Pentair Electrical Products Group Conference John L. Stauch Chief Financial Officer May 21, 2014 PENTAIR 2014 Electrical Products Group Conference
FORWARD-LOOKING STATEMENTS C AUTION C ONCERNING F ORWARD -L OOKING S TATEMENTS 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,” “goals,” “plans,” “believes,” “expects,” “intends,” “will,” “likely,” “may,” “anticipates,” “estimates,” “projects,” “should,” “would,” “positioned,” “strategy,” “future,” "outlook," "opportunity" 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 successfully complete the Redomicile and achieve the expected benefits from the Redomicile; the ability to successfully integrate the Flow Control business and achieve expected benefits from such combination; overall global economic and business conditions; 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 U.S. Securities and Exchange Commission, including in our 2013 Annual Report on Form 10-K. All forward-looking statements speak only as of the date of this communication. Pentair Ltd. assumes no obligation, and disclaims any obligation, to update the information contained in this communication. 2 PENTAIR 2014 Electrical Products Group Conference
KEY DEFINITIONS • All References to 2015, 2016, and 2017 Represent Our Long Term Strategic Goals • Except as Otherwise Noted, and Except for Sales, All References to 2014 Represent Our Results for the Period Indicated Presented on an Adjusted Basis • Except as Otherwise Noted, and Except for Sales, All References to 2013 are Presented on an Adjusted Basis • Except as Otherwise Noted, All References to 2012 are Presented on an Adjusted, Pro Forma Basis to Include the Results of the Flow Control Acquisition • See Appendix for GAAP to Non-GAAP Reconciliations 3 PENTAIR 2014 Electrical Products Group Conference
KEY MESSAGES • We Continue to Expect to Deliver ~$5.00 EPS by 2015 • Productivity & Synergies Solidifying • Sustained and Predictable Growth is Goal • We Are Optimistic About 2016 and Beyond Delivering on Commitments One Quarter at a Time 4 PENTAIR 2014 Electrical Products Group Conference
GLOBAL PENTAIR PORTFOLIO – 2013 SALES 100% = $7.5B By Reporting Segment By Geography By Vertical Food & Developed Beverage, Flow Non-U.S., ~9% Technologies, Energy, Valves & ~11% U.S. and Infrastructure, ~22% ~28% Controls Canada, ~13% Western ~33% ~46% Europe, Technical ~18% Resi/Comm, Solutions, Process Fast ~24% Industrial, ~22% Technologies Growth, ~26% ~23% ~25% Long & Short Cycle Balanced Geographic Balanced Across • • • Balanced Portfolio Exposure with 25% in Verticals Fast Growth Regions Global Solutions / Current Trends: Strength • • Recognized Brands Current Trends: US in NA Residential and • Strength and Western Food & Beverage; Largest “Valve • Europe has Stabilized Industrial has Stabilized; Company” Globally Energy Mixed Pentair has a Balanced Portfolio 5 PENTAIR 2014 Electrical Products Group Conference
DRIVING HIGH PERFORMANCE HOW WE DIFFERENTIATE PENTAIR • Purpose, Vision & Strategic Priorities STRATEGY A • Value Proposition & Competitive Advantage L • Controlling Our Destiny I G HOW WE EXECUTE N PROCESS & • Standard Operating Model … PIMS M STRUCTURE • Organization Design … Corporate, GBUs, Fast Growth Regions E N • Functional Excellence … Standards & Practices T HOW WE WIN RIGHT CULTURE & • Win Right … Pentair Values TALENT • Leadership Behaviors … Top Talent • How We Work Together Three Levers … Aligned To Achieve Our Goals 6 PENTAIR 2014 Electrical Products Group Conference
FINANCIAL TARGETS EPS Revenue ($B) Op Income ~$8.1 ~$1.3B $3.85 ~$5.00 ~$1.1B to $4.00 ~$7.7 $944M $3.21 ~4% ~19% ~25% $7.5 CAGR CAGR CAGR +3% +15% +22% 2013 2014 2015 2013 2014 2015 2013 2014 2015 Guidance Goal Guidance Goal Guidance Goal ROS 12.6% ~14% ~16% • Revenue Growth Accelerating – Prioritizing Platform, Verticals, and Geographic Opportunities • Op Income Growth & EPS Driven by Base and Synergies – Balance Between Base (+10%) and Synergies (+8%) While Investing in Simplification / Standardization (-3%) and Sustainable Tax Benefits Continued Progress Toward Becoming a Great Industrial Company 7 PENTAIR 2014 Electrical Products Group Conference
Q2'14 PENTAIR OUTLOOK Total Pentair Q2’14 FINANCIAL OUTLOOK (YoY) Sales ~Flat to Down 1% Q2’14 Q2’13 • Valves & Controls Flat Sales ~$1.95B $1.96B • Process Technologies Up ~6-8% YoY % ~(1%) • Flow Technologies Down ~20% Op Income (Adj.) ~$285M $268M • Technical Solutions Up ~4-6% ROS (Adj.) ~14.7% 13.7% Adj. Op Income Up ~6% (Includes -10% From OMT & AUS Projects) Adj. Op Margins ~14.7% … Up ~100 bps EPS (Adj.) $1.02-$1.05 $0.92 • Valves & Controls Margins, ~14.0% YoY % ~13% • Process Technologies Margins, ~17.5% • Flow Technologies Margins, ~12.5% Water Transport Impact • Technical Solutions Margins, ~20.0% $M YoY % Adj. EPS Up ~13% • Tax Rate of ~23.5% ~($95M) ~(5%) Sales • Net Interest ~$16.5M; Shares ~199M Op Income (Adj.) ~($20M) ~(7%) Q2 Free Cash Flow Expected to be Strong; >125% of Net Income Expect Margin and EPS Growth Even With Tough Top Line Comp 8 PENTAIR 2014 Electrical Products Group Conference
FULL YEAR 2014 PENTAIR OUTLOOK Total Pentair FY’14 FINANCIAL OUTLOOK (YoY) Sales Up ~2-4% FY’14 FY’13 • Valves & Controls Up ~1-3% ~$7.7B $7.48B Sales • Process Technologies Up ~8-10% YoY % ~3% • Flow Technologies Down ~5-7% Op Income (Adj.) ~$1.1B $944M • Technical Solutions Up ~4-6% ROS (Adj.) ~14.1% 12.6% Adj. Op Income Up ~15% (Includes $20M of OMT Investment) EPS (Adj.) $3.85-$4.00 $3.21 Adj. Op Margins ~14.1% … Up ~150 bps YoY % ~22% • Valves & Controls Margins, ~13.5% • Process Technologies Margins, ~16.0% Water Transport Impact • Flow Technologies Margins, ~11.5% • Technical Solutions Margins, ~21.5% $M YoY % Adj. EPS Up 22% Sales ~($150M) ~(2%) • Tax Rate of ~23.5% • Net Interest ~($70M); Shares ~198.5M Op Income (Adj.) ~($32M) ~(3%) Free Cash Flow of ~$850M; >105% Net Income Current Outlook Consistent with Previous Guidance 9 PENTAIR 2014 Electrical Products Group Conference
REVENUE GROWTH (YoY) By Segment $8.1B Valves & Controls $7.7B 2013 +4% $7.5B 2014F +2% 2015T +6% Core Core Core Growth Flow Technologies Growth Growth ~6% 2013 -1% ~5% 5% 2014F -6% 2015T +4% Flow Tech. WT Impact WT/Mega WT Water Transport 2013 -5% Expected to be (2%) ~(2%) 2014F -9% Approximately Flat to 2014 2015T +0% Process Technologies 2013 2014F 2015T 2013 +8% 2014F +9% • Water Transport & Thermal Mega Projects Impacted 2013 Growth 2015T +7% ~+17% +15% ~+14% • Water Transport / Divestitures (Small - Non Core) Impacting 2014 Technical Solutions • “Core” (Excluding WT) Grew +5% in 2013 and is Expected to 2013 -3% (6%) (~6%) 2014F +5% Grow ~5% in 2014 & ~6% in 2015 2015T +8% Underlying Growth Masked by Inherited Projects 10 PENTAIR 2014 Electrical Products Group Conference
OPERATING INCOME GROWTH (YoY) *Includes OMT $944M ~$1.1B ~$1.3B By Segment +19% ~+23% ~+15% Valves & Controls OMT 2013 +24% ~+7% 2014F* +12% Repositioning +11% ~+8% 2015T +20% Flow Technologies 2013 +7% Core / ~+16% 2014F -2% ~+14% +13% Synergies 2015T +20% Flow Tech. WT Impact 2013 -3% (5%) WT / Mega 2014F -19% ~(7%) 2015T +0% OMT Process Technologies 2013 2014F 2015T 2013 +35% 2014F +20% • Solid “Core” Performance + Repositioning / Synergies Driving Healthy 2015T +20% Operating Income and Margin Expansion • Water Transport / Mega “Challenged” 2013 Technical Solutions 2013 +13% • Water Transport + OMT Investment Impacting 2014 2014F +16% • OMT Expected to “Flip” to a Positive in 2015 … Core / Synergies Accelerate 2015T +15% Solid Contribution from Core / Synergies + Repositioning 11 PENTAIR 2014 Electrical Products Group Conference
Recommend
More recommend
