PENTAIR Investor Presentation November 2017 November 2017 Investor - - PowerPoint PPT Presentation

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PENTAIR Investor Presentation November 2017 November 2017 Investor - - PowerPoint PPT Presentation

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


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November 2017 Investor Presentation

PENTAIR

Investor Presentation

November 2017

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November 2017 Investor Presentation

FORWARD-LOOKING STATEMENTS

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

THIS PRESENTATION CONTAINS STATEMENTS THAT WE BELIEVE TO BE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT ARE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITATION, 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.

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November 2017 Investor Presentation

Industry-Leading, Pure-Play Companies; Strong Financial Profiles

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SEPARATION OF PENTAIR INTO TWO PUBLICLY-TRADED COMPANIES

WATER ELECTRICAL A Leading Global Water Company Focused

  • n Smart, Sustainable Water and Fluid

Processing Applications A High-Performance Electrical Company Focused on Improving Utilization, Lowering Costs, and Maximizing Customer Uptime

2017F Revenue: ~$2.1B 2017F ROS: ~22% 2017F Revenue: ~$2.8B 2017F ROS: ~19%

SUSTAINABILITY

Maximizing the Use of the Resources People Rely on Most Connecting & Protecting Critical Processes, People, and the Environment

CONNECTION & PROTECTION

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November 2017 Investor Presentation

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RATIONALE OF SEPARATION

The Next Step in the Evolution of Pentair

RATIONALE FOUNDATION

STRATEGIC FOCUS Improved Clarity into Performance and Growth Opportunities CAPITAL ALLOCATION FLEXIBILITY Unique Strategies to Deliver Growth for Each FINANCIAL STRENGTH Supports Plan to be Successful, Profitable, and Sustainable PIMS Pentair’s “Business System” MANAGEMENT TEAM Mix of Current & New Executives and Board Members to Lead CAPITAL STRUCTURE Expect Strong Balance Sheet and Investment Grade Metrics

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November 2017 Investor Presentation

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February 2018 Pentair and nVent Investor Meetings

SEPARATION UPDATE

We are Prepared to Stand Up Two Well Positioned Companies

April 2018 Report Q1’18 Earnings Results Q2 2018 Expect nVent Spin to be Complete January 2018 Report Q4’17 Results and Initial 2018 Outlook October 2017 Filed Form 10 for nVent May 2017 Announced Plan to Separate Water and Electrical

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November 2017 Investor Presentation

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PIMS IS KEY TO DRIVING HIGH PERFORMANCE

Our Standard Operating Model Across the Enterprise

PIMS

PENTAIR INTEGRATED MANAGEMENT SYSTEM Rapid Growth Process 3D Innovation Commercial Excellence

  • TALENT & CULTURE -

Talent Mgmt.

  • Org. Development

“Win Right” Values

  • LEAN ENTERPRISE -

Standard Work Creating Flow Strategy Deployment

  • GROWTH -
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November 2017 Investor Presentation

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DRIVING SHAREHOLDER VALUE

Pulling All Levers to Create Shareholder Value

ORGANIC GROWTH

Being in the Right Markets to Drive Sustainable & Predictable Growth

MARGIN EXPANSION

Productivity Through PIMS and Sustainable EPS Growth

FCF & CAPITAL ALLOCATION

Dividends, Accretive Acquisitions, and Opportunistic Buybacks

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November 2017 Investor Presentation

Residential 8

WATER BUSINESS

A Leader in Residential & Commercial Water Treatment

Infrastructure 11% Industrial 6%

Company Characteristics Leadership Vertical Markets Strategic Business Groups Geographies

US & Canada 65% Developing 17% Western Europe 13% Other Developed 5% 56% Infrastructure 8% Filtration & Process 35% Aquatic Systems 33% Flow Technologies 32% Commercial 19% Industrial 17%

  • Industry-Leading Positions and

Strong Brands

  • Focused on Smart,

Sustainable Water and Fluid Processing Applications

  • Attractive Margin Profile
  • Strong Free Cash Flow Generation

David Jones, Chairman John Stauch, President & CEO Karl Frykman, COO Mark Borin, CFO

2017 Forecast

19%

ROS

~$2.8B

Revenue

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November 2017 Investor Presentation

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FILTRATION & PROCESS

A Leader in Residential & Commercial Filtration with Niche Industrial

2017 Forecasted Financials

Provides Innovative and Sustainable Solutions that Improve Water Quality, Beverage Systems, and Environmental Efficiency in a World with Limited Access to Healthy Sources of Drinking and Process Water

Description Vertical Markets Geographies

High Teens

ROS

~$1.0B

Revenue

Infrastructure 11% Industrial 6%

US & Canada 45% Other Developed 6% Western Europe 21% Developing 28% Residential 38% Industrial & Infrastructure 42% 20% Commercial

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November 2017 Investor Presentation

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AQUATIC SYSTEMS

A Leader in North America Pool

2017 Forecasted Financials

Provides Advanced, Efficient Technology, Expertise, and Service to Build Intimacy with Pool Professionals and Ensure Pool Owners Maximize Their Enjoyment

Description Vertical Markets Geographies

>20%

ROS

~$900M

Revenue

Infrastructure 11% Industrial 6%

US & Canada 86% Western Europe 4% Developing 8% Residential 89% 11% Commercial Other Developed 2%

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November 2017 Investor Presentation

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FLOW TECHNOLOGIES

A Leader in Residential & Commercial Flow

2017 Forecasted Financials

Provides a Full Range of Best in Class Solutions for Water Supply, Disposal, and Movement Through a Dedicated Global Network of Sales, Service, and Support

Description Vertical Markets Geographies

Mid Teens

ROS

~$900M

Revenue

Infrastructure 11% Industrial 6%

US & Canada 64% Other Developed 6% Western Europe 15% Developing 15% Commercial & Infrastructure 33% Residential/ Irrigation 50% 17% Specialty

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Investing in our Strengths

  • Increase Pool Content through New Product Introductions
  • Increase Connected Products
  • Build Further Channel Intimacy

PROTECT & GROW AQUATICS

  • Create Water Filtration Franchise
  • Increase Connected Products
  • Look to Build/Add Service Capabilities

EXPAND RESIDENTIAL & COMMERCIAL FILTRATION

  • Grow Point of Use Sales in China
  • Expand Foodservice Presence in China
  • Target Hospitality Market in SE Asia

ACCELERATE CHINA & SE ASIA INVESTMENT COMPANY STRATEGY

TOP STRATEGIC PRIORITIES

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November 2017 Investor Presentation

Industrial 13

ELECTRICAL BUSINESS

A High-Performance Electrical Company Focused on Connection and Protection

Infrastructure 11% Industrial 6%

Company Characteristics Leadership Vertical Markets Strategic Business Groups Geographies

US & Canada 65% Western Europe 22% Developing 11% Other Developed 2% 44% Infrastructure 12% Enclosures 45% Thermal Management 30% Electrical & Fastening Solutions 25% Commercial 28% Energy 16%

  • Industry-Leading Positions and

Strong Brands

  • Focused on Improving Utilization,

Lowering Costs, and Maximizing Customer Uptime

  • Attractive Margin Profile
  • Strong Free Cash Flow Generation

Randall Hogan, Chairman Beth Wozniak, CEO Stacy McMahan, CFO

2017 Forecast

22%

ROS

~$2.1B

Revenue

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November 2017 Investor Presentation

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ENCLOSURES

A Leader in North American Enclosures

2017 Forecasted Financials

Provides Innovative Solutions That Protect, Connect, and Manage Heat in Critical Electronics, Communication, Control, and Power Equipment

Description Vertical Markets Geographies

High Teens

ROS

~$900M

Revenue

Infrastructure 11% Industrial 6%

US & Canada 70% Other Developed 2% Developing 10% Western Europe 18% Infrastructure 19% Industrial 60% 11% Commercial 10% Energy

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November 2017 Investor Presentation

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THERMAL MANAGEMENT

A Leader in Electric Heat Trace, both Industrial and Commercial

2017 Forecasted Financials

Provides Electric Thermal Solutions that Connect and Protect Critical Buildings, Infrastructure, Industrial Processes, and People

Description Vertical Markets Geographies

>20%

ROS

~$600M

Revenue

Infrastructure 11% Industrial 6%

US & Canada 54% Other Developed 2% Developing 14% Western Europe 30% Energy 31% Industrial 41% 28% Commercial

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November 2017 Investor Presentation

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ELECTRICAL & FASTENING SOLUTIONS

Strong Positions in Commercial and Infrastructure Solutions

2017 Forecasted Financials

Provides Fastening Solutions that Connect and Protect Electrical and Mechanical Systems and Civil Structures

Description Vertical Markets Geographies

>20%

ROS

~$550M

Revenue

Infrastructure 11% Industrial 6%

US & Canada 70% Other Developed 2% Developing 10% Western Europe 18% Industrial 19% Commercial 57% 14% Infrastructure 10% Energy

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Driving Focused Growth Initiatives

  • Digital Marketing
  • Driving Velocity
  • Improving the Customer Experience

ONE nVENT

  • New Products and Solutions
  • Aligned Go-to-Market
  • Expanded Offerings with Connected and Prefab Solutions

INDUSTRIAL / COMMERCIAL / INFRASTRUCTURE

  • Local Marketing and Sales
  • Local Product Offerings
  • Expand Distribution Channels

GROW IN EMEA AND FAST GROWTH REGIONS COMPANY STRATEGY

TOP STRATEGIC PRIORITIES

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SUMMARY

Opportunity to Create Significant Value Focus and Scaled Investments Should Accelerate Growth We Have Great Growth Opportunities and Strong Processes We Have Great People Running Great Businesses in Great Markets Remain Disciplined in Our Capital Allocation

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APPENDIX

GAAP to Non-GAAP Measurements & Reconciliations

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Q4’17 FINANCIAL OUTLOOK (YoY) SUMMARY

Q4'17 PENTAIR OUTLOOK

  • Residential and Short Cycle Industrial Strength

Expected to Continue

  • Productivity and Cost Out Actions Continue …

Material Inflation Expected to Moderate

  • Free Cash Flow Expected to be

Seasonally Strong

Q4'17 Q4'16

Sales

  • Op. Income
  • Seg. Income

ROS

EPS (Rpt.) EPS (Adj.)

~$1.24B ~$202M ~$227M ~18% ~$0.82 ~$0.93 $1.19B $162M $204M 17.2% $0.60 $0.78

Expect Continued Top Line, Margin, and EPS Strength

  • Adj. EPS Up ~19%
  • Tax Rate of ~20%
  • Net Interest ~$14M; Shares ~184M

Q4 Free Cash Flow Expected to be Strong and In Line with Seasonality Adjusted Core Sales Up ~2%

  • Water Up ~2%
  • Electrical Up ~2%

Segment Income Up ~11% ROS ~18% … Up ~80 bps

  • Water ~19%
  • Electrical ~21%
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November 2017 Investor Presentation

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FY'17 FINANCIAL OUTLOOK (YoY) SUMMARY

FULL YEAR 2017 PENTAIR OUTLOOK

FY'17 FY'16

Sales

  • Op. Income
  • Seg. Income

ROS

EPS (Rpt.) EPS (Adj.)

~$4.9B ~$745M ~$898M ~18% ~$2.41 ~$3.53 $4.9B $701M $840M 17.2% $2.47 $3.05

  • Adj. EPS Up ~16%
  • Tax Rate of ~20%
  • Net Interest ~$88M; Shares ~184M

Targeting Free Cash Flow ~100% of Adjusted Net Income Adjusted Core Sales Up ~2%

  • Water Up ~1%
  • Electrical Up ~2%

Segment Income Up ~7% ROS ~18% … Up ~100 bps

  • Water ~19%
  • Electrical ~22%

Building Momentum Exiting 2017

  • Adjusted Core Sales Expected to Grow in Both

Segments for the Full Year

  • Margins Expected to Benefit from Growth

Leverage and Improved Productivity

  • Balance Sheet Significantly Improved and

Cash Flow Strength

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November 2017 Investor Presentation

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REPORTED TO ADJUSTED 2017 RECONCILIATION

First Second Third Quarter Quarter Quarter Total Pentair Net sales 1,183.5 $ 1,265.3 $ 1,226.8 $ approx 1,238 $ approx 4,914 $ Operating income 138.4 212.8 192.2 approx 202 approx 745

% of net sales 11.7% 16.8% 15.7% approx 16% approx 15%

Adjustments: Restructuring and other 20.9 17.4 4.9 approx — approx 43 Intangible amortization 24.0 24.6 24.6 approx 25 approx 99 Separation costs — — 9.9 approx — approx 10 Equity income of unconsolidated subsidiaries 0.2 0.4 0.3 approx — approx 1 Segment income 183.5 255.2 231.9 approx 227 approx 898

% of net sales 15.5% 20.2% 18.9% approx 18% approx 18%

Net income from continuing operations—as reported 80.7 68.3 127.1 approx 151 approx 442 Loss on sale of business — — 3.8 approx — approx 4 Loss on early extinguishment of debt — 101.4 — approx — approx 101 Adjustments to operating income 44.9 42.0 39.4 approx 25 approx 152 Income tax adjustments (6.9) (27.8) 4.1 approx (5) approx (51) Net income from continuing operations—as adjusted 118.7 $ 183.9 $ 174.4 $ approx 171 $ approx 648 $ Continuing earnings per ordinary share—diluted Diluted earnings per ordinary share—as reported 0.44 $ 0.37 $ 0.69 $ approx 0.82 $ approx $2.41 Adjustments 0.21 0.63 0.26 approx 0.11 approx 1.12 Diluted earnings per ordinary share—as adjusted 0.65 $ 1.00 $ 0.95 $ approx 0.93 $ approx $3.53 In millions, except per-share data Actual Pentair plc and Subsidiaries Reconciliation of the GAAP year ended December 31, 2017 to the non-GAAP excluding the effect of 2017 adjustments (Unaudited) Fourth Quarter Full Year Forecast