PENTAIR 2015 Investor & Analyst Day
Chairman and CEO November 6, 2015
PENTAIR 2015 Investor & Analyst Day
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS This communication 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 achieve the benefits of planned cost take-out actions; the ability to successfully identify, complete and integrate acquisitions, including the ability to successfully integrate and achieve the expected benefits of the acquisition
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 ability to successfully complete the disposition of the remaining portion of the Water Transport business on anticipated terms and timetable; the impact of changes in laws and regulations, including those that limit U.S. tax benefits; the
Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including in our 2014 Annual Report on Form 10-K. All forward-looking statements speak only as
contained in this communication. 2
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Results from Continuing Operations for the Period Indicated Presented on an Adjusted Basis
Impact of Currency Translation and (2) the Impact of Revenue from Acquired Businesses Recorded Prior to the First Anniversary of the Acquisition Less the Amount of Sales Attributable to Divested Product Lines Not Considered Discontinued Operations
from Continuing Operations Exclusive of Non-Cash Intangible Amortization, Certain Acquisition Related Expenses, Costs of Restructuring Activities, “Mark- to-Market" Gain (Loss) for Pension and Other Post-Retirement Plans, Impairments, and Other Unusual Non-Operating Items
PENTAIR 2015 Investor & Analyst Day
Chairman and CEO November 6, 2015
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Free Cash Flow ~100% Adjusted Net Income FY’15 FINANCIAL OUTLOOK (YoY) SUMMARY
Re-Affirming Our Full Year 2015 Outlook … Positioning for 2016 and Beyond
and Maintenance Spending Delays
for 2016
Efforts Underway
Core Sales Down ~4% (Down 9% Including FX and Acquisitions)
~$6.43B ~$726M ~$1.00B ~15.6% $2.64-$2.66 $3.84-$3.86
Sales Op Income (Rpt.) Op Income (Adj.) ROS (Adj.) EPS (Rpt.) EPS (Adj.)
$7.04B $852M $1.14B 16.1% $3.14 $4.23
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High Performance Company
2012+ Focus
Operating Company
2001 - 2011
Holding Company
1966 - 2000
Maximizing PIMS
Regions and Verticals
Industrial Company
Start
Businesses
Financial Metrics
Market Cap
Strong Execution Against Strategies:
Assessment of Current State:
(-) Timing of Energy Projects (-) Industrial Recovery ++ Opportunity to Drive Growth with PIMS, Sales Excellence, and Prioritized Investments
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$0 $200 $400 $600 $800 $1,000
'06 '07 '08 '09 '10 '11 '12 '13 '14
FREE CASH FLOW ($Ms)
>100% of Adjusted Net Income
2012 Free Cash Flow is Adjusted to Exclude Accelerated Pension Funding of $193M, Deal-Related Payments of $126M, and Repositioning Payments of $20M
Additional Upside the Next Several Years
“Earned the Right to Grow”
Advantage as We Look at Strategic Acquisitions
STATEMENT OF STRENGTH
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PENTAIR 2015 Investor & Analyst Day
Energy, ~23% Industrial, ~25% Food & Beverage, ~10% Resi/Comm, ~33% Infrastructure, ~9% Valves & Controls, ~27% Technical Solutions, ~33% Flow & Filtration Solutions, ~20%
U.S. and Canada, ~55% Western Europe, ~16% Fast Growth**, ~24% Developed Non-U.S., ~5%
100% = $6.8B*
Water Quality Systems, ~20%
*Pro Forma includes ERICO ** China, SE Asia, India, and Middle East
~18% ROW, ~13% U.S. ~49% Canada, ~6% FGR**, ~14%
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GUIDED BY PROCESS UNITED BY OUR WIN RIGHT VALUES PURPOSE
We Improve the Quality of Life of People Around the World
VISION
Be the Next Great Industrial Company Destination Company for Customers, Top Talent, and Shareholders
STRATEGIC PRINCIPLES
Invest in Attractive Markets: Where We Compete Control our Destiny: How We Compete
OPERATING PRINCIPLES (PIMS)
Growth Methodology Talent Management Lean Enterprise
WIN
Customer First Accountability for Performance Innovation and Adaptability
RIGHT
Positive Energy Respect and Teamwork Absolute Integrity
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STRATEGY
A L I G N M E N T
HOW WE DIFFERENTIATE PENTAIR
HOW WE EXECUTE
HOW WE WIN RIGHT
PROCESS & STRUCTURE CULTURE & TALENT
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Growth & Business Leadership Needed
to Drive Differentiated Growth
to Grow Core Businesses and Prepare for Acquisitions
‒ +1-2 pts of Differentiated Growth ‒ +8-10% Segment Income Growth ‒ +9-11% “Core” EPS Growth ‒ FCF >100% of Adjusted Net Income ‒ Plus: Capital Allocation
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Build Capability Allocate Resources Effectively Support Execution Manage the Portfolio
PIMS and Culture People and Dollars Enable Segments Acquisitions and Divestitures
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Continue to Establish PIMS as Differentiating Capability and Core of Operating Rigor
Leverage Advantaged Capital Structure
Build Strength to Fund Key Platform Growth
Keep Simple, Lean Corporate Structure Use Win Right Culture to “Grow” and “Get” Talent … and Win in M&A
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Talent Management
Organization Development
Pay for Performance
Win Right Values
Performance
Rapid Growth Process
3D Innovation
Sales Excellence
‒ Opportunity Segments ‒ Coverage Design ‒ Sales Process ‒ Job Design and Organization Structure ‒ Resource Deployment ‒ Sales Talent & Management ‒ Productivity Metrics ‒ Performance Management & Compensation
ERP Management
Shared Service Centers
Process Digitization
Manufacturing Excellence
‒ Strategy Deployment ‒ Transformation Planning ‒ 5S ‒ Standard Work ‒ Creating Continuous Flow ‒ Material Flow ‒ Visual Management/MDI
Logistics Optimization
Service Excellence
Pentair Integrated Management System
LEAN ENTERPRISE AND STANDARDIZATION TALENT GROWTH
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Continuous Improvement
Material Flow Continuous Flow Stabilization
2005 2010 2015 2020 Introduction to Lean Concepts Initial Lean Deployments 2000 Lean Becomes an Operational Process Lean Operations is in Our DNA Optimized Business Value Streams
3.3
Water Quality Systems Flow & Filtration Solutions Technical Solutions Valves & Controls
3.1 2.5 2.3
Lean Assessment Based on a 4.0 Scale
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Services and Sales Offices LEAN Begins Expansion
Lean to Enterprise Legacy OpEx / 6Sigma SIOP 12 LEAN Focus Sites 42 Sites Lean Plans CCF / MMF Mar 12 Jun 12 Sep 12 Jan 13 Apr 13 Jul 13 Jan 14 Jan 15 Aug 15
LEAN Applied to Two Value Streams
PNR / TYC Announcement PNR / Flow Control Merger
Moved XX PNR Legacy Employees to Flow Control Developed and Deployed a Lean Playbook and Online Lean Training Modules Trained 500+ Flow Control Employees and Completed 20,000+ eLearning Modules Moved 32 PNR Legacy Employees to Flow Control Developed and Deployed a Lean Playbook and Online Lean Training Modules
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Early Margin Improvement
Emerged Stronger than Before
Developed and Deployed from Here
PIMS Adoption was Accelerated
have Room for Further Improvement
Industry Leader
be Deployed to Other Businesses
ENCLOSURES
Revenue Growth ROS Expansion
AQUATICS
Revenue Growth ROS Expansion
1998 2015F $600M ~$1.0B 1998 2015F 8% 22%+ 2006 2015F $400M ~$750M 2006 2015F 10% 20%+
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Centers
Talent Upgrades
to Problem Solve
Process Across GBU’s
Four Wall Lean Process Lean Footprint Rationalization
Building Out Lean Core Capability
2015 Factories: 102 Distribution Ctr.: 66 Service Ctr.: 90 Offices: 173 Reduction by 2020 Factories: >30% Distribution Ctr.: ~30% Service Ctr.: ~20% Offices: ~20%
Footprint Optimization
Transformed
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Build Strong Bench Current Focus Deployed to TFC Merger Objectives
2001 - 2012
Leadership Cadre
1/3 External
Population Upgraded
Finance, and HR
2013 - 2016
PNR Leaders
COOs of Their Segments
Bench
Performance
Growth
Roles
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Advance & Standardize The 3D Process To Drive New Product Development Efficiency Advance & Standardize The 3D Process To Drive New Product Development Efficiency Advance Pentair’s Technology Leadership Position to Drive Differentiated Growth Advance Pentair’s Technology Leadership Position to Drive Differentiated Growth Advance Global Technical Capabilities to Enable Engineering Productivity Advance Global Technical Capabilities to Enable Engineering Productivity
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions FOOD & BEVERAGE Solutions: Beer & Wine
Point of Use Filtration
Pumps & Pump Systems
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Growth
1.Strategy 2.Structure 3.Management
Objective Why it Matters Impact
and Predictable Growth
PIMS
Across Pentair
the Right:
1.Customers 2.Markets 3.Products
Level of Our Customer Facing Teams
8 Step Process
STRATEGY STRATEGY STRUCTURE STRUCTURE MANAGEMENT MANAGEMENT
Opportunity Segments Opportunity Segments
1
Coverage Design Coverage Design
2
Customer Contact Continuum Customer Contact Continuum
3
Job Design & Organizational Structure Job Design & Organizational Structure
4
Resource Deployment Resource Deployment
5
Sales Talent & Management Sales Talent & Management
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Productivity Metrics Productivity Metrics
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Performance Management & Compensation Performance Management & Compensation
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Key Focus Areas for Talent Strategy
STRATEGY STRUCTURE
Opportunity Segments Opportunity Segments
1
Coverage Design Coverage Design
2
Customer Contact Continuum Customer Contact Continuum
3
Job Design & Organization Structure
4
Resource Deployment Resource Deployment
5
Sales Talent & Management
6
Productivity Metrics Productivity Metrics
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Performance Management & Compensation
8
MANAGEMENT
Job Design – Responsibilities, Focus, Competencies Job Profile Mapping Management / Organizational Structure Recruiting & On-Boarding Training and Development Coaching and Mentoring Career Development and Succession Planning Compensation Philosophy, Guidelines, and Governance Plan Design, Documentation, and Communication Performance Management Process
Key Elements
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Valves & Controls (2015F Revenue ~$1.8B) Aftermarket/MRO (Revenue ~$900M) Engineered Projects (Revenue ~$935M) Flow & Filtration Solutions (2015F Revenue ~$1.4B) Water Technologies (Revenue ~$800M) Fluid Solutions (Revenue ~$430M) Process Filtration (Revenue ~$200M) Water Quality Systems (2015F Revenue ~$1.4B) Aquatic & Environ. Systems (Revenue ~$825M) Water Filtration (Revenue ~$560M) Technical Solutions (2015F Revenue ~$2.2B*) Enclosures (Revenue ~$950M) Thermal Management (Revenue ~$700M)
(Revenue ~$550M*)
*Pro Forma Including ERICO
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Aftermarket / MRO Engineered Projects Water Technologies Fluid Solutions Process Filtration Aquatic & Environmental Systems Water Filtration Enclosures Thermal Management
Engineered Fastening Solutions We Provide Advanced, Efficient Technology and Expertise to the Swimming Pool and Aquaculture Industries to Ensure Their Profitable Operations We Provide Innovative Solutions that Improve Water Quality and Beverage System Efficiency in a World with Limited Access to Healthy Sources of Drinking Water We Protect Mission-Critical Electrical and Electronics Equipment with the Widest Range of Innovative Standard Products and Custom Solutions We Protect Processes with Products and Services to Maintain Temperature or Prevent Freezing in Industrial, Commercial, or Residential Applications We Protect Electrical and Civil Installations Through Innovative Engineered Fastening Solutions that Drive Productivity by Reducing Installation Time V&C’s Reliable Products and Lifecycle Services Enable Us to Timely Support our Customers’ Infrastructure Maintenance, Efficiency, and Safety Requirements Around the World V&C’s Engineered Solutions for Pressure Protection and Severe Isolation in Critical Applications Enable Our Customers to Solve Their Most Relevant Infrastructure Challenges We Provide a Full Range of Best in Class Solutions for Water Supply and Disposal Through a Dedicated Global Network We Provide Domain Expertise and Solutions to Ensure the Quality, Efficiency, and Yield of Crops, Food, Dairy, and Beverages We Provide Filtration and Separation Solutions for our Customer’s Most Challenging Water, Process, and Energy Needs
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Valves & Controls
Flow & Filtration Solutions
Water Quality Systems
Technical Solutions
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Acquisitions, and/or Buybacks
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions
Valve Automation Integrated Solutions Expand Installed Base and Aftermarket Sales Enhance Focus on Process Industry (Triple Offset Valves)
>$400M >$250M >$300M >$400M
Expand Industrial Water Solutions and Adoption of Membrane Technology Grow Global Commercial/Industrial Fire and Pro-Channel (2-Step) Become a Leading Global Player in Food & Beverage Processing Further Develop Foodservice in Fast Growth Regions EcoSelect Pool Solutions Penetration and Recirculating Aquaculture Systems Innovative Solutions for Point of Use Drinking Water Purification Smart Products: Integrating with Building/Factory Information Systems; Heating Controls Grow Electrical Enclosures Outside North America Thermal Building Infrastructure Penetration and Portfolio Diversification
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$0 $200 $400 $600 $800 $1,000
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15F'20F
FREE CASH FLOW ($Ms)
Expecting Continued Strong Free Cash Flow and Disciplined Capital Allocation
2012 Free Cash Flow is Adjusted to Exclude Accelerated Pension Funding of $193M, Deal-Related Payments of $126M, and Repositioning Payments of $20M
STATEMENT OF STRENGTH
>100% of Adjusted Net Income
Additional Upside the Next Several Years
“Earned the Right to Grow”
Advantage as We Look at Strategic Acquisitions
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– Expect Most Verticals to Stabilize in Late 2016 – Growth & Volume Leverage Expected to be a Major Component of EPS Expansion Through 2020
– Transformation Plans in Place for all Platforms – Dashboards & Comp model in progress
Core Sales Performance
Productivity at Manufacturing Sites
Footprint
Accounting Centers, etc.
Front-end of Sales Process
PIMS Performance
Grade
(39 Straight Years)
− Debt Reduction − Acquisitions − Buybacks
Capital Allocation
+8-10%* Seg. Income and +9-11%* Adj. EPS CAGR +2-4% Core Sales CAGR UPSIDE
Includes ERICO in 2015 Base *Includes Benefit of ERICO
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Driving Long-Term Shareholder Value by Executing Against Our Commitments
Most Attractive Long-Term Opportunities and Prioritizing Investments
‒ PIMS as a Differentiating Capability and Core of Operating Rigor ‒ Leverage Our Advantaged Capital Structure ‒ Use Our “Win Right” Culture to “Grow,” “Get” Talent, and “Win” in M&A
Organic Growth, EBITA Expansion, and Free Cash Flow
Strategic M&A and/or Share Repurchases
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Vice President, Technology November 6, 2015
PENTAIR 2015 Investor & Analyst Day
Advance & Standardize The 3D Process To Drive New Product Development Efficiency Advance & Standardize The 3D Process To Drive New Product Development Efficiency Advance Pentair’s Technology Leadership Position to Drive Differentiated Growth Advance Pentair’s Technology Leadership Position to Drive Differentiated Growth Advance Global Technical Capabilities to Enable Engineering Productivity Advance Global Technical Capabilities to Enable Engineering Productivity
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NEW PRODUCT PERFORMANCE METRICS SUMMARY
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from New Products DISCOVER Identify, Evaluate & Prioritize DEVELOP Optimize & Validate Design
DEPLOY Execute Launch
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TECHNOLOGY ROADMAP & KEY EXAMPLES
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Societal Needs Technology Advancements
Advanced Electronics
Advanced Materials
Advanced Manufacturing Processes
Information Monitoring & Controls
Industrialization
Energy Sources ADVANCED Products:
Convergence Growth Opportunities
RESOURCE SCARCITY Solutions FOOD & BEVERAGE Solutions Application Focused SMART Products CONNECTED Solutions Service Model Focused
Middle Class
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions FOOD & BEVERAGE Solutions: Beer & Wine
Point of Use Filtration
Pumps & Pump Systems
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Nano to Micro Polymer Structures
Proprietary Polymer Formulations & Advanced Casting Methods
Molecular Chemical Structures
Advanced Coating & Synthesis Technologies
Creating Customer Value
Critical Material Properties
Filtration Innovations Enable Many Hygienic & Resource Scarcity Solutions
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New to Market Hollow Fiber Format with Breakthrough Chemical Stability …. A $500M Addressable Opportunity
2017 2016 2015
Applications
Boilers & Power Generation
Food & Beverage Processing
Separations
Applications
Separations
Process Separations
Applications
Disrupting Compounds, Pesticides & Herbicides
& Concentration
Applications
Removal for Reinjection Water in O&G Production
Applications
Waste Water reuse and Energy Recovery Solutions
HF-s Nano MBR HF-c HF-de HF-ds
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions FOOD & BEVERAGE Solutions: Beer & Wine
Point of Use Filtration
Pumps & Pump Systems
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BMF … Generation 1 BMF Flux+ … Gen 3
Consistent Beer Quality & Improved Taste Stability ... by a More Sustainable Process ... with Increased Flexibility & Modularity ... in a Safe Working Environment ... at Lower Costs Consistent Beer Quality & Improved Taste Stability ... by a More Sustainable Process ... with Increased Flexibility & Modularity ... in a Safe Working Environment ... at Lower Costs
Deliver
From Commercial Breweries To Craft Breweries
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions FOOD & BEVERAGE Solutions: Beer & Wine
Point of Use Filtration
Pumps & Pump Systems
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Source of Data : Baytel Associate, 2015 Edition
Total Systems & Consumables: $2.1 B
The Need
The Challenge
1) Filtration to Remove Suspended & Organic Matter 2) Reverse Osmosis (RO) to Remove Harmful Minerals & Organic Chemicals 3) Ultraviolet (UV) Light to Disinfect
The Current Situation
Not Meet NSF Standards or Work as Advertised
USA 24% China 21% USA 30% China 16% ROW 23% India 22% SE Asia 9%
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& Giardia
Bacteria, Cryptosporidium & Giardia
Premium Performance “Best Cost to Install” Superior Performance “Best Total Cost of Ownership”
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High Efficiency RO Module Design Produced By Proprietary Manufacturing Method Patent Pending Design Increases Feed Velocity Across the Membrane
Standard Module Design Pentair’s GRO Design
Design Innovation
Design Innovation
Great Quality, but …. > 80% Water Wasted
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+++ Counterfeit Flow Tube Counterfeit UV Lamp
UV Light Source Water Flows Inside Quartz Tube Cylindrical Reflector
Geometry Enables Unique Sensing Feature
Design Innovation
Performance Design Innovation
Performance
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions FOOD & BEVERAGE Solutions: Beer & Wine
Point of Use Filtration
Pumps & Pump Systems
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Accelerating Nature’s Processes … Helping to Ensure a Sustainable Future
From Waste Water Treatment Plants To Resource Recovery Facilities
Treated & Returned to the Ecosystem
Waste Water
Water Nutrients Energy
But Wastewater is a Rich Resource that could Help Address the Water-Food-Energy Challenges Society Faces Today But Wastewater is a Rich Resource that could Help Address the Water-Food-Energy Challenges Society Faces Today
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Waste from A Dairy Processing Plant
From Waste to a Source of Energy & Water … New Opportunities Possible
UF Treated Water Suitable for Reuse after Nano-Filtration or RO
Methane Used to Offset the Natural Gas supply X-Flow UF Membrane Systems
Innovative Technologies …
20 to 30% Higher Methane Production Than Conventional Treatment While Producing Water Suitable For Reuse
Innovative Technologies …
20 to 30% Higher Methane Production Than Conventional Treatment While Producing Water Suitable For Reuse
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Tubular Membrane Modules
Excellent Process Performance … but CAPEX & OPEX Challenged due to Energy Requirements
Helical Tubular Membranes
Advanced Hydraulic Design Enables:
Membrane Area
Advanced Hydraulic Design Enables:
Membrane Area
Helical Tubular Module … A Significant Breakthrough for Industrial Reuse
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Helical Tubular Module … A Significant Breakthrough for Industrial Reuse
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions FOOD & BEVERAGE Solutions: Beer & Wine
Point of Use Filtration
Pumps & Pump Systems
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from O&G to Power & Mining
Enables Efficient Designs & Reduces Costs Short Face Double Flanged Butterfly Valve
to -196o C
Cryogenic Standards FCT Cryogenic Ball Valve for LNG Processing
Reduces Actuator Horizontal Footprint by 70%
Marine Applications Compact ¼ Turn Hydraulic Actuator for LNG Tankers
Hazardous Applications in Chemical, Petrochemical, and O&G
Sensor for Remote Mounting, Calibration & Monitoring ICOT 6000 - Explosion Proof Valve Positioner
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for Water & Hydrocarbon Detection
Remotely Monitor Up to 250 Sensors TraceTek TT-TS12 Leak Detection System
Hazardous Locations in O&G, Petrochemical & Grain Processing
and ATEX Safety Standard ZONEX Terminal Box Down Hole Heating System ROCC Heat Management System Controller
Touch Screen Interface Simplifies Calibration & Operation
Option for Location in Hazardous Areas
and High-Pressure Environments of Down Hole Applications
Electrical Connections Enable this Innovation
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Coalescing Technology Widely used in O&G Processing & Petrochemical Industries
Advanced Coalescing Technologies is ~ $500M Addressable Opportunity
Small droplets adhere to the media and merge into larger ones as the fluid carries the particles through the media
As the Droplets Become Larger & Migrate Through the Media, They Release from the Media and Fall Under the Force of Gravity as the Droplet Carrier Fluid Flows in the Opposite Direction
How They Work Standard Coalescer
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Lobed Shaped Coalescer
Higher Packing Efficiency
5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
24 36 48 Traditional Design APEX Zenith Zenith + Advanced Media Vessel Diameter (inches) Projected Processing Rate (CFM)
True Breakthrough in Performance … Major Reductions in CAPEX & OPEX
Proprietary Coalescing Media
Higher Flow per Element 2x to 10x Increase in Flow per Vessel Significant Footprint Reductions CAPEX & OPEX Reductions 2x to 10x Increase in Flow per Vessel Significant Footprint Reductions CAPEX & OPEX Reductions
Proprietary Design Enables Major Performance Benefits
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions FOOD & BEVERAGE Solutions: Beer & Wine
Point of Use Filtration
Pumps & Pump Systems
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Examples:
SMART Products
Controllers
Technologies & Controllers
Instrumentation (e.g., Flow Meters, CO2 Sensors, Thermistors, Leak Detection, etc.)
Freeze Protection Systems Filtration & Pump Systems Valve Control Systems
SYSTEM Solutions ENTERPRISE Solutions CONNECTED Solutions SMART Products:
Devices with Advanced Features to Enable Component Level Diagnostics, Preventative Maintenance & Asset Management Services
CONNECTED Solutions:
Solutions Integrating SMART Products to Enable Component & System Level Performance Monitoring, Diagnostics, Preventative Maintenance & Asset Management Services, as well as Simplify Integration into an Enterprise Solution
2015 2018 2017 2016
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Algorithm Maintains Constant Pressure
Flow Rate Demands
Communication Methods for Monitoring & Control Intelli-Boost … SMART Flow Management System
Maintains Constant Pressure over a Wide Range of Flow Rate Demands
and Predictive Maintenance Algorithms Built-in
MBSP-3 … SMART Sump Pump with Battery Back-up
Alerts Delivered to Homeowner, Plumber,
Platform Designed to Connect Multiple Home Water Products
Efficiency via SMART Controls
Experience with Enhanced Remote Monitoring & Control Features IntelliFlo 2 … Next Gen Energy Efficient Pool Pump Intelli-Drive … SMART Submersible Pump Controller
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Enables User Friendly Interface
Optimize Heating Schedule SMART Residential Floor Heater Thermostat Digital EPIC Smart Valve Position Transmitter
Test Curves for Performance Diagnostics & Trending
Slim Line SMART Industrial Electrical Cabinets
Maintains Constant Temperature
Communicated via Multiple Protocols to Enable Predictive Service Cycles SMART Electro-Hydraulic Valve Actuator
Safe Applications
Predictive Maintenance Diagnostics
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– A Modular Communications Gateway Between the Host SCADA & PNR’s Valve Systems – Simplifies Connectivity and Control Between Valves, Other Field Devices & the Host – Enables a PNR Industrial IoT Service Solution
» Performance Optimization » Predictive Maintenance » Asset Life Cycle Management
– 2016 Launch
A SMART, Flexible Product That Can Enable an Industrial IoT Service Solution
Valve System Diagnostics Communication Master (DCM) - A Gateway to The Industrial IoT
PNR Smart Service Centers HOST DCM
LAN
. . . .
LOOP B LOOP A LOOP X
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– Process & Asset Performance Management
» Visualize & Collect Data Across Multiple Breweries, Real-Time » KPI’s Include: CO2 Generation, Uptime, Water & Energy Consumption » Data Analytics to Optimize Performance » Data Analytics to Identify Asset & Performance Issues and Perform Predictive Maintenance
– Gain New Product Innovation Insights
– Being Implemented at 5 Breweries
» Cambodia, Russia, Spain, St. Lucia, Ethiopia
A SMART Service Solution Creating Real Time Value & Enabling Growth
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A Data Collection, Analytics & Service Solutions Platform
PENTAIR 2015 Investor & Analyst Day
– 24/7 Remote Monitoring & Control – Process & Asset Performance Management
» Visualize & Collect Data Across Multiple Facilities, Real-Time » KPI’s Include: Water Quality, O2 Levels, Water Quality, Water & Energy Consumption » Data Analytics to Optimize Performance » Data Analytics to Predict Asset & Performance Issues
– Gain New Product Innovation Insights
– In Alpha Test at Multiple Facilities
Imagine The Standardization of Urban Farming & Its Impact on the Food Chain
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A 24/7 Remote Monitoring, Control & Analysis Service
PENTAIR 2015 Investor & Analyst Day
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Advance & Standardize The 3D Process To Drive New Product Development Efficiency Advance & Standardize The 3D Process To Drive New Product Development Efficiency Advance Pentair’s Technology Leadership Position to Drive Differentiated Growth Advance Pentair’s Technology Leadership Position to Drive Differentiated Growth Advance Global Technical Capabilities to Enable Engineering Productivity Advance Global Technical Capabilities to Enable Engineering Productivity
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Acting/Interim President November 6, 2015
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PENTAIR
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Geographic Distribution* Vertical Distribution* Aftermarket/MRO (Revenue $900M) Aftermarket/MRO (Revenue $900M) Engineered Projects (Revenue $935M) Revenue ~$1.8B Segment Margin ~13% Strategic Business Groups 2015 Forecasted Financials
Energy, ~59% Industrial, ~41% North America, ~26%
~24% Other Dev., ~14% Fast Growth, ~36% *2015F Revenue
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Brent Oil Price per Barrel (Since 2010) Global Rig Count (Since 2010)
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Chemical & Petrochemical
Advantage
“Wellhead to Wal-Mart”
Asia
Increased Demand for V&C Products and Services
Trend V&C Impact Industry Impact
Competitive Supplier with Increasing Capacity
Build as Planned
Opportunity: $7B Sales: $0.5B
Global Chemicals and Petrochem Capex 1 ($B)
753 864 809 701 2020 Projected CAGR 6.6% CAGR 3.3% 927 2019 2018 2017 2016 2015 673 2014 675 2013 661 2012 633
1 Nominal values Source: IHS Energy Data
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Aftermarket/MRO Engineered Projects
Selling Organization
Standard Product & Service for MRO EPC’s and Specifications
Quoting & Product Selection
Standard Products with “Immediate” Quotes Engineering Intensive Quotes
Engineering/Product Management
Low Intensity with Focus
High Intensity with Focus on Specifications
Service/Lifecycle Management
Start with Long Cycle Application and Focus
Operations/Sourcing
Short Lead Times & Local Support 9 to 12 Months Project Management & Global
Finance, IT, HR, & Legal
Processes Optimized by Function in Support of the Business & Customer
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2012PF Productivity & Cost-Out Inflation Volume/FX 2015F
~($300M) ~$315M ~($75M)
ROS 12.3%
~$53M
Revenue: $2.4B Revenue: ~$1.8B
Adj. Op Inc.
Amortization
ROS ~12.7%
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Aftermarket/ MRO Projects/
Applications/ Vertical
Pressure Management ~30% ~56% ~44%
Triple Offset Valves ~10% ~21% ~79%
Butterfly Valves ~16% ~58% ~42%
Actuation & Controls ~10% ~42% ~58%
Ball Valves ~11% ~37% ~63%
Gate, Globe & Check ~23% ~46% ~54%
% of V&C 2015F Sales
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KEY METRICS VALUE PROPOSITION BRANDS APPLICATIONS Keystone KTM Anderson Greenwood Crosby
V&C’s Reliable Products and Lifecycle Services Enable the Timely Support of
Maintenance, Efficiency, and Safety Requirements Around the World
~$900M
~3-5%
~3%
Industrial ~40% Energy ~60% Mining Pressure Relief Valves
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Aligned to Customer Buying Patterns
and Capability Across a Wide Portfolio
Metrics
Aftermarket Mix
Opportunities Linked
Buying Patterns
Metrics Linked to Customer Needs
Pricing Tools
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Capture
for Aftermarket Sales Growth Expansion
Maintenance Agreements Penetration
Proactively Target Opportunities
Conversion
Installations
Existing Installations New Wins Pentair Competitors 3
Existing Installed Base Installed Base Growth
4 1 2
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1
Primary Growth Area Wallet Share Growth Tertiary Growth Area
$250M of Estimated Sales Growth by 2020 3
High Medium Low Product Opportunity Application Vertical Opportunity
2
Low Medium High
Conventional Power Conventional Power Nuclear Power Metals & Mining O&G-Upstream O&G-Downstream Chemicals Pressure Management Actuation & Quarter Turn Pressure Management & Quarter Turn Gate, Globe & Check Valves 1 2 3
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Distribution Project Teams Sales Office Factory 3rd Party
Customer
Product Selection, Quoting & Project Mgmt.
Our Global Sales Offices 3rd Party
2015 2016+
KEY PERFORMANCE INDICATORS
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KEY METRICS VALUE PROPOSITION BRANDS APPLICATIONS
Vanessa
LNG Cryogenic TOV Valve Petrochemical/ Chemical Actuated TOV Valve Refining Knifegate Valve
Crosby FCT Fasani Clarkson
V&C’s Engineered Solutions for Pressure Protection and Severe Isolation in Critical Applications Enable Our Customers to Solve Their Most Relevant Infrastructure Challenges
~$935M
~1-2%
~Flat
Energy ~60% Industrial ~40%
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Project Investment
TOP DOWN AND BOTTOM UP KEY CRITERIA
HIGH MID
(Further Qualification Required)
LOW TOP
PRIORITIZATION
Pursue Do not Pursue Pursue Pursue Do not Pursue
OUTCOME
Segment Attractiveness Customer Product Strength Aftermarket Potential
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Increasing the Size of the Triple Offset Valve Opportunity
Value Proposition
Current TOV Opportunity Ball & GGC Conversion
$0.7B $0.6B $1.3B
Total Opportunity
$100M of Estimated Sales Growth by 2020
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$100M of Estimated Sales Growth by 2020
Automation Integrated Solutions Strategy Valve Actuation Strategy
Valves and Controls and Other Industrial Components to the HOST System
and Control Packages
V&C FOCUSED STRATEGIES:
Offering of Highly Engineered and Automation Capable Valves Valve Strategy Component Package Control Room Data Access Connectivity
Services connectivity Monitoring Wireless
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Current State: Geography-Based, Generalist Covered by Territory Sales Rep End of 2015/2016: Segmented, Customer-Centric
National Account Rep
Covered by:
Project Sales Rep
EPC Technical Sales Rep Channel Sales Rep
Inside Sales
Dedicated Aftermarket/MRO Coverage
Territory Sales Rep
Global Account Manager
Key Regional EPC Rest of Industry – High Touch Rest of Industry – Low Touch Indirect Channel Global
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13% 17-18% 5% 4% 15% 14-15% 34% 31-32% 33% 32-33% 2015F 2020T V&C Cost Structure Material OCOGS R&D/Selling G&A Segment Income ~$1.8B ~$2.2B
– Aftermarket/MRO: ~+3-5% – Engineered Projects: ~+1-2%
Related Cost Structure
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SALES SEGMENT INCOME
2010 2013 2014 2015F 2020T
$1.8B $2.5B
2013 2014 2015F 2020T
$350M ~$233M
ROS 16.8% +60-90 bps per Year
$399M
14.3%
~$1.8B
~13%
Revenue Performance (2015-2020)
– Oil & Gas: Flat to Down – LNG/Process: + $50M – Triple Offset Valves: +$100M – Automation: +100M
Segment Income Expansion
$2.4B
~1%
5 YR CAGR
~2-4%
5 YR CAGR
~7-10%
5 YR CAGR
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President November 6, 2015
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Geographic Distribution* Vertical Distribution*
Water Technologies Water Technologies
(Revenue ~$800M)
Fluid Solutions Fluid Solutions
(Revenue ~$430M)
Revenue ~$1.4B Segment Margin ~13%
Strategic Business Groups 2015 Forecasted Financials
Process Filtration Process Filtration
(Revenue ~$200M)
Industrial, ~16% Resi/Comm, ~32% Energy, ~6% Infrastructure, ~16% Food & Beverage, ~30% North America, ~51%
~20% ROW, ~29% *2015F Revenue
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VALUE PROPOSITION
BRANDS APPLICATIONS
Sump Pumps & Sewage Irrigation Pumps Fire Systems
MYERS JUNG AURORA BERKELEY FAIRBANKS NIJHUIS HYDROMATIC
Irrigation Water Supply & Disposal Fire Suppression
Submersible Grinders, Solids Handling
KEY METRICS We Provide a Full Range of Best in Class Solutions for Water Supply and Disposal Through a Dedicated Global Network
~$800M
~1-2%
~2% Verticals (2015F):
Residential & Commercial ~55% Infrastructure ~15% Industrial ~15%
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GOAL: Become a Leading Global Player in Water Supply/Disposal
Proposition, Full Portfolio with Fast Local Service
Through Localization and Partnerships with EPCs and Distributors
Smart Portfolio and Sales Excellence in the Pro Channel
Developed Regions and Renewable Energy Challenges in Emerging Regions
SMART Sump Pump with Battery Back-up ~$100M of Estimated Sales Growth by 2020 Local for Local Capability
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Beer Membrane Filtration
105
VALUE PROPOSITION BRANDS APPLICATIONS We Provide Domain Expertise and Solutions to Ensure the Quality, Efficiency, and Yield of Crops, Food, Dairy, and Beverages
Spray Nozzles & Tips Pumps QC Equipment C02 Systems
HYPRO SÜDMO HAFFMANS Beverage Solutions OEM Agriculture Solutions Energy Recovery SHURFLO
KEY METRICS
~$430M
~2-3%
~5% Verticals (2015F): Food & Beverage ~80% Industrial ~20%
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GOAL: Become a Leading Global Player in Food & Beverage Processing
Beverage Accounts
Customer Intimacy to:
Beer Quality, and Improved Taste Stability to Craft Brewers
Expansion into Biogas
System to Farmers
Compact Filtration Non Invasive CO2 Monitoring
~$100M of Estimated Sales Growth by 2020 Brewers
Biogas Upgrading
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VALUE PROPOSITION BRANDS APPLICATIONS We Provide Filtration and Separation Solutions for our Customer’s Most Challenging Water, Process, and Energy Needs
Membranes Pressure Vessels Engineered Packages Industrial Air Filtration
Industrial Water Oil & Gas Separations Municipal X-FLOW CODELINE
KEY METRICS
~$200M
~6-7%
1% Verticals (2015F):
Infrastructure ~45% Energy ~25% Industrial ~20%
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GOAL: Become a Technology, Applications, and Thought Leader for Industrial Water Solutions
Beverage, Oil & Gas, and Power Applications
Technology
Verticals and Applications
~$75M of Estimated Sales Growth by 2020
Helical Tubular Membranes Industrial Water Reuse In Oil & Gas UF Systems for Produced Water Reuse
Technology Applications Expertise Tailored Solutions to Critical Problems
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Proposition Around Service, Coverage and Loyalty Programs
Appropriate Coverage Models
Managers to Cover Dealers and Create Channel Pull with Distributors
Through Applying PIMS to Simplify Business Processes
Water Technologies Pro Channel:
Distributors Pro-Channel
DLR DLR DLR DLR
End User Newly Implemented Push-Pull Model
Field Marketing Manager
Territory Account Manager
Dealer Focus
Dealer Value Proposition
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Smart Products & Connected Solutions
Food & Beverage Solutions
Resource Scarcity Solutions
Bioreactor & Biogas Upgrading
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BMF … Generation 1 BMF Flux+ … Gen 3
Consistent Beer Quality & Improved Taste Stability ... by a More Sustainable Process ... with Increased Flexibility & Modularity ... in a Safe Working Environment ... at Lower Costs Consistent Beer Quality & Improved Taste Stability ... by a More Sustainable Process ... with Increased Flexibility & Modularity ... in a Safe Working Environment ... at Lower Costs
Deliver
From Commercial Breweries To Craft Breweries
PENTAIR 2015 Investor & Analyst Day
Waste from A Dairy Processing Plant
From Waste to a Source of Energy & Water … New Opportunities Possible
UF Treated Water Suitable for Reuse after Nano-Filtration
Methane Used to Offset the Natural Gas supply X-Flow UF Membrane Systems
Innovative Technologies …
20 to 30% Higher Methane Production Than Conventional Treatment While Producing Water Suitable For Reuse
Innovative Technologies …
20 to 30% Higher Methane Production Than Conventional Treatment While Producing Water Suitable For Reuse
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1.
Become a Leading Global Player in Water Supply/Disposal Grow Fire Systems Through a Global Network to Meet Local Service and Delivery Needs. Expand Our Pump Portfolio Globally Through Innovation and Sales Excellence
2.
Become a Leading Global Player in Food & Beverage Processing Build Upon Application Expertise and Customer Intimacy to Deliver Broader Solution Offerings to Key Accounts and OEM Customers
3.
Become a Thought Leader for Industrial Water Solutions Build Upon Process Filtration Application Expertise to Solve Industrial Water Challenges and Drive Wider Adoption of Membrane Technologies
~$100M of Estimated Sales Growth by 2020 ~$100M of Estimated Sales Growth by 2020 ~$75M of Estimated Sales Growth by 2020
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Provide Scale
Complexity Reduction
Business Processes: Order Management, Customer Service, SIOP
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SALES SEGMENT INCOME
Portfolio Positioned to Grow with Macro Trends
2010 2013 2014 2015F 2020T
Build on PIMS Foundation to Drive Operational Performance
Improve the Customer Experience $1.4B $1.7B
2013 2014 2015F 2020T
~5-7%
5 YR CAGR
$201M ~$186M
ROS 12.4% ~40-50 bps per Year
$199M
12.2%
~$1.4B
~13%
~2-3%
5 YR CAGR
$1.6B
Flat
5 YR CAGR
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President November 6, 2015
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120 North America, ~71%
~10% ROW, ~19% Resi/Comm, ~83% Food & Beverage, ~17%
Geographic Distribution* Vertical Distribution*
Aquatic & Environmental Systems Aquatic & Environmental Systems
(Revenue ~$825M)
Water Filtration Water Filtration
(Revenue $560M)
Revenue ~$1.4B Segment Margin ~20%
Strategic Business Groups 2015 Forecasted Financials
*2015F Revenue
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KEY METRICS VALUE PROPOSITION BRANDS APPLICATIONS We Provide Advanced, Efficient Technology and Expertise to the Swimming Pool and Aquaculture Industries to Ensure Their Profitable Operations
~$825M
~4-5%
~8%
Residential & Commercial ~90% Food & Bev ~10%
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~$100M of Growth by 2020
Penetrated Less than 10% of Installed Base Globally
Through to Accelerate Replacement
Position with Complementary EcoSelect Technologies:
– LED Lighting – Hi-Efficiency Heaters – Salt Water Chlorination – Robotic Cleaners – Automation Controls
>$200M Global Variable Speed Pump Opportunity Expansion Potential $29M $37M $72M
$300M
50 100 150 200 250 300 350 400
Natural Demand Intelliflo Value Proposition
Potential Demand at 3% of existing pumps and 15% of breakage
Current Penetration
$M
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~$80M of Estimated Sales Growth by 2020
Leadership Role in RAS Systems Engineering
– RAS is Expected to Help Fill the Supply Gap as Demand for Seafood Outruns Traditional Supply Sources – Net Pen Production is Migrating Toward Onshore RAS Grow Out
Engineered Systems
Aquaponics / Urban Farming Success
100,000 150,000 200,000 250,000 300,000 350,000
'90 '95 '00 '05 '10 '15 '20 '25 '30
Tons
Year
Fish Production Actual/Forecast 1990 - 2030
Fish Demand
Wild Capture Ponds Net Pens RAS
RAS Growing to Fill Supply Gap
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KEY METRICS VALUE PROPOSITION BRANDS APPLICATIONS We Provide Innovative Solutions that Improve Water Quality and Beverage System Efficiency in a World with Limited Access to Healthy Sources of Drinking Water
~$560M
~4-5%
~3%
Residential & Commercial ~60% Food & Beverage ~30%
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~$100M of Estimated Sales Growth by 2020
Residential
(Expensive and Environmentally Unsustainable)
Provide Economical, Reliable Protection from Contaminants
750M* Global Households
60M with POU Filtration
300M Using Bottled Water
8% Global Industry Segment Penetration Potential 240M Global Households that Could Use POU Filtration
1% of the Potential = $240M
Eg., Asia has 7+ Million Foodservice Outlets Growing at 7%-10% Per Year
Growing Concerns Globally Around Drinking Water Quality Foodservice
Demand for Foodservice
Capitalize on Their Growth
Fast Growth Regions
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Deploying ~50 Sales Resources Over Five Years Focused on Dealers
Sales Through Our Most Successful Customers
Superior Web Presence to Support Channel Pull-Through
Distributor/OEM Water Filtration
DLR DLR DLR DLR
End User Future Go To Market:
Push-Pull Model
Dealer Merchandiser
Territory Account Mgr
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127
Customer Intimacy Driving Insights Designs Tailored to Global Regions Investment in Basic Research Selective Acquisitions & Partnerships Energy Efficient Value Propositions Innovative Customer Solutions Driving Differentiated Growth
PENTAIR 2015 Investor & Analyst Day
High Efficiency RO Module Design Produced By Proprietary Manufacturing Method Patent Pending Design Increases Feed Velocity Across the Membrane
Standard Module Design Pentair’s GRO Design
128
Design Innovation
Design Innovation
Great Quality, but …. > 80% Water Wasted
PENTAIR 2015 Investor & Analyst Day
+++ Counterfeit Flow Tube Counterfeit UV Lamp
UV Light Source Water Flows Inside Quartz Tube Cylindrical Reflector
Geometry Enables Unique Sensing Feature
129
Design Innovation
Performance Design Innovation
Performance
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Broaden EcoSelect Penetration and Coverage Globally
Farming Technology to Fill the Emerging Supply Gap
Quality Concerns
Water Solutions as Global Middle Class Demand for Convenient Food Increases
~$100M of Estimated Sales Growth by 2020 ~$80M of Estimated Sales Growth by 2020 ~$50M of Estimated Sales Growth by 2020 ~$50M of Estimated Sales Growth by 2020
131
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SALES SEGMENT INCOME
2010 2013 2014 2015F 2020T
$1.0B $1.3B
2013 2014 2015F 2020T
$231M ~$278M
ROS 18.7% ~50 bps per Year
$253M
18.2%
~$1.4B
~20.0%
A Portfolio with Demonstrated Growth and Favorable Outlook
Execution and Healthy Market Forces Expected to Lead to Mid to High Single Digit Growth
Global Growth in Middle Class and Water Quality Concerns
Commitment to PIMS Execution Leads to Outstanding Operating Results
All Businesses
$1.4B
~8%
5 YR CAGR
~4-5%
5 YR CAGR
~6-7%
5 YR CAGR
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PENTAIR 2015 Investor & Analyst Day
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President November 6, 2015
135
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2.
3.
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Geographic Distribution** Vertical Distribution**
Enclosures Enclosures
(Revenue $950M)
Thermal Management Thermal Management
(Revenue $700M)
Revenue ~$2.2B* Segment Margin ~22%
Strategic Business Groups 2015 Forecasted Financials
Engineered Fastening Solutions Engineered Fastening Solutions
(Revenue $550M*)
* Pro Forma Including ERICO
Industrial ~37% Resi/Comm ~25% Energy ~22% Infrastructure ~16% North America ~64%
~20% ROW ~16% **2015 Pro Forma Revenue
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KEY METRICS VALUE PROPOSITION BRANDS APPLICATIONS
Data Centers Washdown/Corrosive Conditions Commercial Construction Weather Resistant/Outdoor
We Protect Mission-Critical Electrical and Electronics Equipment with the Widest Range of Innovative Standard Products and Custom Solutions
~$950M
~0-2%
~1% Verticals (2015F):
Industrial ~55% Infrastructure ~20% Energy ~10%
PENTAIR 2015 Investor & Analyst Day
Cable Management Distribution Blocks Rail & Strut Flexibar
Opportunity Description
Enclosure, Thermal Management, and Engineered Fastening Products Opportunity Size
Recent Progress
Next steps
139
Busbar Hoffman Proline Enclosure
~$100M of Estimated Sales Growth by 2020
PENTAIR 2015 Investor & Analyst Day
140
KEY METRICS VALUE PROPOSITION BRANDS APPLICATIONS
Commercial Construction Rail and Transit Heating Pipe Freeze Protection Residential Floor Heating
We Protect Processes with Products and Services to Maintain Temperature or Prevent Freezing in Industrial, Commercial, or Residential Applications
~$700M
~1-4%
~4% Verticals (2015F):
Energy ~35% Industrial ~30% Residential & Commercial
~25%
PENTAIR 2015 Investor & Analyst Day
Opportunity Description
Building/Factory Information Management Systems Opportunity Size
Grow to a ~$200M Product Line by 2020 Recent Launches
Next steps
141
~$100M of Estimated Sales Growth by 2020
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KEY METRICS VALUE PROPOSITION BRANDS APPLICATIONS
Electrical, Datacom, Infrastructure, Energy Commercial, Residential, Industrial Commercial and Industrial Construction
We Protect Electrical and Civil Installations Through Innovative Engineered Fastening Solutions that Drive Productivity by Reducing Installation Time
~$550M
~3-4%
~3% Verticals (2015F):
Residential & Commercial ~75% Infrastructure ~25%
PENTAIR 2015 Investor & Analyst Day
Corporate Consolidation Cross-Selling PIMS Lean/ Standardization
Initiate Growth Synergies
143
Integration Work Streams Benefit 2015 2016 2018 Utilize PNR Structural Advantage $ Millions Plan
$14M FCST
$14M Drive Lean & PIMS to Consolidate and Standardize Cost Synergies Plan
$18M FCST $2M $12M $20M Cross-Sell Products into Industrial Automation and Commercial Contractors Sales Synergies Plan
$25M
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Customers Inquiry Quotes Orders
End Users Intelligence PIMS Lean to Reduce Time Lead Generation Instant Quotes Perfect Order
F D C B A
Opportunity Description
Coverage, and Sales Process Opportunity Size
Class) and Optimize Resource Deployment to Generate ~$200M of Incremental Sales by 2020 Recent Progress
Issue Resolutions, Easier Returns,
Next Steps
~$200M of Estimated Sales Growth by 2020 Win Rate
E
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Enclosures Thermal Management Engineered Fastening Solutions
Panel Integrators Data/Com OEMs Factory Electricians & Project Leaders Building Architects & Contractors Electrical Contractors Civil Construction Utilities
Key Success Factors
Installation Time
PENTAIR 2015 Investor & Analyst Day
146
Enclosure Modification Centers
USA with Channel Partners
Issue for Modified Enclosures
Thermal Building Services
to Solve Heat Trace Challenges
in Fire Protection, Transportation
Heating and Roof Protection
Pipeline Temperature Controls
Full Solution for Process Pipelines
End-to-End Solution and MRO Services
Engineers – Prototype to Production
World Class Quality and Lead Times 5 Year Sales Growth: $70M Opportunity 5 Year Sales Growth: $30M Opportunity 5 Year Sales Growth: $50M Opportunity 5 Year Sales Growth: $30M Opportunity
Single Circuit Enclosure Solution
PENTAIR 2015 Investor & Analyst Day
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~$200M of Estimated Sales Growth by 2020 >$100M of Estimated Sales Growth by 2020 ~$100M of Estimated Sales Growth by 2020 ~$100M of Estimated Sales Growth by 2020
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SALES SEGMENT INCOME
2010 2013 2014 2015F 2020T
$1.6B $1.7B
2013 2014 2015F 2020T
$342M ~$395M
ROS 21.9% ~70 bps per Year
$378M
20.5% $1.7B ~22%
~3%
5 YR CAGR
~$1.8B
~2-3%*
5 YR CAGR
~9-11%^
5 YR CAGR
*Includes ERICO Pro Forma in 2015 Base ^Includes Benefit of ERICO
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1.
2.
3.
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2015 Investor & Analyst Day
Chief Financial Officer November 6, 2015
151
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– Deployment of Sales Excellence – Continue to Go Beyond 4-Wall Lean for “Back Office” Optimization
– Right-Size Manufacturing Workforce for Expected Top Line Performance – Accelerate Footprint Rationalization in V&C (Continued Energy Softness) – Accelerate Standardization: ERPs, Data Centers, etc.
– Core EPS = 100% of Free Cash Flow = Significant Capital Allocation Opportunity
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Valves & Controls (2015F Revenue $1.8B) Aftermarket/MRO (Revenue $900M) Engineered Projects (Revenue $935M) Flow & Filtration Solutions (2015F Revenue $1.4B) Water Technologies (Revenue $800M) Fluid Solutions (Revenue $430M) Process Filtration (Revenue $200M) Water Quality Systems (2015F Revenue $1.4B) Aquatic & Environ. Systems (Revenue $825M) Water Filtration (Revenue $560M) Technical Solutions (2015F Revenue $2.2B*) Enclosures (Revenue $950M) Thermal Management (Revenue $700M)
(Revenue $550M)
*Pro Forma Including ERICO
Four External Reporting Segments 10 Strategic Business Groups
Higher Growth Priority
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Valves & Controls Flow & Filtration Solutions Water Quality Systems Technical Solutions
Valve Automation Integrated Solutions Expand Installed Base and Aftermarket Sales Enhance Focus on Process Industry (Triple Offset Valves)
2015-2020 2-4% CAGR 2015-2020 2-3% CAGR 2015-2020 4-5% CAGR 2015-2020 2-3% CAGR
Expand Industrial Water and Adoption of Membrane Technology Grow Global Commercial/Industrial Fire and Pro-Channel (2-Step) Become a Leading Global Player in Hygienic Processing & Precision Agriculture Further Develop Foodservice in Fast Growth Regions EcoSelect Pool Solutions Penetration and Recirculating Aquaculture Systems Improve Point of Use Drinking Water Purification Smart Products: Integrating with Building/Factory Information Systems; Heating Controls Grow Electrical Enclosures Outside North America Thermal Building Infrastructure Penetration and Portfolio Diversification
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2015 Investor & Analyst Day
Growth
1.Strategy 2.Structure 3.Management
155
Overview Why it Matters Impact
and Predictable Growth
PIMS
Across Pentair
the Right:
1.Customers 2.Markets 3.Products
Level of Our Customer Facing Teams
8 Step Process
STRATEGY STRATEGY STRUCTURE STRUCTURE MANAGEMENT MANAGEMENT
Opportunity Segments Opportunity Segments
1
Coverage Design Coverage Design
2
Customer Contact Continuum Customer Contact Continuum
3
Job Design & Organizational Structure Job Design & Organizational Structure
4
Resource Deployment Resource Deployment
5
Sales Talent & Management Sales Talent & Management
6
Productivity Metrics Productivity Metrics
7
Performance Management & Compensation Performance Management & Compensation
8
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Growth Opportunities Talent & Cost Customer
Core Growth (Net Sales %) Core Growth (Net Orders %)
Pipeline (2-3x Sales) Win Rate
% Reps Achieving Target Revenue per Rep
Cost of Sales Standard Margin %
Coverage, Penetration, and Retention Metrics (CPR) Share of Wallet Market Share
Metric Flexibility at Sales Leader Levels Based on Go- To-Customer Model
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Customer Focus Sourcing Optimize Front-End Business Processes Expanding Lean Culture Throughout the Organization
Continue Strong Performance in Sourcing
Foundational in Sourcing Organization
Lean Continue Improvement on OTD (>96%) by 2020 Quality PPM Continues to Improve (<1,000) by 2020
In Progress
Sourcing + Lean Initiatives Drive > 500 bps Gross Margin Improvement from ’15-’20
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Factories Distribution Centers Offices Service Centers
Today: 102 Today: 66 Today: 90 Today: 173 2020: ~46 2020: ~70 2020: ~72 2020: ~138
REDUCE BY 30% REDUCE BY 30% REDUCE BY 20% REDUCE BY 20%
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2015 Investor & Analyst Day
159
ERPs ACCOUNTING CENTERS DATA CENTERS
Today: 55 Today: 60 Today: 30 2020: ~20 2020: ~10 2020: ~3
REDUCE BY 80% REDUCE BY 65% REDUCE BY 90%
PENTAIR
2015 Investor & Analyst Day
160
Market Growth +1-2% Differentiated Growth
+ Leverage / PIMS = + Tax Rate Reduction =
PENTAIR
2015 Investor & Analyst Day
161
REVENUE GROWTH (2015-2020 CAGR) SEGMENT INCOME (2015-2020 CAGR) ROS EXPANSION (2015-2020 Per Year) 2015 TO 2020 EPS GROWTH
Valves & Controls Flow & Filtration Water Quality Systems Technical Solutions Total Pentair
2-4% 2-3% 4-5% 2-3% 2-4%
Valves & Controls Flow & Filtration Water Quality Systems Technical Solutions Total Pentair
7-10% 5-7% 6-7% 9-11%* 8-10%*
Valves & Controls Flow & Filtration Water Quality Systems Technical Solutions Total Pentair
~60-90 bps
*Includes Benefit of ERICO Technical Solutions & Pentair Pro Forma with ERICO in 2015 *Includes Benefit of ERICO Revenue is Pro Forma with ERICO in 2015 Base
~40-50 bps ~50 bps ~70 bps* ~70 bps*
*Includes Benefit of ERICO
PENTAIR
2015 Investor & Analyst Day
162
PENTAIR
2015 Investor & Analyst Day
FREE CASH FLOW DEBT/EBITA 2000 2005 2010 2015F 2020T
$117M
Ending Debt 2015F FCF Dividends & Buyback 2020T Net Debt
$4.8B
>$5B
Available Capacity @ 3.5x 163
$203M $211M ~$700M
~9-11%*
5 YR CAGR *Includes Benefit of ERICO
PENTAIR
2015 Investor & Analyst Day
164
PENTAIR 2015 Investor & Analyst Day
165
PENTAIR 2015 Investor & Analyst Day
166
PENTAIR 2015 Investor & Analyst Day
167
PENTAIR 2015 Investor & Analyst Day
168
PENTAIR 2015 Investor & Analyst Day
169
PENTAIR 2015 Investor & Analyst Day
170
PENTAIR 2015 Investor & Analyst Day
171