2018 pentair investor & analyst day · this presentation contains statements that we believe to...

James C. Lucas

2018 PENTAIR INVESTOR & ANALYST DAY

VP, Investor Relations and Treasury

| ©2018 Pentair | Confidential property of Pentair. Do not reproduce without express permission of Pentair. | 2

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. THE OFFICER TITLES FOR INDIVIDUAL SPEAKERS SET FORTH IN THIS PRESENTATION ARE THE TITLES SUCH PERSONS ARE

EXPECTED TO HAVE AT PENTAIR PLC AFTER THE COMPLETION OF THE PROPOSED SEPARATION.

2018 Investor & Analyst Day

Forward-Looking Statements


• Except as Otherwise Noted, All References to Pentair and All Amounts Included Herein Represent

the Pentair Water Business Excluding the Pentair Electrical Business

• Except as Otherwise Noted All References to 2017 and 2016 Represent Our Results from

Continuing Operations for the Period Indicated, Presented on an Adjusted Basis

• "Core Sales" Refers to GAAP Revenue from Continuing Operations Excluding (1) the 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

• "Adjusted Core Sales" Represents "Core Sales" Excluding the Impact of 1 Large Dairy Job

• Segment Income Represents Equity Income of Unconsolidated Subsidiaries and Operating Income

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

• Return on Sales ("ROS") Equals Segment Income Divided by Sales

• See Appendix for GAAP to Non-GAAP Reconciliations


Key Definitions


Time Speaker Topic

8:05a Randy Hogan Welcome

8:10a John Stauch The New Pentair

8:40a Karl Frykman Prioritizing Our Opportunities

9:00a John Jacko Building Out Our Growth Capabilities

9:20a Dr. Phil Rolchigo Accelerating Our Investments in Technology

9:40a Break

10:00a Mark Borin Financial Strength & Disciplined Capital Allocation

10:30a Q&A

11:30a Conclude


Today’s Agenda

Randall J. Hogan

CREATING TWO FOCUSED GROWTH COMPANIES

Chairman and CEO

| ©2018 Pentair | Confidential property of Pentair. Do not reproduce without express permission of Pentair. | 62018 Investor & Analyst Day

Separation into Two Publicly-Traded Companies

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

WATER ELECTRICAL

A Leading Global Water Treatment Company Focused on Smart, Sustainable

Water Solutions

A High-Performance Electrical Company Focused on Connecting and Protecting

Customers with Inventive Electrical Solutions

2017 Revenue: ~$2.1B 2017 ROS: ~19%

2017 Revenue: ~$2.8B 2017 ROS: ~17%

SUSTAINABILITYMaximizing the Use ofthe Resources People

Rely on Most

Protecting Critical Processes, People,

and the Environment

PROTECTION


Rationale of Separation

The Next Step in the Evolution of Pentair

RATIONALE

FOUNDATION

STRATEGIC FOCUS

Improved Clarity into Performanceand 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 Executivesand Board Members to Lead

CAPITAL STRUCTURE

Expect Strong Balance Sheet and Financial Positioning


Future President & CEO

John L. Stauch

THE NEW PENTAIR: A GROWTH COMPANY


We Have a Great Opportunity


What You Will Hear Today

We Will be Focused on Delivering for Customers and Creating Value for Shareholders

We are Prioritizing Our Opportunities

We Plan to be Disciplined with Our Capital

We are Accelerating Our Investments in Technology

We are Building Out Our Growth Capabilities


A Focused Portfolio Driven by Strong Secular Trends

Prioritization and Investment to Optimize Our Opportunities

Accelerating Urbanization

Climate Change & Resource Scarcity

Economic Power Shifts

Demographic Shifts

2017 Revenue:$2.8B

Industrial

Commercial Residential

~80% is Residential & Commercial


The New Pentair

Our Impact is Significant

OUR PURPOSE: We believe that the health of our world depends on reliable access to clean water.

OUR MISSION: Pentair delivers smart, sustainable solutions that empower our customers to make the most of life’s essential resource.

OUR BRAND PROMISE: Smart, sustainable water solutions. For life.



Our Priorities

Prioritizing Areas of Investment and the Way in Which We Deliver on Them

Pentair Integrated Management System (PIMS)

Commercial Excellence Talent Management Lean Enterprise

Strategic Focus Areas

Advance Our Growth in Pool

Accelerate Residential & Commercial Filtration

Expand in China & Southeast Asia

Our Vision

To be the Leading Residential & Commercial Water Treatment Company



Uniquely Positioned to Address Water Opportunities

~$3BA Global Leader

in Residential & Commercial Water Treatment

*Represents mid-point of 2018 outlook

*




~$1BA Global Leader in Aquatic Systems

Innovative Product Offering

Technology Leadership

Dealer Intimacy

Aftermarket Support


*




~$1BA Global Leader

in Filtration Solutions

Comprehensive Technology Offering

Solid Distribution Capabilities

Strong Technical Support and Service

Respected Brands


*




~$900MA Global Leader in Flow Technologies

Well-Known Brands

Complete Solutions

Certified Equipment

Application Expertise


*



Our Strategic Priorities

Focused Growth Priorities

Advance Growth in PoolAccelerate Residential

& Commercial FiltrationExpand in China &

Southeast Asia



Continuing to Evolve

Evolving Our Growth Toolkit to Complement Lean

• Growth is a “Mindset,” a “Culture,” and a “Process”

• Mega Trends Support Global Growth … We Are Focused on Differentiated Growth to Deliver Top-Tier Performance

• An Enterprise Led Growth Process and Organization is Expected toEnsure Consistency and Best Practices

• A Focused and Prioritized Set of Actions Funded and Resourced as an Enterprise are Designed to Allow Us to Accelerate Growth

• Technology Innovation and Business Model Innovation are BOTHRequired for Sustained and Consistent Growth



Individual P&L Driven Individual P&L Driven Team Driven

Our New Operating Model

Drives Our Strategy and Provides Focus

SBU Model

SBU Model + Shared Services

Enterprise Model

(Some Shared Services)



Building a Growth Organization

SBU Leader “Focus on Priorities”

Sales “Agile Execution”

Vertical Market Leader “Customer Advocate”

Marketing Organization “Value Proposition”

Product Management “Differentiation”

Technology “Innovation”

Support Functions “Customer Support”


An Excellent Start to the New Pentair

We Have a Great Foundation … Building Out Our Growth Capabilities

Culture and PeopleGrowth Capability

Productivity and Cash

• Commercial Excellence• Technology• Digital Transformation

• Functional Support Depth• Strong Pentair Culture• Building Growth Bench

• Quality & Delivery• Proven Margin Capability• Reliable Cash Flow

Our Opportunity!!



Defining Commercial Excellence

A Foundation for Growth



Residential Value Chain

We are Focused on All Areas of the Value Chain

Install Sell Distribute

Specialty Distributors

Plumbing Wholesalers

MRO WholesalersDealers (Affiliated, Specialists)

Technical Specialist (Plumber, Handyman)

Traditional Channel Partner

Professional Trade Dealer

• Important Partners• Satisfy Demand• Handle Volume

Fluctuations• Provide Credit

• Most are Independent• Affiliate with Best Product• Need Reliability• Need Quality

• End User• Seeking References &

Brand• Price Aware• More Informed Today

Consumer

Retailers

Under Pressure; Looking for Exclusive Brands and

True Partners

Seeking Differentiation andConsumer Pull

Make Decisions on Brand, Product, and Price



Our Digital Opportunity

Using Consumer Direct Sales to FUND and FIND Future Growth

Use Digital Marketing to Connect Consumers

with Our Professional Dealers

Digitally Engage “Future Customers” Through Directly Selling Them

what They Want

Collect and Utilize Data to Analyze what

Customers Need

2

A Three Step Process …

1 3


Accelerating Our Strategic Initiatives

Empowering Technology Innovation Centers to Drive Differentiation

Technology Innovation Centers

Water and Fluid Treatment

Technologies

SMART Products and Connected

Solutions

Fluid Dynamic Technologies

(Hydraulics, CFD, FEA, etc.)

ALIGN to Strategic Focus

BUILD the PNR Ecosystem

ADVANCE our Current Capabilities



The New Pentair Strategy Summary

A Focused Residential & Commercial Pure-Play Water Treatment Company

Our Vision: To be the Leading Residential & Commercial Water

Treatment CompanyValue Creation Through:

• Advance Pool Growth

• Accelerate Residential and Commercial Filtration

• Expand in China & Southeast Asia

Focused Strategies:

• Innovation

• Digital Transformation

Accelerated by:

Win Right Values and Utilizing PIMS for Sustained

& Consistent Performance

Sustained Performance

• Remain Investment Grade

• Fuel Core Growth Investments

• Competitive Dividend Yield

• M&A / Intelligent Buy Backs

• Sustained Operating Margin Expansion

• Free Cash Flow = Adjusted Net Income

• ROIC Acceleration

Smart Capital Allocation

• Base Core Growth

• Differentiated Growth

• Bolt-on and Tuck-in M&A

Revenue Growth ~$3B of Revenue*

~18% ROS*

Targeting Free Cash Flow =Adjusted Net Income

Filtration Solutions

AquaticSystems

FlowTechnologies

China / SE Asia

A Pure PlayWater Company


Industrial

ResidentialCommercial

Sales by Geography

UnitedStates

OtherDeveloped

Other Developing

Sales by Vertical

Sales by Segment

Grounded in:


Future Chief Operating Officer

Karl Frykman

PRIORITIZING OUR OPPORTUNITIES


Strengthening the Core and Prioritizing Investments

What You’ll Hear Today

Keep Our Core Business Delivering

Accelerating Growth Initiatives

• Take Advantage of Healthy Residential & Commercial Opportunities

• Drive Growth Through Customer Intimacy

• Deliver Price and Productivity to Mitigate Inflation

• Advance Our Growth in Pool

• Accelerate Residential & Commercial Filtration




A Strong Foundation

Well Established in Lean … Growth Capabilities Being Embedded

We Have a Solid PIMS Foundation

Our Productivity and Cash Disciplines are Well-Developed

Our Growth Capabilities are “Developing”

We Have a GREAT Set of Businesses



2015 2016 2017

Aquatic Systems

A Global Leader in Aquatic Systems

Revenue

ROS

$822M$878M

$940M

2015 2016 2017

26.9%24.6%

22.4%

ApplicationsKey Attributes

• Innovative Product Offering

• Technology Leadership

• Dealer Intimacy

• Aftermarket Support

• ~85% Replacement / Aftermarket

Residential

CommercialOther

DevelopedOther Developing

United States

Revenue Composition

By Vertical By Geography



Optimization and Complexity Reduction Underway

Significant Reduction in Complexity Drives Margin Expansion and Growth

Websites

Plants

Distribution Centers

Accounting Close Locations

Product Line Exits

-2

35 to 1 … Built on a Contemporary Platform

-34 -4

Over 20% Reduction in Product Lines

-11

ONE Pentair Masterbrand … Significant Complexity

Reduced

-15

Brands

20% Reduction in Plants

-8

25% Reduction in DC’s

-4

>25% Reduction in Accounting Locations

-5



2015 2016 2017

2015 2016 2017

Further Opportunity for Margin Expansion

Good Progress on Margins … Room for Further Improvement


Filtration Solutions ROS

14.2%

15.5%

14.1% • Focusing the Portfolio

•Eliminating Back Office Complexity

•Rigorously Apply the PIMS Toolkit

• Focus on Profitable Growth and Higher Value Products

Flow Technologies ROS

15.3%15.2%14.5%


Advance Growth in Pool

Still Room for Growth in an Attractive Space

Pentair’s core remainsstrong amidst key consolidation and emerging channel

shifts …

… upside concentrated in

products sold through current pro channel …

… requiring a near-term focus on

products and the end consumer



Expanding Aftermarket Products

Opportunities with Existing and New Products

Single Speed

VariableSpeed

In Ground Poolsby Pump Types (5M)

Increase Sales of Variable Speed Pumps

Rationale for Selection

• Low upfront investment, high potential

• Provides greater access to end-consumer

• Builds on existing customer base & quick wins

2022 Goals

• 50% penetration of variable speed pumps in existing pools

• Consistent consumer demand for sustainable, exciting products for pool owners

• Connected products for enjoyable pool ownership



Opportunities Remain in Automation Segment

Fastest Growing Segment in Pool Space


• High growth segment with demand from existing pool owners

• Creates greater pull-through for other Pentair products

• Drives consumer awareness and brand equity

2022 Goals

• 20% penetration of existing non-connected pools

• Pentair system of connectedpools with valuable informationfor pool owners

• Platform for additionalproduct sales



Aquatic Systems Summary

Accelerate Growth to Drive Content on Pool Pad

2017 Base 2022 Goal

~$900M

Initiatives




Loyal Network is Key for Residential & Commercial Growth

Pentair’s core of components is strong

and stable; foodservice is a leader …

… expanding systems will open new paths …

… requiring a near-term focus on portfolio and

channels



Building a Loyal Dealer Network

Sell Through and Support a Scaled Network of Active Dealers


• Good margins, we have the right products and solutions

• Ability to develop strong systems brand

• Sufficient number of dealers to add to our network of partners

• We can drive leads to our dealers and train them

• We can manage a dealer network

2022 Goals

• Loyal network of 700+ water dealers

• 40% attachment rate of drinking water systems to softening sales

• Consistent consumer demand creation for loyal dealers

US Water Treatment Dealers

Branded / Affiliated

Independent


Residential & Commercial Water Filtration Summary

Expanding Sales Through Our Loyal Dealer Network

2017 Base 2022 Goal

~$600MWater

Filtration

Initiatives

~$1BFiltration Solutions



An Exciting Growth Opportunity

Pentair enjoys good customer

advocacy with low penetration …

… but we will need to change to capture

sales in this high growth segment …

… requiring a near-term focus on customers and

product portfolio



China & Southeast Asia Expansion Summary

Focused Investment Drives Faster Growth

2017 Base 2022 Goal

~$160M

Base Growth and Initiatives



Summary

Focused and Prioritizing Resources to the Critical Few Activities

Keep Our Core Business Delivering

Accelerating Growth Initiatives

• Take Advantage of Healthy Residential & Commercial Opportunities

• Drive Growth Through Customer Intimacy

• Deliver Price and Productivity to Mitigate Inflation

• Advance Our Growth in Pool

• Accelerate Residential & Commercial Filtration



Future Chief Growth Officer

John Jacko

BUILDING OUT OUR GROWTH CAPABILITIES


What You’ll Hear Today

Compete on Differentiators; Prioritize Revenue

Renew Our Offerings

Redefine The Competition Reinvent Business Model

Customer Led Product Development

New Innovative Business Models

2

3

1 Commercial Excellence

Define Customers Needs



Building Our Growth Engine

New Competencies Integrated into PIMS

Pentair Integrated Management

System Operationalizing• Structure• Imbedded Processes• Team Review & Rhythm

Building• Competency Assessment• SBU Impact• Training

Defining• Sales Excellence• Marketing Capability• Product Management



Defining Commercial Excellence

As a Foundation for Growth



Building Our Commercial Excellence Capabilities

To Enhance Performance

Assess Commercial Competencies

• Talent Assessment• Organizational Needs• Quick Win Drivers to Enable Segments

Launch New Programs

• Market Insights• Strategic Pricing• Product Management


Creates a Sustainable Growth Organization

Operationalizing Our Commercial Capabilities


Building Out Our Capabilities

Commercial Excellence is a Journey

2017 20192018

• Commercial Excellence Defined

• Strategic Pricing Training Initiated

• Structure

• New Platforms for Digital Execution

• Sales Training

• Single Instance Salesforce

• Digital Marketing Tools Launched

• B2B Customer Insight Pilot / Training

• Residential & Commercial Teams Launched

• Sales Training

• Continued Training and Reinforcement

• Sales Training

• Marketing Cloud

• New Processes Embedded in Tools

Beyond


A Focus on Differentiated Growth

Differentiated Growth and Further Penetration in Our Core

AnnualRevenue Growth

RateGDP

Growth

Differentiated Growth

We Rise and Fall with the Industry Assuming We have Equivalent Offering

Occurs When We do a Better Job than Competitors in Meeting Customer Needs

Key Area of Focus



Segment #1

x%Growth

?%

?%

?%

?%

?%

Customer Led Growth

Customer Driven Innovation and Differentiation is Key

Competitive Assumptions:

• Similar Talent

• Similar Business Acumen

• Similar Technologies

Differentiated Growth Will Be Customer Driven:

• Satisfying Unmet Needs

• Innovative Breakthroughs

• Differentiated Business Models

Competitor A

Competitor B

Pentair

Competitor C

Competitor D



Strengthening the Front End of Our Process

Focusing on “Discover” Will Significantly Increase Customer Success

Discover Develop Deploy

Customer Need

Supplier Solution

Develop Product Test/ Validate

Many Companies Check Customer Needs After Launch



Expanding Residential Applications & Offerings

Extensive Breadth of Solutions Addressing Critical Consumer Water Needs

2

1

3

3

1

1

1

2

2

3

3

1

Filtration & Purification, Softening, Heating, Cooling, Transporting, and Controlling

1) Water Quality & Safety

• Improved drinking water aesthetics• Mineral removal to stop spotting & staining• Heated, chilled, and carbonated water• Disinfection and sanitization• Heavy metals and organic chemical removal

2) Water Efficiency & Availability

• Water supply & pressure boost systems• Rain water capture and reuse• High efficiency irrigation systems

3) Energy Efficiency & Asset Protection

• Mineral removal to reduce scaling• High efficiency pool heating, lighting,

and pumping• Leak detection and flood control• High efficiency water heating

Key Customer Needs


% Total Revenue

Global Market Size

~$22B


Residential Value Chain

We are Focused on All Areas of the Value Chain

Install Sell Distribute

Specialty Distributors

Plumbing Wholesalers

MRO WholesalersDealers (Affiliated, Specialists)

Technical Specialist (Plumber, Handyman)

Traditional Channel Partner

Professional Trade Dealer

• Important Partners• Satisfy Demand• Handle Volume

Fluctuations• Provide Credit

• Most are Independent• Affiliate with Best Product• Need Reliability• Need Quality

• End User• Seeking References

and Brand• Price Aware• More Informed Today

Consumer

Retailers

Under Pressure; Looking for Exclusive Brands and

True Partners

Seeking Differentiation andConsumer Pull

Make Decisions on Brand, Product, and Price



Expanding Commercial Applications & Offerings

Broad Offering, Large Installed Base, Strong Quality, and Reliability

212

3


1) Water Quality & Safety • Improved drinking water aesthetics• Mineral removal to stop spotting• Heated, chilled, and carbonated water• Water purification

2) Water Efficiency & Availability• Water supply and pressure boost systems• Rain water capture and reuse• Wastewater treatment and disposal• High efficiency irrigation systems

3) Energy Efficiency & Asset Protection• Mineral removal to stop scaling• Fire suppression• High efficiency pool systems• High efficiency water heating & cooling

Key Customer Needs

3

3

3

12

1

3


% Total Revenue

Global Market Size

~$11B


Commercial Food Service Applications & Offerings

Strong Brands Addressing Critical Water Related Issues


1) Water Quality & Safety • Improved drinking water aesthetics• Heated, chilled, and carbonated water• Designer water• Mineral removal to stop spotting • Disinfection & sanitization• Heavy metals and organic chemical removal

2) Beverage Dispense Efficiency• Syrup dispensing solutions• Alcoholic beverage dispensing solutions

3) Energy Efficiency & Asset Protection• Mineral removal to reduce scaling

⁻ coffee/espresso machines⁻ combi ovens⁻ dishwashers

Key Customer Needs

3

1

2

31

1

31

% Total Revenue

Global Market Size

~$8B


A Customer Focus

Is Not a Disintermediation Play

• Relationships - Increase access to end users

• Data Driven - Better insights to product needs

• Digital Commerce - Where to buy, inventory locations

• Loyalty - Installation and technical assistance

Pentair

Distribution

Dealer

End User



Digital Education and Active Buying are Playing Significant Roles

B2B Customers are Expecting a B2C Customer Experience

Digital Journey - Customer Digital Process Changing

Accelerating the Digital Experience

MY WAY

MY WAY

MY WMY WAY

Buyers Demand to be Served When and How They Prefer

Recent B2B Study:

• More Transparent Buying Process

• Unified Customer Experience

• Personalized Offers, Configuration, and Pricing

• Frictionless & Dynamic Experience



• Strong unaided awareness of the brand in select areas of the business

• Consolidating 35 different websites to Pentair.com

• Built out brand architecture for all of the business

• Build Pentair brand while maintaining legacy

Brand Supports Web as a One Stop Experience

Separation Gives Us a Unique Opportunity


Upgrade of Our Digital Ecosystem

To Deliver a New Customer Experience, Intimacy, and Loyalty

ExperienceManagement

RelationshipManagement

www.pentair.com

BusinessIntelligence

Customers

IoT Enabled Products & Systems



Our Digital Customer Value Chain

Learn, Find, Solve: A Simplified Experience

• Marketing to End Users

• Permission Based Access to Consumer Data

• Brand Equity

• Lead Generation

• Breadth of Product Platforms

• Ease of Doing Business

• Configure, Price, Quote

• Personalized Experience

• Technical Support

• Testimonials

• Interactive Content

• Suggestions for Optimal Products

• Product Ratings

• Purchase History

• Dealer/Channel Portals

• “Fits With”; “Also Bought”

• Locators

• IoT Integration

Customer Value Pentair ValueShared Value



Our Digital Transformation Tied to Smart Products

Improve the Customer Experience and Drive Growth

• Improved value chain productivity

• Improved customer loyalty & satisfaction

• Improved POS and customer data

• Enhanced end-user insights

• Improved recurring product revenue

• New service model opportunities

• Align our goals with our end users as IoT progresses

Pentair Distribution Dealer End User



Future Chief Technology Officer

Dr. Phil Rolchigo

ACCELERATING OUR INVESTMENTS IN TECHNOLOGY


Building Our Technology Growth Muscles

Strongly Positioned to Deliver Differentiated Innovations

Pentair Integrated Management

System

Process:• Building a more agile process to

meet consumer oriented persona

Talent:• Functionalizing across enterprise• Aligning to strategic initiatives

Technology• Focusing on Residential &

Commercial opportunities



Executing Our Strategic Initiatives

Clear Focus to Direct Investments to Deliver Differentiated Innovation



Southeast Asia




Continued Innovations Driving Growth in an Attractive Space

Hi Efficiency & Hybrid HeaterIntelliflo VS Pumps

Illumavision Intellicenter




Growing Opportunity in Whole Home and Point of Use Water Filtration

High Efficiency Whole Home Water Softening, Lead, and Iron Removal Systems

High Efficiency Point of UseResidential & Commercial RO Systems




A Significant Opportunity with Great Growth Dynamics

Today’s POUUnder the Sink Designs

Reverse Osmosis & Disinfection Systems

Present a Significant Growth Opportunity



Executing Our Strategic Initiatives

We Have the Technology Edge to Drive Differentiation

+

• Micro-electronics • Wireless Communications• IoT & Big Data Solutions

Emerging Adjacent Technologies

• Functionalized Materials• Nanotechnologies• Additive Manufacturing

Advance our Products and Reinvent Offerings in High Growth Categories



Southeast Asia



Accelerating Our Strategic Initiatives

Empowering Technology Innovation Centers to Drive Differentiation

Technology Innovation Centers

Water & Fluid Treatment

Technologies

• Strong Capabilities Exist

• Align To Strategic Focus

SMART Products & Connected

Solutions

• Align & Build Capabilities

• Build the PNR Ecosystem

Fluid Dynamic Technologies

(Hydraulics, CFD, FEA, etc.)

• Strong COE Exists

• Continue Advancing

ALIGNING TALENT & TECHNOLOGY TO STRATEGIC INITIATIVESThe right capabilities, partnerships, and organizational structure



New Products Aligned to Consumer Needs

Translating VOC to Build Technology and Product Roadmaps

Consumer VOC

Make My Water …. Safe…...... Taste great………..... Healthy………………… Premium Designer

Make My Equipment …. Easy to Install…...... Easy to Service………..... Cool & Informative………………… Smart & Connected




Significant Opportunities to Innovate in Filtration, Sanitization, and Controls

Building on Our Legacy of Innovation

to Re-invent Other High Growth Categories




Significant Opportunities to Innovate in Filtration, Disinfection, and Controls

Re-establishing Our Legacy of Innovation

in Water Treatment Solutions

Designer Water

IoT Enabled High FlowWhole Home & POU Solutions

Disinfection & Sensing




Utilizing Core Technologies with Agile Differentiation

Today’s POUUnder the Sink Designs

Creating Region Specific Consumer Led Designs

Next Generation Counter Top Designs



Change is Necessary to Achieve Our Vision

“EMERGENCE OF THE INTERNET IN EVERYTHING WE DO”



The Pentair IoT Product Ecosystem

Using the Pentair IoT Ecosystem to Enhance the Customer Experience

• Increased end user touch points

• Improved brand awareness & customer loyalty

• Improved end user intimacy₋ Access to end user data₋ Access to product data

• Increase pull-through of other Pentair products

• Increase recurring product sales

• New service model opportunities

• Awareness & education on water related issues

• Mobile access to their water related products

• Optimized maintenance & cost of ownership

• Enhanced safety & reliability

• Enhanced peace of mind

• Technical support

• Personalized experience

• Analytics to optimize product performance & quality

• Suggestions for new products

• Access to product ratings

• Predictive maintenance services

• e-Commerce

Customer Value Pentair ValueShared Value

Pentair Distribution Dealer End User




The Pentair Residential IoT Ecosystem

Monitoring, Controlling, and Servicing Our Entire Suite of Residential Products

Connect to Other SMART Home IoT Platforms

Pentair IoTCloud

Gateway

Pentair IoT Ecosystem



Executing on Our Strategic Initiatives

Our Technology Edge and Breadth of Products are Core to Differentiated Growth

+

• Micro-electronics • Wireless Communications• IoT & Big Data Solutions

Adjacent Emerging Technologies

• Functionalized Materials• Nanotechnologies• Additive Manufacturing

Advancing Our Products & Reinventing Categories


& Commercial FiltrationExpand in China& Southeast Asia

Future Chief Financial Officer

Mark C. Borin

FINANCIAL STRENGTH & DISCIPLINED CAPITAL ALLOCATION


What You Will Hear Today

Solid Foundation Fuels Future Growth

Accelerating Revenue and Income Growth

Disciplined Capital Allocation

Strong Free Cash Flow

Performance History



Pentair Overview

Expecting Solid Top Line and Bottom Line Growth in 2018

Revenue Segment Income

2015 2016 2017 2018 Outlook

$2.81B$2.78B

$2.85B

~$2.95B

2015 2016 2017 2018 Outlook

$493M$438M$409M

ROS 14.6% 15.8% 17.3%

~3-5%

Adjusted EPS

2017 2018 Outlook

$1.94

~$2.20 - $2.30

~16%

Executive Summary

~40bps

• Interest: $48M in 2017, ~$20M in 2018

• Tax Rate: 20% in 2017, ~18% in 2018

• Share Count: ~183M in 2017 and 2018

• Sales Expected to be up ~3-5% on ~2-4% Core Growth

• ROS Expected to be up ~40 bps, Inclusive of Incremental ~$25M Growth Investment

• Targeting Free Cash Flow = Adj. Net Income

• Interest and Tax Rate Tailwinds for 2018

~$525M



2015 2016 2017

Aquatic Systems

A Global Leader in Aquatic Systems

Revenue

ROS

$822M$878M

$940M

2015 2016 2017

26.9%24.6%

22.4%


• Innovative Product Offering

• Technology Leadership

• Dealer Intimacy

• Aftermarket Support


Residential

CommercialOther

DevelopedOther Developing

United States

Revenue Composition




2015 2016 2017


A Global Leader in Filtration Solutions

Revenue

ROS

$1,018M

$976M$991M

2015 2016 2017

14.2%

15.5%

14.1%


• Comprehensive Technology Offering

• Solid Distribution Capabilities

• Strong Technical Support and Service

• Respected Brands


Residential

CommercialOther

Developed

Other Developing United

States

Industrial

China/SEA

Revenue Composition




2015 2016 2017

Flow Technologies

A Global Leader in Flow Technologies

Revenue

ROS

$969M$923M $914M

2015 2016 2017

15.3%15.2%14.5%


• Well-Known Brands

• Complete Solutions

• Certified Equipment

• Application Expertise


Residential

IndustrialOther

Developed

Other Developing

United StatesCommercial

China/SEA

Revenue Composition




2017 Revenue Performance and 2018 Outlook

Focused Initiatives Drive Differentiated Growth in 2018

$2.78B

2016 Volume Price

$22M$21M $9M $15M $2.85B

Acq/Large Jobs

FX 2017

Summary

$2.85B

2017 Volume Price

~$60M~$25M ~$30M

FX 2018

Summary

~$2.95B

2%YOY

~3-5%YOY

Core Sales Up ~2-4%

• Aquatic Systems Up ~4-6%

• Filtration Solutions Up ~2-4%

• Flow Technologies Up ~0-2%

Adjusted Core Sales Up 2%

• Aquatic Systems Up 7%

• Filtration Solutions Flat

• Flow Technologies Down 1%

2017A 2018 Outlook

~1 pt ~1 pt ~0 pts ~0 pts 2 pts ~2 pts ~1 pt ~1 pt 4 pts



2017 Segment Income Performance and 2018 Outlook

Reinvesting in Growth While Delivering Margin Expansion

$438M

2016 Growth/Price/Acq.

FX

$22M $1M

($34M)

$66M $493M

Inflation Prod. 2017

Summary Summary

$493M

2017 Growth/Price

FX

~$55M ~$2M

(~$40M)

~$15M ~$525M

Inflation Prod. 2018

Net of ~$25M Growth InvestmentROS Without Investment - ~18.5%

YoY Without Investment - ~12%

ROS15.8%

ROS17.3%

ROS17.3%

ROS~17.7%

13%YOY ~6%

YOY

Income Up 13%, ROS Up 150 bps

• ~$10M Headwind from Large Projects

• 1% of Net Material Inflation

• ROS Benefit from >$35M of Net Cost Out

Income Up ~6%, ROS Up ~40 bps

• ~$25M Investment In Growth Investments

• ~1% of Net Material Inflation

• ~1% of Net Productivity

2017A 2018 Outlook

.4% (.1%) (1.2%) 2.4% 1.4% (.1%) (1.4%) 0.5%



2018 Adjusted EPS and Free Cash Flow Outlook

Expecting to Deliver Strong Adjusted EPS and Free Cash Flow

$1.94

2017 Adj. EPS Segment Income

~$0.14~$0.12 ~$0.05 ~$2.25

Interest Tax Rate 2018 Adj. EPSOutlook*

• Expect ~$20M of Interest in 2018 … Dependent on Final Capital Structure

• Effective Tax Rate Improves to ~18% … Down 2 pts from 2017 Rate

• Shares of ~183 Million

Summary

~$414M

2018 Adjusted Net Income

Depreciation Capex

~$45M

(~$45M)

~$0M

Work Cap/Other

2018 Free Cash Flow

• Business Is Not Capital Intensive

• Working Capital Opportunities to Offset Restructuring and Timing of Cash Taxes

• Target Free Cash Flow to Equal Adjusted Net Income

Summary

~$414M

- Restructuring- Taxes+ Working Capital

ADJUSTED EPS

~7% ~6% ~3% ~16%

FREE CASH FLOW

*Represents mid-point of $2.20 -$2.30 guidance


Long-Term Revenue Goals

GDP + Differentiated Growth + M&A = Top Tier Growth Performance

GDP~$2.85B

2017 Revenue

2022

Base

Differentiated Growth

Strategic M&A

1 Focus on Core Business and Verticals that Grow

2 Invest in Differentiated Growth through Technology and Business Model Innovation

3 Disciplined Strategic Bolt-on and Tuck-in M&A


Full Year 2018 Pentair Outlook

Expecting Top Line to Improve and Further Margin Expansion

KEY CONSIDERATIONS

• FX Sales Benefit of ~1%

• ROS Inclusive of Growth Investments

• Tax Rate Benefit of ~2% from Tax Reform

AquaticSystems


FlowTechnologies

Pentair

Core Sales Up ~4-6% Up ~2-4% Up ~0-2% Up ~2-4%

Sales ~$0.98B ~$1.05B ~$0.92B ~$2.95B

ROS Up ~40bps Up ~60bps Up ~30bps Up ~40bps

Corporate Expense ~$55M

Interest Expense ~$20M

Tax Rate ~18%

Adjusted EPS ~$2.20-$2.30

Shares ~183M

• Capital Expenditures ~$45M

• Total D&A of ~$85M + ~$15M of Non-Cash Stock Compensation



Capital Allocation Priorities

Disciplined Use of Our Precious Capital

Invest in Organic Growth

Competitive Dividend

Strategic Bolt-on and Tuck-in M&A or Intelligent Share Buyback

Maintain Investment Grade Rating



Accelerating Core Sales Growth

Sustained Margin Expansion

Strong Free Cash Flow

Disciplined Capital Allocation

Summary

Pulling All Levers to Deliver Shareholder Value

Top Tier TSR


Future President & CEO

John L. Stauch

THE NEW PENTAIR: A GROWTH COMPANY


The New Pentair Strategy Summary

A Focused Residential & Commercial Pure-Play Water Treatment Company

Our Vision: To be the Leading Residential & Commercial Water

Treatment CompanyValue Creation Through:

• Advance Pool Growth

• Accelerate Residential and Commercial Filtration


Focused Strategies:

• Innovation

• Digital Transformation

Accelerated by:

Win Right Values and Utilizing PIMS for Sustained

& Consistent Performance

Sustained Performance

• Remain Investment Grade

• Fuel Core Growth Investments

• Competitive Dividend Yield

• M&A / Intelligent Buy Backs

• Sustained Operating Margin Expansion

• Free Cash Flow = Adjusted Net Income

• ROIC Acceleration

Smart Capital Allocation

• Base Core Growth

• Differentiated Growth

• Bolt-on and Tuck-in M&A

Revenue Growth ~$3B of Revenue*

~18% ROS*

Targeting Free Cash Flow =Adjusted Net Income


AquaticSystems

FlowTechnologies

China / SE Asia

A Pure PlayWater Company


Industrial

ResidentialCommercial

Sales by Geography

UnitedStates

OtherDeveloped

Other Developing

Sales by Vertical

Sales by Segment

Grounded in:



Summary

Strong Fundamentals and Attractive Opportunities Ahead

We are Driven by the Pentair Integrated Management System and have a Proven and Capable Management Team

We are a Pure Play Water Company with a Portfolio of Industry-Leading Brands and Strong Secular Trends

We have a Large and Installed Base to Serve

We have a Strong Capital Structure, Robust FCF Generation, and Plan to be Disciplined with Our Capital



SMART, SUSTAINABLE WATER SOLUTIONS.

FOR LIFE.


Today’s Presenters

Randall J. Hogan, Chairman and Chief Executive Officer

Randall J. Hogan currently serves as Pentair’s Chairman and Chief Executive Officer and upon the separation, he will serve as Chairman of nVent.

Hogan was named Pentair’s Chief Executive Officer in 2001 and was appointed Chairman in 2002. He first joined Pentair in 1998 as Executive Vice President of the Enclosures Group.

Prior to Pentair, Hogan was President of United Technologies’ Carrier Transicold Division. He also held leadership roles at the Pratt & Whitney division of United Technologies, General Electric, and McKinsey & Company. Hogan serves as a Director of Medtronic plc where he is also a member of the Audit and Finance Committees. Hogan holds an MBA from the University of Texas at Austin and a Bachelor of Science degree in Civil Engineering from the Massachusetts Institute of Technology.

John L. Stauch, EVP and Chief Financial Officer

John Stauch currently serves as Executive Vice President and Chief Financial Officer of Pentair and upon the separation, he will serve as Chief Executive Officer of Pentair.

Prior to joining Pentair in 2007, Stauch served as Chief Financial Officer of the Automation and Control Systems unit of Honeywell International Inc. Previously, he held a series of executive, investor relations, and managerial finance roles with Honeywell International Inc. and its predecessor AlliedSignal Inc. He also served as Chief Financial Officer and IT Director of PerkinElmer Optoelectronics.

Stauch serves as a director of Deluxe where he is currently the Chair of the Audit Committee and member of the Finance Committee. Stauch holds a Bachelor of Arts degree in Finance from Michigan State University.



Today’s Presenters, cont.

Karl R. Frykman, SVP and President, Water

Karl Frykman currently serves as Senior Vice President and President of the Water business for Pentair, and upon the separation, he will serve as Executive Vice President and Chief Operating Officer of Pentair.

Prior to joining Pentair in 2000, Frykman served as Vice President of Operations for American Products, Vice President of Research and Development and Manufacturing for Anthony Pools, and Vice President of Poolsaver.

Frykman holds an MBA from Harvard University and a Bachelor of Arts in Economics from Stanford University.

John H. Jacko, SVP and Chief Marketing Officer

John Jacko currently serves as Senior Vice President and Chief Marketing Officer for Pentair, and upon the separation, he will serve as Executive Vice President and Chief Growth Officer of Pentair.

Prior to joining the company in 2017, he was Vice President and Chief Marketing Officer of Kennametal. Previously, Jacko was Senior Vice President and Chief Marketing Officer of Flowserve Corporation and also spent more than 20 years at Honeywell Aerospace (formerly Allied Signal) gaining experience and increasing leadership responsibility across a broad spectrum of product management, marketing, and sales.

Jacko holds an MBA from the University of New Haven, Connecticut, and earned his Bachelor of Science degree in engineering from the University of Connecticut.




Phil Rolchigo, Ph.D., Vice President, Technology

Phil Rolchigo currently serves as Vice President of Technology for Pentair and upon the separation, he will serve as Senior Vice President and Chief Technology Officer.

Dr. Rolchigo joined the company in 2007 in his current role. Prior to Pentair, he held a number of leadership roles in the water industry, including serving as the Global Separation and Advanced Technologies Director for General Electric, Water and Process Technologies, and as the Chief Technology Officer for Osmonics, Inc.

Rolchigo received a Doctorate and Master’s degree in chemical and biochemical engineering from the University of Pennsylvania. He also received a Bachelor’s degree in chemical engineering from the University of Rochester and was an Industrial Research Affiliate in chemical engineering at the Massachusetts Institute of Technology.

Mark C. Borin, SVP, Chief Accounting Officer and Treasurer

Mark Borin currently serves as Senior Vice President, Chief Accounting Officer and Treasurer for Pentair, and upon the separation, he will serve as Executive Vice President and Chief Financial Officer of Pentair.

Borin began his career with the company in 2008 as Corporate Controller and Chief Accounting Officer. Prior to joining Pentair, he served as audit partner with KPMG and was a member of the firm for 19 years. At KPMG, Borin's list of clients included large, multi-national companies in the automotive, energy, real estate, and transportation industries.

Borin holds a Bachelor’s degree in Accounting and Economics from the University of Michigan. He is a Certified Public Accountant.




Jim Lucas, Vice President, Investor Relations and Treasury

James Lucas currently serves as Vice President, Investor Relations and Treasury for Pentair and upon the separation, he will serve as Senior Vice President, Investor Relations and Treasurer.

Lucas joined Pentair in 2012 as Vice President, Investor Relations and has also served as Vice President of Strategic Planning. Prior to Pentair, Lucas served as Managing Director, Research at Janney Montgomery Scott. Previously, he held analyst positions with NatWest Securities and Raymond James.

Lucas holds an MBA from Tampa College and a Bachelor’s of Science degree in accounting from Tampa College.



Other Management not Presenting

Kelly A. Baker, Chief Human Resources Officer, Water

Kelly Baker currently serves as Chief Human Resources Officer (CHRO) of the Water business for Pentair, and upon the separation, she will serve as Executive Vice President and CHRO for Pentair.

Prior to joining the company in 2017, Baker served as CHRO for Patterson Companies. In addition, for more than 20 years, she held various human resources roles during her tenure at General Mills, including VP of HR for the U.S. segment.

She earned her MBA from the University of Michigan’s Stephen M. Ross School of Business and her Bachelor of Business Administration degree in accounting from Howard University.

Karla C. Robertson, General Counsel, Water

Karla Robertson currently serves as General Counsel of the Water business for Pentair, and upon the separation, she will serve as Executive Vice President, General Counsel, and Secretary of Pentair.

Prior to joining the company in 2017, Robertson held several legal positionsof increasing responsibility at SUPERVALU, including over the last four years of her tenure serving as Executive Vice President, General Counsel, and Corporate Secretary. Previously, Robertson was in-house employment counsel at Target Corporation, worked in private practice at Faegre & Benson LLP (currently Faegre Baker Daniels LLP), and served as a judicial law clerk for the United States District Court for the Southern District of Iowa.

Robertson holds her Juris Doctor degree from the University of Denver.



Appendix



Appendix

Full Year Net Sales Growth

Adjusted

Core Large Jobs Core Currency

Acq./

Div Total

2017 Pentair 1.7% (0.8%) 0.9% 0.4% 1.1% 2.4%

Aquatic Systems 6.6% 0.3% 0.1% 7.0%

Filtration Solutions (0.2%) (2.1%) (2.3%) 0.9% 2.9% 1.5%

Flow Technologies (1.4%) 0.4% —% (1.0%)

2018 Pentair approx 2 - 4% 1% —% 3 - 5%

Aquatic Systems approx 4 - 6% —% (1%) 3 - 5%

Filtration Solutions approx 2 - 4% 2% —% 4 - 6%

Flow Technologies approx 0 - 2% 1% (2%) (1) - 1%

Reconciliation of Net Sales Growth to Core Net Sales Growth by Segment

for the years ended December 31, 2017 and 2018 (Unaudited)


2018 pentair investor & analyst day · this presentation contains statements that we believe to...

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