 PENTAIR
PENTAIR
Investor Presentation
RANDALL J. HOGAN
Chairman and Chief Executive Officer
May, 2012
PENTAIR
Filed by Pentair, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Pentair, Inc.
Commission File Number: 000-04689 |
 PENTAIR
2
FORWARD-LOOKING STATEMENTS
Caution Concerning Forward-Looking Statements This communication may
contain certain statements about Pentair, Inc. (“Pentair”), Tyco Flow Control International Ltd. (“Tyco Flow”) and Tyco International Ltd. (“Tyco”) that are
“forward-looking statements” within the meaning of the U.S. Private Securities Litigation
Reform Act of 1995. The forward-looking statements contained in this press release may
include statements about the expected effects on Pentair, Tyco Flow and Tyco of the proposed merger of
Pentair and Tyco Flow (the “Merger”), the anticipated timing and benefits of the
Merger, Pentair’s and Tyco Flow’s anticipated standalone or combined financial results and all other statements in this document other than historical facts. 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”, “expect”, “positioned”, “strategy”,
“future” or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements. These statements are based
on the current expectations of the management of Pentair, Tyco Flow and Tyco (as the case may be) and
are subject to uncertainty and changes in circumstances and involve risks and uncertainties
that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. In addition, these statements are based on a
number of assumptions that are subject to change. Such risks, uncertainties and assumptions
include: the satisfaction of the conditions to the Merger and other risks related to the
completion of the Merger and actions related thereto; Pentair’s and Tyco’s ability to
complete the Merger on anticipated terms and schedule, including the ability to obtain shareholder
or regulatory approvals of the Merger and related transactions; risks relating to any unforeseen
liabilities of Pentair or Tyco Flow; future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition, losses and future prospects; business and management strategies and the expansion and growth of
Pentair's or Tyco Flow’s operations; Pentair’s and Tyco Flow’s ability to integrate
successfully after the Merger and achieve anticipated synergies; the effects of government regulation
on Pentair’s or Tyco Flow’s businesses; the risk that disruptions from the transaction will
harm Pentair’s or Tyco Flow’s business; Pentair’s, Tyco Flow’s and Tyco’s plans, objectives,
expectations and intentions generally; and other factors detailed in Pentair’s and Tyco’s
reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including their
Annual Reports on Form 10-K under the caption “Risk Factors”.
Forward-looking statements included herein are made as of the date hereof, and none of Pentair, Tyco
Additional Information
This communication does not constitute an offer to sell or the solicitation of an offer
to buy any securities or a solicitation of a vote or proxy. The Merger will be submitted to a vote of
Pentair shareholders and the proposed distribution of Tyco Flow to Tyco shareholders will be submitted
to a vote of Tyco shareholders. In connection with the Merger, Tyco Flow will file a
registration statement on Form S-4 with the SEC. Such registration statement will include a proxy statement of Pentair that also constitutes a prospectus of Tyco Flow, and will be
sent to Pentair shareholders. In addition, Tyco Flow will file with the SEC a registration
statement on Form S-1, which will include a prospectus of Tyco Flow, and Tyco will file a proxy
statement with the SEC related to the proposed distribution of the Tyco Flow shares that will be sent
to Tyco shareholders. Shareholders of Pentair and Tyco are urged to read the proxy
statements and other documents filed with the SEC when they become available because they will contain important information about Pentair, Tyco Flow, Tyco and the
proposed transactions. Shareholders will be able to obtain copies of these documents (when they are
available) and other documents filed with the SEC with respect to Pentair, Tyco Flow and Tyco
free of charge from the SEC's website at www.sec.gov. These documents (when they are available) can also be obtained free of charge from Pentair upon written
request to Investor Relations Department, Pentair, Inc., 5500 Wayzata Blvd., Suite 800, Minneapolis,
MN, 55416, or by calling (763) 545-1730 or from Tyco or Tyco Flow upon written
Participants in the Solicitation Pentair and Tyco and
certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from shareholders in connection with the
proposed transaction under the rules of the SEC. Information about the directors and executive
officers of Pentair may be found in its Annual Report on Form 10-K for the year ended
December 31, 2011 filed with the SEC on February 21, 2012 and definitive proxy statement relating to
its 2012 annual meeting of shareholders filed with the SEC on March 9, 2012. Information about
the directors and executive officers of Tyco may be found in its Annual Report on Form 10-K for the year ended September 30, 2011 filed with the SEC on November
16, 2011 and definitive proxy statement relating to its 2012 annual general meeting of shareholders
filed with the SEC on January 13, 2012. These documents can be obtained free of
Flow or Tyco undertakes any obligation to update publicly such statements to reflect subsequent events
or circumstances. request to Investor Relations Department, Tyco International Ltd., 9 Roszel
Road, Princeton, NJ, 08540, or by calling (609) 720-4200. charge from the sources indicated
above. Additional information regarding the interests of these participants will also be included in the proxy statements when it becomes available. |
 PENTAIR
3
PENTAIR …
WINNING RIGHT
Well Positioned for Future Success & Sustainable Growth
•
Clear Growth Agenda
–
Targeted Investments, Focused Resource Allocation and Prioritized Investments
•
Positioning to Win in the “New”
New World
–
Growing Population & Wealth of Developing Economies Create Tremendous
Opportunity for Pentair
–
Increasing Presence in Fast Growth Regions
•
Pentair Integrated Management System Key to Value Creation
–
Operational Excellence, Lean Improvements and Repositioning Benefits
–
One-Year Anniversary of Rapid Growth Process
•
Well Positioned for Sustainable, Profitable Growth in 2012 & Beyond
–
Focused on Generating Strong, Sustainable Shareholder Returns |
 PENTAIR
4
Making Significant Progress Towards Vision
OUR VISION |
 PENTAIR
5
A Decade of Positive Transformation
~
20%
20%
of Sales
in Fast Growth
Region
~
5%
5%
of Sales
in
Fast Growth
Regions
Expanded Tech
Product Offerings,
Acquired
~
$200M
in Sales
~
17%+
17%+
ROS
Tech Product
Business
Today
Today
Early
Early
2000’s
2000’s
Mid-
Mid-
2000’s
2000’s
Tools Largest
Business
Sold Tools,
Acquired >$1B in
Water Revenues
Portfolio of ~25
Smaller Businesses;
Manufacturing
Oriented
Global Water
Business,
Product Focus
More Global Filtration
Sales, Acquired
A
Leading
Leading
Membrane
Membrane
Technology
Technology
Company
Began Lean
Enterprise in
Tech Products
A HISTORY OF CHANGE
Announced Pending
Merger with
Tyco Flow Control
Tyco Flow Control |
 PENTAIR
6
More than a Decade of Differentiated Performance
A HISTORY OF PERFORMANCE
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
*Total shareholder return of Pentair and S&P 500 from close on 12/31/2000 through close on
3/31/2012 Pentair
S&P 500
Since 2001…
Pentair
+390%
S&P Industrial
+7%
TOTAL SHAREHOLDER RETURN* OF PENTAIR AND S&P 500 |
 PENTAIR
7
SALES BY PLATFORM
SALES BY PLATFORM
SALES BY GEOGRAPHY
SALES BY GEOGRAPHY
SALES BY VERTICAL
SALES BY VERTICAL
•
~2/3 Water & Fluid;
~1/3 Technical Products
•
Balanced Portfolio with
Attractive Growth Prospects
•
Leading Brands; Solid
Distributor Network
Diverse Businesses, Geographies, & Vertical Markets
•
Fast Growth Region Mix Up
from ~9% in 2005
•
Key Growth Regions include
China, Latin America,
India & Middle East
•
Strength in Diversity of
Verticals Served
•
More Advanced Water
Systems Across Verticals
United
States
(61%)
Developed
Non-US
(21%)
Fast
Growth*
(18%)
Residential
(~36%)
Commercial
(~11%)
Industrial &
Agriculture
(~44%)
Infrastructure
(~9%)
US ~2/3
Non US ~1/3
Technical
Products
Flow
Treatment /
Process
Aquatic
Water &
Fluid Solutions
A
DIVERSE,
GLOBAL
COMPANY
2011
REVENUE
OF
$3.5B
* Fast Growth Regions include China, Latin America, India, SE Asia, Eastern Europe, the Middle
East and Africa |
 PENTAIR
8
2009
2010
2011
2011 PERFORMANCE …
A RECORD YEAR
2009
2010
2011
2009
2010
2011
RECORD SALES
Adj.
ROS
*
9.6%
ROS
11.0%
$2.7
$3.0
$1.47
$2.00
Strong Year …
Well Positioned for Future Growth
•
Broad-Based Growth Across
Diverse Portfolio
•
Productivity Initiatives Driving
Operating Margins Higher
•
Continuing to Deliver Strong
Earnings Growth
$3.5
Adj.
ROS
*
11.7%
$2.41
SALES
($B)
ADJ. OPERATING INCOME
*
($M)
ADJ. DILUTED EPS
*
($)
+13%
2-YR CAGR
+25%
2-YR CAGR
$258
$334
$404
STRONG PROFITS
RECORD EARNINGS
+28%
2-YR CAGR
* Results are adjusted and from continuing operations; see reconciliations in appendix.
|
 PENTAIR
9
$0.88
$0.01
1976
1985
1995
2005
2012
Pentair Has Increased Dividends for 36 Consecutive Years
*Dividends adjusted for splits and stock adjustments. **All results are on an adjusted
basis. See reconciliation in appendix. 2009
2010
2011
Adj. NI
FCF in excess of Adj. NI
•
Free Cash Flow Conversion
Consistently >100% of Adj.
Net Income
$207M
$211M
$248M
STRONG CASH FLOW GENERATION
FREE CASH FLOW
**
ANNUALIZED DIVIDENDS
*
•
Strong Free Cash Flow Conversion
Fuels Dividend Growth
Dividend
Payout Ratio
Currently >30% |
 PENTAIR
10
Adj. Op Income Up 10%
Adj. Op Margins 11.3% …
Up 20 bps
•
Volume/Acq.
(0.8 pts.)
•
Price/Productivity
+3.0 pts.
•
Inflation
(2.0 pts.)
Adj. EPS Up 23%
•
Adj. Effective Tax Rate ~20%
(ETR ~29% excl. discrete tax item benefit)
•
Adj. Interest Up ~$7M
Q1 Free Cash Flow of ($82M)
•
Normal Seasonality and Timing
•
On Track to Deliver FY FCF >100% of NI
* All year-over-year comparisons against 2011 adjusted results.
** CPT refers to the acquisition of Norit’s Clean Process Technologies Business; Closed
May 12, 2011 FINANCIAL HIGHLIGHTS
SUMMARY
Sales Up 9% …
(Incl. +9 pts from CPT
**
& (1 pt) from FX)
•
Water & Fluid Up 14%
•
Technical Products Down (1%)
•
Western Europe Plus Lower Flood-Related Pump
Sales Negatively Impacted Top-Line
•
Double Digit Growth in Industrial, Energy,
Agriculture and Pool
•
Pricing, Lean & Repositioning Drove Margins
up YoY, Despite Acquisition Impact
•
Below the Op Line, Lower Taxes YoY More than
Offset Higher Interest and Diluted Shares
Strong Execution Drove Double Digit Adj. Op Income Growth
Q1’12 PENTAIR RESULTS
*
as presented on April 24, 2012
Q1’12
Q1’11
Sales
$858M
$790M
Op Income
(Rpt.)
$85M
$86M
Op Income
(Adj.)
$97M
$88M
ROS
(Adj.)
11.3%
11.1%
EPS
(Rpt.)
$0.61
$0.51
EPS
(Adj.)
$0.64
$0.52 |
 PENTAIR
11
•
Flow (~40% of Water & Fluid Solutions Sales Mix)
-
Expect W. Europe & Municipal Headwinds to Continue
in 1H; Easier Comparisons in 2H
•
Treatment/Process (~38% of Sales Mix)
-
Expect Industrial/Energy to Remain Strong;
Stabilized US Residential with Easier 2H Comparisons
-
Expect W. Europe Headwinds to Continue; Expect Fast
Growth Regions Sales to Improve
•
Aquatic (~22% of Sales Mix)
-
Significant Pool Installed Base; Expect Good Demand
with Eco-Select Products Growing Beyond Market
-
Brazil Acquisition Expected to Benefit Sales >$10M
SALES
GROWTH
EXPECTATIONS
(FY
2012)
as
presented
on
April
24,
2012
Nice
Growth
in
Many
Verticals
…
Mitigating
W.
Europe
&
Muni
Headwinds
Water &
Fluid
Solutions,
69%
Technical
Products,
31%
Industrial
37%
Communications
20%
Energy
11%
General Electronics
11%
Commercial
7%
Infrastructure
6%
Other
8%
WATER & FLUID SOLUTIONS
(FY’12)
TECHNICAL PRODUCTS (FY’12) SALES MIX BY SEGMENT (2011) Strength in Breadth of Portfolio & Alignment with
Global Mega Trends •
Expect Attractive Growth in
Industrial and Energy
•
Softness in
Electronics and Communications
Expected to Continue
–
Lumpy Telecom Program Impact 1H ~$15M YOY
•
Solid Growth in
Commercial and Infrastructure
Expected to Continue
Residential
52%
US
68%
Non-US
32%
Industrial
18%
Commercial
13%
Municipal
11%
Agriculture
6% |
 PENTAIR
12
FY’12 FINANCIAL OUTLOOK
KEY HIGHLIGHTS
•
New Products, Expanded Distribution and Fast
Growth Regions Expected to Fuel Growth
•
Expect Better Price/Cost, More Productivity
and Prioritized Investments to Expand Margins
•
Expect to Generate FCF > Net Income, with
Disciplined Allocation
•
Integration Planning & Leadership is Critical
…
Tyco Flow Deal Not Reflected in this Outlook
Growth
and
Productivity
Strategies
In
Place
…
Well
Positioned
in
2012
FULL YEAR 2012 PENTAIR OUTLOOK
*
as presented on April 24, 2012
FY’12
FY’11
Sales
~$3.7B
$3.46B
Op Income
(Rpt.)
$433M -
$458M
$169M
Op Income
(Adj.)
$445M -
$470M
$404M
ROS
(Adj.)
up 50 bps -
80 bps
11.7%
EPS
(Rpt.)
$2.62 -
$2.77
$0.34
EPS
(Adj.)
$2.65 -
$2.80
$2.41
Adj. Op Income Up 10% -
16%
Adj. Op Margins Up 50 bps -
80 bps
•
Water & Fluid Margins, Up ~50 bps
•
Technical Products Margins, Up ~100 bps
Adj. FY EPS Up 10% -
16%
•
Adj. Tax Rate 26% -
27%
•
Adj. Interest Up ~$8M YoY
Sales Up 6% -
8% …
(incl. ~3pts from CPT Acq.)
•
Water & Fluid Up 8% -
10%
•
Technical Products Up 2% -
4%
FY’12 Free Cash Flow ~$270M
•
Expect >100% Net Income Conversion
* 2012 full year outlook does not include any future impact from Tyco Flow Deal;
All year-over-year comparisons against 2011 adjusted results. |
 PENTAIR
13
POSITIONED TO SERVE THE “NEW”
NEW WORLD
Breadth
and
Expertise
to
Serve
the
“New”
New
World
Industrialization
Infrastructure
Resource Scarcity
Quality of Life
>4 Billion Reaching
Middle Class Globally
Needs and Wants Are
Driving Demand
Increasing Population and Wealth
of the “New”
New World
Food
Infrastructure/Industry
(Transportation and Manufacturing)
Energy |
 PENTAIR
14
CLEAR VISION, CONSISTENT STRATEGY
Clear Path Forward for Growth and Value Creation
•
Invest in Innovative Technology
& Application Expertise
•
Innovate
Around Scarcity, Energy
Efficiency and Sustainability
•
Continue to Build Scale in Fast
Growth Regions
•
Taking PIMS to the Next Level
and Leveraging New Rapid
Growth
Tool
STRATEGIC PRIORITIES |
 PENTAIR
15
$57
$62
$58
$67
$78
1.7%
1.9%
2.1%
2.2%
2.3%
2007
2008
2009
2010
2011
($M)
% of Sales
Salt-less Water Softener,
featuring Hybrid
Deionization Technology
Liquid Natural
Gas Filtration
System
High Capacity
In-Row Cooling
Units
Investing in Pentair’s Future and Growth
INVESTING IN INNOVATION
Beer Membrane Filtration
Award-Winning
“Fish
Friendly”
Pump
RESEARCH AND DEVELOPMENT
Qingdao Enclosure Design Center
O
Gehaltemeter
for Optimizing
Beverage Quality
Energy-Efficient IntelliFlo
Variable Speed Pool Pump
2 |
 PENTAIR
16
Building Global Scale and Enhancing Growth Prospects
Fast Growth
*
9%
Fast Growth
*
18%
2005 Sales
$2.9B
•
Addressing the Growing
Demands of the “New”
New World
•
Broad Array of Solutions
with Growing Application
Expertise and Regional
Focus
•
More Advanced
Production Capabilities &
Expanded Capacity
2011 Sales
$3.5B
GEOGRAPHIC SALES MIX
INCREASING OUR GLOBAL PRESENCE
* Fast Growth Regions include China, Latin America, India, SE Asia, Eastern Europe, the Middle
East and Africa Developed
Non-US
18%
United
States
73%
Developed
Non-US
21%
United
States
61% |
 PENTAIR
17
Safety, Quality, Delivery, Cost and Cash Focus
Attracting and Developing Top Talent
Prioritizing Investments & Innovation
Building Growth Capabilities
LEAN
ENTERPRISE
EXECUTING OUR PROVEN STRATEGY
PIMS Roadmap Is Key to Value Creation |
 PENTAIR
18
Well-Positioned to Serve the “New”
New World
-
Growing Population and Wealth of Developing Economies
A World-Leading
~$7.7B
*
Industrial
Growth
Company
-
A Global Leader in Flow, Filtration and Equipment Protection
PENDING PENTAIR & TYCO FLOW MERGER, Previously
Announced A Great Industrial Combination
Strong from the Start
-
More Global, More Diverse and More Scale
Stronger in the Future
-
Projected ~$0.40 Accretive to 2013 EPS; Expect 2015 EPS of >$5.00
-
Expect ~$200M annual operational cost synergies with full realization by Yr 3
-
Expect Debt/Proforma
2013 EBITDA of ~1.3x
1
2
3
4
* Combined projected 2012 pro forma revenues. Tyco Flow financials calendarized to
December. As Presented on March 28, 2012 |
 PENTAIR
19
Two Global Leaders …
A Powerful Combination
A Global Leader in Industrial
Valves and Controls
Strong Regional Leader in Water
and Environmental Solutions
A Global Leader in Industrial
Heat Management Solutions
Strong Lean/Six Sigma Journey
Strong Cash Flow Generation
Broad Global Reach
PENDING PENTAIR & TYCO FLOW CONTROL COMBINATION
Emerging Presence in Industrial
Fluid Processing Solutions
A Global Leader in Water Flow
and Filtration Applications
A Global Leader in Equipment
Protection Solutions
Proven Operational Excellence
and Lean Discipline
Strong Cash Flow Generation
Building Global Presence
STRENGTHENS FLUID
PROCESS SOLUTIONS
EXTENDS WATER
OFFERINGS
ADVANCES THERMAL
CAPABILITIES
ENHANCES
GROWTH POTENTIAL
As Presented on March 28, 2012 |
 PENTAIR
20
Water & Environ.
Water & Fluid
Thermal Controls
Technical Products
Valves & Controls
Flow Control
STRONG STRATEGIC FIT
Complementary Capabilities to Best Serve Customers
PENTAIR
SALES BY SEGMENT
TYCO FLOW
SALES BY SEGMENT
COMBINED COMPANY SALES
2012 pro forma PROJECTED SALES ~$7.7B*
Technical
Products,
~30%
Projected 2012 Sales: ~$3.7B
Projected 2012 Sales: ~$4.0B*
EP
FC
W&F
* Tyco Flow financials calendarized to December.
As Presented on March 28, 2012
Water &
Fluid
Solutions,
~45%
Equipment
Protection
Solutions,
~25%
Flow
Control,
~30%
Water &
Fluid
Solutions,
~70%
Valves &
Controls,
~60%
Water &
Environ.,
~20%
Thermal
Controls,
~20% |
 PENTAIR
21
SERVING HIGHLY ATTRACTIVE GROWTH SECTORS
Driven By Strong Secular Growth Trends
•
Increased Scale in Attractive Growth Sectors
•
Sales Mix: Estimated 35% Project
DIVERSE VERTICALS
COMBINED 2012 pro forma PROJECTED SALES MIX
Infrastructure,
~10%
Comm’l,
~10%
Industrial
Performance & Quality
Efficiency
Hazardous
Energy
Efficiency
Unconventional
Technology
Global Water
Scarcity
Regulation
Sustainability
Infrastructure
Aging
Capacity Needs
Urbanization
SECULAR TRENDS DRIVING DEMAND
As Presented on March 28, 2012
Industrial,
~35%
Energy,
~25%
Residential,
~20% |
 PENTAIR
22
EXPANDED GLOBAL REACH
Fast Growth Regions ~25% of Combined Sales
~40%
US & CANADA
~35%
DEVELOPED
REST OF WORLD
WORLDWIDE
>100 Manufacturing Facilities
>90 Service Centers
>30,000 Employees
Significant US Residential
Installed Base
US Industrial Sector
Strength
Continued Increase in
Demand for Oil and Gas,
Power
Broader Offering,
Recognized Brands, Plus
Service Centers in Large,
Fragmented Market
Rising GDP and
Urbanization Driving
Infrastructure, Energy
& Water Demands
Robust Industrial Sector
Greater Scale in Fast
Growth Regions Across
All Businesses
~25%
FAST GROWTH
REGIONS
As Presented on March 28, 2012 |
 PENTAIR
23
•
Operating/G&A Cost Synergies: ~$160M
–
Direct/Indirect Sourcing Opportunities
–
Lean/PIMS in Factories: Deploy in Tyco Flow
–
IT/Finance/HR Standardization
–
Management and Regional Business Integration
•
‘Day One’
Cost Avoidance: ~$40M
–
~$80M Public Company Corporate Cost Avoidance,
Net of ~$40M Integration/Corporate Investments
•
‘Day One’
Annualized Tax Rate of ~24-26%
(Below the Operating Line)
–
Expect Annualized Tax Rate of ~24-26%
•
Revenue Synergies …
All Upside Potential
–
Cross-Selling of Channels, Verticals, Products and Services
–
Not Assumed in Accretion and Cash Flow Forecasts
VALUE CREATION POTENTIAL
~$1B in Value Day 1 from Corp Cost Avoidance + Taxes
RUN-RATE SYNERGY ESTIMATE
Estimated One Time Costs of $230M
(~1/3 is Non-Cash Inventory Step-Up Costs)
ANTICIPATED PRE-TAX SYNERGIES
As Presented on March 28, 2012
Corp Cost
Avoidance
Tax
Synergies
Cost
Synergies
~$200M of
Operational
Synergies
pre-tax
Expected
Annualized
Tax Rate of
~24-26% |
 PENTAIR
24
•
Direct/Indirect Sourcing
–
Benefit from Global Procurement and Indirect
Sourcing Capabilities
–
Leverage Company-Wide Standard Vendor Lists
–
Insource/Resource Common Buys
•
Operations / Lean
–
PIMS Works …
Proven Processes Utilizing
Standard Work and Cultural Influence
•
Global Structure …
Significant Opportunity
–
Drive to Standard Systems and Processes in
IT/Finance/HR to Reduce G&A
–
Integrate and Leverage Regional Sales and Service
Locations …
Focus in Fast Growth Regions
–
Pentair G&A ~7.5% of Sales …
Tyco Flow “SpinCo”
>10.5%
–
No Reductions in R&D
COST SYNERGY DRIVERS
Expected Annual Cost Synergies of ~$200M by 2015
2013
2014
2015
~$90M
~$150M
~$200M
Direct/
Indirect
Sourcing
Ops/
Lean
Global
Structure:
G&A,
Selling/
Mkting
EXPECTED Operational Cost SYNERGIES
As Presented on March 28, 2012 |
 PENTAIR
25
VALUE CREATION ROADMAP
Clear Strategy, Focused Execution and Proven Framework
CLEAR VISION,
CONSISTENT STRATEGY
PERFORM AT A
HIGHER LEVEL
EXECUTE OUR
PROVEN STRATEGY
LEVERAGE COMBINED
STRENGTHS
Focus on Key Value
Creation
Metrics:
-
Organic Sales Growth +
Key Acquisitions
-
Op Margin Expansion
-
Prioritized Growth
-
Cash Flow > NI
-
ROIC
Based on the Pentair
Integrated Management
System (PIMS)
-
Lean Enterprise
-
Talent Process
-
New Product
Development Roadmap
-
Rapid Growth Process
Shared Vision and
“Win-Right”
Culture
Leverage Process and
Cash Flow Disciplines
Strong Customer-Centric
Business Models
Clear, Simple, Global
Vision
based on “New”
New World
Shareholder Value
Creation Has Always
Been Our #1 Goal |
 PENTAIR
26
INTEGRATION LEADERSHIP
Valves &
Controls
Thermal
Water &
Environ.
Pentair
Dedicated Resources to Capture Synergistic Potential
Leaders by Function
Business
Process
Sourcing/
Indirect
Lean/RE
Logistics
Finance/IT
Selling/
Marketing
HR/
Culture
Legal/
Compliance
Executive/
Board
INTEGRATION TEAM
Reporting Directly to Chairman/CEO
INTEGRATION LEADER
Program Management Office (PMO)
Integration Team Will Consist of
~25 –
40 Proven Leaders
•
Primary Focus on Structure,
Standardization, Indirect
Spend, Direct Materials and
On-Boarding
•
Function and Geographic
Region Focus
•
Pentair + Tyco Flow
Leadership
•
Supported by PMO Office
•
First 100 Days Plan Already
Underway
As Presented on March 28, 2012 |
 PENTAIR
27
•
Mega Trends in Favor
of Combination
•
Complementary
Extension of Product
Offerings & Solutions
More Scale, More Global and More Diverse
•
Broader Global Reach
•
Fast Growth Region
Sales ~25%
•
Global Service and
Sales Coverage
•
Increased Scale in High
Growth Applications
•
Enhanced Product
Offerings and Solutions
•
Diverse Customer Base
COMBINED PENTAIR AND TYCO FLOW
BY APPLICATION
COMBINED 2012 pro forma PROJECTED SALES MIX
BY PLATFORM
COMBINED 2012 pro forma PROJECTED SALES MIX
BY GEOGRAPHY
COMBINED 2012 pro forma PROJECTED SALES MIX
As Presented on March 28, 2012
Equipment
Protection
Solutions,
~25%
Flow Control,
~30%
Water &
Fluid
Solutions,
~45%
US and
Canada,
~40%
Fast Growth
Regions,
~25%
Western
Europe,
~20%
Developed
Non-US,
~15%
Energy,
~25%
Infrastructure,
~10%
Residential,
~20%
Industrial,
~35%
Comm’l,
~10% |
 PENTAIR
28
APPENDIX
GAAP to Non-GAAP Measurements & Reconciliations |
 PENTAIR
29
REPORTED TO ADJUSTED 2012 RECONCILIATION
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December
31, 2012 to the "Adjusted" non-GAAP excluding the
effect of 2012 adjustments (Unaudited) Total Pentair
First Quarter
Year
In millions, except per-share data
2012
2012
Net sales
858.2
$
approx $3.700
Operating
income
-
as
reported
85.0
approx
433
-
458
% of net sales
9.9%
approx. 12%
Adjustments:
Deal related costs
11.8
11.8
Operating
income
-
as
adjusted
96.8
approx
445
-
470
% of net sales
11.3%
approx. 12%+
Net
income
attributable
to
Pentair,
Inc.
-
as
reported
60.8
approx
265
-
281
Interest expense
(1.2)
(1.2)
Adjustments net of tax
4.4
4.4
Net income from continuing operations attributable
to
Pentair,
Inc.
-
as
adjusted
64.0
approx
268
-
284
Continuing
earnings
per
common
share
attributable
to
Pentair,
Inc.
-
diluted
Diluted
earnings
per
common
share
-
as
reported
0.61
$
$2.62
-
$2.77
Adjustments
0.03
0.03
Diluted
earnings
per
common
share
-
as
adjusted
0.64
$
$2.65
-
$2.80 |
 PENTAIR
30
Pentair, Inc. and Subsidiaries
Reconciliation of the GAAP "As Reported" years ending December
31, 2011, December 31, 2010 and December 31, 2009 to the
"Adjusted" non-GAAP excluding the effect of adjustments (Unaudited)
Year
Year
Year
In millions, except per-share data
2011
2010
2009
Net sales
3,456.7
$
3,030.8
$
2,692.5
$
Operating income - as reported
168.5
$
334.2
$
219.9
$
% of net sales
4.9%
11.0%
8.2%
Adjustments:
CPT deal related costs
8.3
—
—
Restructuring and asset impairment
12.9
—
37.9
Inventory step-up and customer backlog
13.4
—
—
Goodwill impairment
200.5
—
—
Operating income - as adjusted
403.6
334.2
257.8
% of net sales
11.7%
11.0%
9.6%
Net income from continuing operations attributable
to Pentair, Inc. - as reported
34.2
197.8
115.5
Adjustments net of tax
206.5
—
26.2
Bond tender
—
—
3.2
Net income from continuing operations attributable
to Pentair, Inc. - as adjusted
240.7
197.8
144.9
Continuing earnings per common share attributable to Pentair, Inc. -
diluted Diluted earnings per common share - as
reported 0.34
$
2.00
$
1.17
$
Adjustments
2.07
—
0.30
Diluted earnings per common share - as adjusted
2.41
$
2.00
$
1.47
$
REPORTED TO ADJUSTED RECONCILIATIONS (2011, 2010, 2009)
|
 PENTAIR
31
Note: Inventory step-up and customer backlog reflect amortization of fair market
value step-up associated with inventory and in process customer contracts. REPORTED
TO ADJUSTED 2011 RECONCILIATION Pentair, Inc. and
Subsidiaries Reconciliation of the GAAP "As Reported" year
ending December 31, 2011 to the "Adjusted" non-GAAP
excluding the effect of 2011 adjustments (Unaudited)
Total Pentair
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year
In millions, except per-share data
2011
2011
2011
2011
2011
Net sales
790.3
$
910.2
$
890.5
$
865.7
$
3,456.7
$
Operating income - as
reported 86.2
109.4
92.9
(120.0)
168.5
% of net sales
10.9%
12.0%
10.4%
(13.9%)
4.9%
Adjustments:
CPT deal related costs
1.7
6.1
—
0.5
8.3
Restructuring
—
—
2.1
10.8
12.9
Inventory step-up and customer backlog
0.2
5.3
5.8
2.2
13.5
Goodwill impairment
—
—
—
200.5
200.5
Operating income - as adjusted
88.1
120.8
100.8
94.0
403.7
% of net sales
11.1%
13.3%
11.3%
10.9%
11.7%
Net income attributable to Pentair, Inc. - as reported
50.5
66.7
51.1
(134.1)
34.2
Adjustments net of tax
1.3
8.8
6.6
189.8
206.5
Net
income from continuing operations attributable
to Pentair, Inc. - as adjusted
51.8
75.5
57.7
55.7
240.7
Continuing earnings per common share attributable to Pentair, Inc. -
diluted Diluted earnings per common share - as reported
0.51
$
0.67
$
0.51
$
(1.36)
$
0.34
$
Adjustments
0.01
0.08
0.07
1.92
2.07
Diluted earnings per common share - as adjusted
0.52
$
0.75
$
0.58
$
0.56
$
2.41
$
|
 PENTAIR
32
GAAP TO NON-GAAP RECONCILIATION
Pentair, Inc. and Subsidiaries
Reconciliation of Free Cash Flows for the years ending December 31,
2011, December 31, 2010 and December 31, 2009 (Unaudited)
In millions
2011
2010
2009
Free Cash Flow
Net cash provided by (used for) continuing operations
320.2
$
270.4
$
259.9
$
Capital expenditures
(73.3)
$
(59.5)
$
(54.1)
$
Proceeds from sale of property and equipment
1.3
$
0.3
$
1.2
$
Free cash flow
248.2
$
211.2
$
207.0
$
Pentair, Inc. and Subsidiaries
Reconciliation of Free Cash Flows for the three months ending March 31,
2012 and April 2, 2011 (Unaudited)
In millions
2012
2011
Free Cash Flow
Net cash provided by (used for) operating activities
(67.5)
$
(48.2)
$
Capital expenditures
(15.6)
$
(13.3)
$
Proceeds from sale of property and equipment
1.5
$
0.1
$
Free cash flow
(81.6)
$
(61.4)
$
|