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Form 8-K PENTAIR plc For: Oct 20

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October 20, 2015 8:02 AM EDT


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 20, 2015
Commission file number 001-11625
 
 
Pentair plc
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
Ireland
 
98-1141328

(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification number)

P.O. Box 471, Sharp Street, Walkden, Manchester, M28 8BU United Kingdom
(Address of principal executive offices)
Registrant’s telephone number, including area code: 44-161-703-1885
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 




ITEM 2.02 Results of Operations and Financial Condition
On October 20, 2015, Pentair plc (the “Company”) issued a press release announcing its earnings for the third quarter of 2015 and a conference call in connection therewith. A copy of the release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
This press release refers to certain non-GAAP financial measures (core sales, adjusted operating income, adjusted operating margins, adjusted net income, adjusted earnings per share from continuing operations and free cash flow) and a reconciliation of those non-GAAP financial measures to the corresponding financial measures contained in the Company’s financial statements prepared in accordance with generally accepted accounting principles.
The 2015 adjusted operating income, adjusted operating margins, adjusted net income and adjusted earnings per share from continuing operations ("EPS") eliminate intangible amortization, certain targeted restructuring activities and acquisition-related expenses. The 2014 adjusted operating income, adjusted operating margins, adjusted net income and adjusted EPS eliminate intangible amortization, certain targeted restructuring activities, certain expenses related to the redomicile of the Company, "mark-to-market" loss for pension and other post-retirement plans and certain tax items.
We use the term “core sales” to refer to GAAP net sales 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 (“acquisition sales”). The portion of GAAP net sales attributable to currency translation is calculated as the difference between (a) the period-to-period change in net sales (excluding acquisition sales) and (b) the period-to-period change in net sales (excluding acquisition sales) after applying current period foreign exchange rates to the prior year period. We use the term “core sales growth” to refer to the measure of comparing current period core sales with the corresponding period of the prior year. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
Management utilizes these adjusted financial measures to assess the run-rate of its continuing operations against those of prior periods without the distortion of these factors. The Company believes that these non-GAAP financial measures will be useful to investors as well to assess the continuing strength of the Company’s underlying operations.
The Company uses free cash flow to assess its cash flow performance. The Company believes free cash flow is an important measure of operating performance because it provides the Company and its investors a measurement of cash generated from continuing operations that is available to pay dividends and repay debt. In addition, free cash flow is used as criterion to measure and pay compensation-based incentives. The Company’s measure of free cash flow may not be comparable to similarly titled measures reported by other companies.
ITEM 9.01 Financial Statements and Exhibits
(a)
Financial Statements of Businesses Acquired
Not applicable.
(b)
Pro Forma Financial Information
Not applicable.
(c)
Shell Company Transactions
Not applicable
(d)
Exhibits
The following exhibit is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:
Exhibit
 
Description
99.1
  
Pentair plc press release dated October 20, 2015 announcing earnings results for the third quarter of 2015.





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on October 20, 2015.
 
PENTAIR PLC
 
Registrant
 
 
 
 
By
/s/ John L. Stauch
 
 
John L. Stauch
 
 
Executive Vice President and Chief Financial Officer





PENTAIR PLC
Exhibit Index to Current Report on Form 8-K
Dated October 20, 2015 
Exhibit Number
 
Description
99.1
  
Pentair plc press release dated October 20, 2015 announcing earnings results for the third quarter of 2015.




Exhibit 99.1

News Release
Pentair Reports Third Quarter 2015 Results
•
Third quarter sales of $1.6 billion. Total sales declined 12 percent consisting of a 5 percent decline in core sales and FX translation impact of negative 7 percent.
•
Adjusted EPS decreased 13 percent to $0.97 and adjusted operating margins declined 70 basis points to 16.1 percent compared to third quarter 2014 adjusted results.
•
Free cash flow was $176 million in the quarter and the company expects to deliver full year free cash flow equal to approximately 100 percent of adjusted net income.
•
Beginning last quarter, Pentair started excluding non-cash intangible amortization from adjusted EPS guidance to better reflect the company's performance.
•
The company updates 2015 adjusted EPS guidance to a range of $3.84 - $3.86. This excludes approximately $0.50 per share of non-cash intangible amortization. The company's prior adjusted EPS guidance of $3.80 - $3.90 also excludes non-cash intangible amortization.
Reconciliations of GAAP to Non-GAAP measures are in the attached financial tables.
MANCHESTER, United Kingdom — October 20, 2015— Pentair plc (NYSE: PNR) today announced third quarter 2015 sales of $1.6 billion. Sales were down 12 percent compared to sales for the same period last year. Adjusted third quarter 2015 earnings per diluted share from continuing operations (“EPS”) were $0.97, down 13 percent from adjusted EPS of $1.11 in the third quarter of last year. On a GAAP basis, the company reported EPS of $0.63 compared to EPS of $1.00 in the third quarter of 2014. Amounts excluded from adjusted EPS, adjusted net income, adjusted operating income and segment income are described in the attached schedules.
“Our third quarter results were in line with our previously communicated expectations as three of our four segments delivered solid margin improvement,” said Randall J. Hogan, Pentair Chairman and Chief Executive Officer.  “Our sales into the Residential & Commercial and Food & Beverage verticals remained healthy as we continued to face ongoing challenges in the Energy and Industrial verticals.  We continue to drive productivity and adjust our cost structure aggressively as we manage these ongoing challenges, particularly within our Valves & Controls business.  We are pleased to have closed the acquisition of ERICO during the quarter and our integration efforts are underway.  We are focused on delivering strong cash flow and reducing our balance sheet leverage.  We remain committed to delivering long-term shareholder value.”

Third quarter 2015 adjusted operating income was $249 million, down 16 percent compared to the same period last year, and adjusted operating margins were 16.1 percent, a decline of 70 basis points when compared to adjusted third quarter 2014 operating margins.
Free cash flow in the quarter was $176 million and was $327 million for the first nine months of 2015. The company expects to deliver full year free cash flow equal to approximately 100 percent of adjusted net income.
Pentair paid dividends of $0.32 per share in the third quarter of 2015. Pentair previously announced on December 10, 2014 that its Board of Directors approved a 16 percent increase in the company's regular annual cash dividend rate for 2015 to $1.28 from $1.10. 2015 marks the 39th consecutive year that Pentair has increased its dividend.
THIRD QUARTER BUSINESS HIGHLIGHTS
All references to changes in core sales exclude the impact of currency translation and acquisitions. See attached reconciliations of these Non-GAAP measures.
Valves & Controls delivered third quarter 2015 sales of $441 million, down 28 percent versus the prior year quarter. Core sales declined 18 percent year over year for the third quarter and FX translation was negative 10 percent. Backlog including FX decreased 3 percent sequentially to $1.2 billion.

(more)
2

•
Core sales in the Energy vertical, which accounted for approximately 60 percent of Valves & Controls revenue in the quarter, decreased 17 percent. Core sales to the oil & gas industry were down 17 percent while core sales to the power industry decreased 18 percent. Core sales to the mining industry decreased 30 percent.
•
Core sales in the Industrial vertical, which accounted for approximately 40 percent of Valves & Controls revenue in the quarter, decreased 18 percent.
Valves & Controls delivered third quarter segment income of $56 million, down 48 percent compared to $108 million in the same quarter last year. Third quarter segment margins decreased 510 basis points to 12.6 percent.
Flow & Filtration Solutions third quarter sales were $363 million, down 8 percent versus the prior year quarter. Core sales declined 1 percent in the third quarter and FX translation was negative 7 percent.
•
Core sales in the Residential & Commercial vertical, which accounted for approximately 35 percent of Flow & Filtration Solutions revenue in the quarter, decreased 5 percent.
•
Core sales in the Food & Beverage vertical, which accounted for approximately 30 percent of Flow & Filtration Solutions revenue in the quarter, increased 11 percent.
•
Core sales in the Infrastructure vertical, which accounted for approximately 15 percent of Flow & Filtration Solutions revenue in the quarter, increased 6 percent.
•
Core sales in the Industrial vertical, which accounted for approximately 15 percent of Flow & Filtration Solutions revenue in the quarter, decreased 19 percent.
Flow & Filtration Solutions third quarter segment income of $53 million was flat as compared to the same period last year. Segment margins increased by 100 basis points to 14.6 percent.
Water Quality Systems delivered third quarter 2015 sales of $322 million, down 1 percent versus the prior year quarter. Core sales grew 3 percent in the third quarter and FX translation was negative 4 percent.
•
Core sales in the Residential & Commercial vertical, which accounted for approximately 85 percent of Water Quality Systems revenue in the quarter, increased 4 percent.
•
Core sales in the Food & Beverage vertical, which accounted for approximately 15 percent of Water Quality Systems revenue in the quarter was flat.
Water Quality Systems delivered third quarter segment income of $61 million, which represented an 8 percent increase compared to $56 million in the same quarter last year. Third quarter 2015 segment margins increased 150 basis points to 18.8 percent.
Technical Solutions delivered third quarter 2015 sales of $432 million, down 1 percent versus the prior year quarter. Core sales grew 2 percent, acquisitions contributed an additional 3 percent in the third quarter, and FX translation was negative 6 percent.
•
Core sales in the Industrial vertical, which accounted for approximately 45 percent of Technical Solutions revenue in the quarter, decreased 1 percent.
•
Core sales in the Energy vertical, which accounted for approximately 25 percent of Technical Solutions revenue in the quarter, increased 9 percent.
•
Core sales in the Residential & Commercial vertical, which accounted for approximately 20 percent of Technical Solutions revenue in the quarter, increased 9 percent.
•
Core sales in the Infrastructure vertical, which accounted for approximately 10 percent of Technical Solutions revenue in the quarter, decreased 17 percent.
Technical Solutions delivered third quarter segment income of $101 million, flat compared to $101 million in the same quarter last year. Third quarter 2015 segment margins increased 30 basis points to 23.4 percent.
OUTLOOK
The company updated its full year 2015 adjusted EPS guidance to a range of $3.84 - $3.86, which excludes approximately $0.50 per share of non-cash intangible amortization. The prior 2015 adjusted EPS guidance of $3.80 - $3.90 excluded non-cash intangible amortization. On a comparable basis to the company's updated guidance, 2014 adjusted EPS was $4.23 excluding $0.45 of non-cash intangible amortization. The company anticipates full year 2015 sales of $6.4 billion, or down approximately 9 percent compared to 2014 sales on a reported basis and down 4 percent on a core basis. The company expects to generate free cash flow equal to approximately 100 percent of adjusted net income in 2015.

(more)
3

Pentair excludes non-cash intangible amortization from adjusted EPS guidance to better reflect the company's performance. The company introduced fourth quarter 2015 adjusted EPS guidance of $1.03 - $1.05, which excludes $0.17 of non-cash intangible amortization, and down approximately 10 to 12 percent versus the same quarter last year's adjusted EPS. The company expects fourth quarter revenue to be approximately $1.7 billion, which would be down approximately 3 percent on a reported basis and down 5 percent on a core basis excluding FX translation and acquisitions compared to fourth quarter 2014 revenue.
EARNINGS CONFERENCE CALL
Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the company’s performance and third quarter 2015 results on a two-way conference call with investors at 9:00 a.m. Eastern today. A live audio webcast of the call, along with the related presentation, can be accessed in the Investors section of the company’s website, www.pentair.com, shortly before the call begins. Reconciliations of non-GAAP financial measures are set forth in the attachments to this release and in the presentation, both of which can be found on Pentair’s website. The webcast and presentation will be archived at the company’s website following the conclusion of the event.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains statements that we believe to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact are forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “targets,” “plans,” “believes,” “expects,” “intends,” “will,” “likely,” “may,” “anticipates,” “estimates,” “projects,” “should,” “would,” “positioned,” “strategy,” “future” or words, phrases or terms of similar substance or the negative thereof, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the ability to achieve the benefits of planned cost take-out actions; the ability to successfully identify, complete and integrate acquisitions, including the ability to successfully integrate and achieve the expected benefits of the acquisition of ERICO Global Company; 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 ability to successfully complete the disposition of the remaining portion of the Water Transport business on anticipated terms and timetable; the impact of changes in laws and regulations, including those that limit U.S. tax benefits; the 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 2014 Annual Report on Form 10-K. All forward-looking statements speak only as of the date of this press release. We assume no obligation, and disclaim any obligation, to update the information contained in this press release.
ABOUT PENTAIR PLC
Pentair plc (www.pentair.com) delivers industry-leading products, services and solutions for its customers’ diverse needs in water and other fluids, thermal management and equipment protection. With 2014 revenues of $7.0 billion, Pentair employs approximately 30,000 people worldwide.
PENTAIR CONTACTS:
Jim Lucas
Vice President, Investor Relations & Strategic Planning
Direct: 763-656-5575

Rebecca Osborn
Senior Manager, External Communications
Direct: 763-656-5589


(more)
4


Pentair plc and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
In millions, except per-share data
September 26,
2015
September 27,
2014
 
September 26,
2015
September 27,
2014
Net sales
$
1,552.1

$
1,758.4

 
$
4,688.3

$
5,236.5

Cost of goods sold
1,012.0

1,133.7

 
3,071.8

3,401.4

Gross profit
540.1

624.7

 
1,616.5

1,835.1

% of net sales
34.8
%
35.5
%
 
34.5
%
35.0
%
Selling, general and administrative
330.2

328.8

 
958.7

1,071.0

% of net sales
21.3
%
18.8
%
 
20.5
%
20.6
%
Research and development
29.9

28.5

 
88.7

88.2

% of net sales
1.9
%
1.6
%
 
1.9
%
1.7
%
Operating income
180.0

267.4

 
569.1

675.9

% of net sales
11.6
%
15.2
%
 
12.1
%
12.9
%
Other (income) expense:
 
 
 
 
 
Equity income of unconsolidated subsidiaries
(0.9
)
(0.3
)
 
(2.0
)
(0.9
)
Loss on sale of business
—

—

 
—

0.2

Net interest expense
31.3

17.1

 
68.1

51.1

% of net sales
2.0
%
1.0
%
 
1.5
%
1.0
%
Income from continuing operations before income taxes
149.6

250.6

 
503.0

625.5

Provision for income taxes
34.4

58.1

 
115.7

148.3

Effective tax rate
23.0
%
23.2
%
 
23.0
%
23.7
%
Net income from continuing operations
115.2

192.5

 
387.3

477.2

Income (loss) from discontinued operations, net of tax
—

1.6

 
(5.6
)
2.6

Loss from sale / impairment of discontinued operations, net of tax
—

(380.1
)
 
(4.8
)
(385.7
)
Net income (loss)
$
115.2

$
(186.0
)
 
$
376.9

$
94.1

Earnings (loss) per ordinary share
 
 
 
 
 
Basic
 
 
 
 
 
Continuing operations
$
0.64

$
1.01

 
$
2.15

$
2.47

Discontinued operations
—

(1.99
)
 
(0.06
)
(1.98
)
Basic earnings (loss) per ordinary share
$
0.64

$
(0.98
)
 
$
2.09

$
0.49

Diluted
 
 
 
 
 
Continuing operations
$
0.63

$
1.00

 
$
2.12

$
2.43

Discontinued operations
—

(1.95
)
 
(0.06
)
(1.95
)
Diluted earnings (loss) per ordinary share
$
0.63

$
(0.95
)
 
$
2.06

$
0.48

Weighted average ordinary shares outstanding
 
 
 
 
 
Basic
180.2

190.2

 
180.1

193.2

Diluted
182.6

193.1

 
182.6

196.4

Cash dividends paid per ordinary share
$
0.32

$
0.30

 
$
0.96

$
0.80



(more)
5

Pentair plc and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
 
 
 
 
September 26,
2015
December 31,
2014
In millions
Assets
Current assets
 
 
Cash and cash equivalents
$
144.9

$
110.4

Accounts and notes receivable, net
1,136.5

1,205.9

Inventories
1,296.2

1,130.4

Other current assets
385.7

366.8

Current assets held for sale
0.9

80.6

Total current assets
2,964.2

2,894.1

Property, plant and equipment, net
921.4

950.0

Other assets
 
 
Goodwill
5,827.4

4,741.9

Intangibles, net
2,515.6

1,608.1

Other non-current assets
426.7

436.2

Non-current assets held for sale
15.6

24.9

Total other assets
8,785.3

6,811.1

Total assets
$
12,670.9

$
10,655.2

Liabilities and Equity
Current liabilities
 
 
Current maturities of long-term debt and short-term borrowings
$
3.2

$
6.7

Accounts payable
531.0

583.1

Employee compensation and benefits
264.6

305.5

Other current liabilities
693.9

709.1

Current liabilities held for sale
3.5

35.1

Total current liabilities
1,496.2

1,639.5

Other liabilities
 
 
Long-term debt
4,983.2

2,997.4

Pension and other post-retirement compensation and benefits
301.6

322.0

Deferred tax liabilities
827.9

528.3

Other non-current liabilities
525.6

497.7

Non-current liabilities held for sale
0.5

6.5

Total liabilities
8,135.0

5,991.4

Equity
4,535.9

4,663.8

Total liabilities and equity
$
12,670.9

$
10,655.2


(more)
6

Pentair plc and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
Nine months ended
In millions
September 26,
2015
September 27,
2014
Operating activities
 
 
Net income
$
376.9

$
94.1

Loss (income) from discontinued operations, net of tax
5.6

(2.6
)
Loss from sale / impairment of discontinued operations, net of tax
4.8

385.7

Adjustments to reconcile net income from continuing operations to net cash provided by (used for) operating activities of continuing operations
 
 
Equity income of unconsolidated subsidiaries
(2.0
)
(0.9
)
Depreciation
101.4

103.9

Amortization
83.8

85.9

Deferred income taxes
1.9

6.7

Share-based compensation
27.5

24.8

Excess tax benefits from share-based compensation
(6.0
)
(10.0
)
Amortization of bridge financing fees
10.8

—

Loss (gain) on sales of assets and businesses
(7.7
)
1.2

Changes in assets and liabilities, net of effects of business acquisitions
 
 
Accounts and notes receivable
85.8

71.5

Inventories
(115.3
)
(38.5
)
Other current assets
(45.1
)
(36.8
)
Accounts payable
(82.3
)
(34.4
)
Employee compensation and benefits
(42.0
)
(11.9
)
Other current liabilities
30.5

95.4

Other non-current assets and liabilities
(25.5
)
(45.9
)
Net cash provided by (used for) operating activities of continuing operations
403.1

688.2

Net cash provided by (used for) operating activities of discontinued operations
(7.2
)
(4.8
)
Net cash provided by (used for) operating activities
395.9

683.4

Investing activities
 
 
Capital expenditures
(100.6
)
(92.5
)
Proceeds from sale of property and equipment
24.8

4.1

Acquisitions, net of cash acquired
(1,913.0
)
—

Other
(0.8
)
0.9

Net cash provided by (used for) investing activities of continuing operations
(1,989.6
)
(87.5
)
Net cash provided by (used for) investing activities of discontinued operations
59.0

—

Net cash provided by (used for) investing activities
(1,930.6
)
(87.5
)
Financing activities
 
 
Net receipts (repayments) of short-term borrowings
(2.0
)
0.3

Net receipts of commercial paper and revolving long-term debt
276.5

426.2

Proceeds from long-term debt
1,714.8

—

Repayments of long-term debt
(4.6
)
(13.2
)
Debt issuance costs
(26.8
)
—

Excess tax benefits from share-based compensation
6.0

10.0

Shares issued to employees, net of shares withheld
21.9

30.3

Repurchases of ordinary shares
(200.0
)
(850.0
)
Dividends paid
(173.3
)
(156.2
)
Purchase of noncontrolling interest
—

(134.7
)
Net cash provided by (used for) financing activities
1,612.5

(687.3
)
Effect of exchange rate changes on cash and cash equivalents
(43.3
)
(8.0
)
Change in cash and cash equivalents
34.5

(99.4
)
Cash and cash equivalents, beginning of period
110.4

256.0

Cash and cash equivalents, end of period
$
144.9

$
156.6

Free cash flow
 
 
Net cash provided by (used for) operating activities of continuing operations
$
403.1

$
688.2

Capital expenditures
(100.6
)
(92.5
)
Proceeds from sale of property and equipment
24.8

4.1

Free cash flow
$
327.3

$
599.8


(more)
7

Pentair plc and Subsidiaries
Supplemental Financial Information by Reportable Segment (Unaudited)
 
 
 
 
 
 
2015
In millions
First
Quarter
Second
Quarter
Third
Quarter
Nine
Months
Net sales
 
 
 
 
Valves & Controls
$
429.2

$
496.4

$
440.9

$
1,366.5

Flow & Filtration Solutions
350.1

374.6

362.7

1,087.4

Water Quality Systems
306.9

387.7

322.0

1,016.6

Technical Solutions
395.8

407.1

432.3

1,235.2

Other
(7.0
)
(4.6
)
(5.8
)
(17.4
)
Consolidated
$
1,475.0

$
1,661.2

$
1,552.1

$
4,688.3

Segment income (loss)*
 
 
 
 
Valves & Controls
$
55.4

$
64.4

$
55.7

$
175.5

Flow & Filtration Solutions
35.9

56.3

52.8

145.0

Water Quality Systems
51.8

88.2

60.5

200.5

Technical Solutions
77.6

86.4

101.0

265.0

Other
(21.9
)
(22.4
)
(20.8
)
(65.1
)
Consolidated
$
198.8

$
272.9

$
249.2

$
720.9

Segment income as a percent of net sales
 
 
 
 
Valves & Controls
12.9
%
13.0
%
12.6
%
12.8
%
Flow & Filtration Solutions
10.2
%
15.0
%
14.6
%
13.3
%
Water Quality Systems
16.9
%
22.8
%
18.8
%
19.7
%
Technical Solutions
19.6
%
21.2
%
23.4
%
21.5
%
Consolidated
13.5
%
16.4
%
16.1
%
15.4
%
 
 
 
 
 
 
2014
In millions
First
Quarter
Second
Quarter
Third
Quarter
Nine
Months
Net sales
 
 
 
 
Valves & Controls
$
531.0

$
628.6

$
607.9

$
1,767.5

Flow & Filtration Solutions
401.1

424.5

394.1

1,219.7

Water Quality Systems
304.0

377.9

324.1

1,006.0

Technical Solutions
415.3

408.6

438.8

1,262.7

Other
(7.4
)
(5.5
)
(6.5
)
(19.4
)
Consolidated
$
1,644.0

$
1,834.1

$
1,758.4

$
5,236.5

Segment income (loss)*
 
 
 
 
Valves & Controls
$
74.3

$
100.9

$
107.6

$
282.8

Flow & Filtration Solutions
42.3

61.8

53.5

157.6

Water Quality Systems
50.3

84.7

56.0

191.0

Technical Solutions
83.9

81.9

101.1

266.9

Other
(21.7
)
(21.0
)
(22.4
)
(65.1
)
Consolidated
$
229.1

$
308.3

$
295.8

$
833.2

Segment income (loss) as a percent of net sales
 
 
 
 
Valves & Controls
14.0
%
16.1
%
17.7
%
16.0
%
Flow & Filtration Solutions
10.6
%
14.6
%
13.6
%
12.9
%
Water Quality Systems
16.6
%
22.4
%
17.3
%
19.0
%
Technical Solutions
20.2
%
20.0
%
23.1
%
21.1
%
Consolidated
13.9
%
16.8
%
16.8
%
15.9
%
* Segment income (loss) represents operating income (loss) 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.

(more)
8


Pentair plc and Subsidiaries
Reconciliation of the GAAP “As Reported” year ended December 31, 2015 to the “Adjusted” non-GAAP
excluding the effect of 2015 adjustments (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Actual
 
Forecast
In millions, except per-share data
 
First
Quarter
Second
Quarter
Third
Quarter
 
Fourth
Quarter
 
Full
Year
Total Pentair
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
1,475.0

$
1,661.2

$
1,552.1

 
approx
$
1,745

 
approx
$
6,430

Operating income—as reported
 
171.2

217.9

180.0

 
approx
158

 
approx
726

% of net sales
 
11.6
%
13.1
%
11.6
%
 
approx
9.1
%
 
approx
11.3
%
Adjustments:
 
 
 
 
 
 


 



Restructuring and other
 
—

25.5

25.3

 
approx
54

 
approx
105

Intangible amortization
 
27.6

28.0

28.2

 
approx
39

 
approx
123

Inventory step-up
 
—

1.5

1.4

 
approx
29

 
approx
32

Deal related costs and expenses
 
—

—

14.3

 
approx
—

 
approx
14

Operating income—as adjusted
 
198.8

272.9

249.2

 
approx
280

 
approx
1,000

% of net sales
 
13.5
%
16.4
%
16.1
%
 
approx
16.0
%
 
approx
15.6
%
Net income from continuing operations—as reported
 
118.2

153.9

115.2

 
approx
96

 
approx
484

Amortization of bridge financing fees
 
—

—

8.3

 
approx
—

 
approx
8

Adjustments, net of tax
 
21.2

42.4

53.2

 
approx
94

 
approx
211

Net income from continuing operations—as adjusted
 
$
139.4

$
196.3

$
176.7

 
approx
$
190

 
approx
$
703

Continuing earnings per ordinary share—diluted
 
 
 
 
 
 


 



Diluted earnings per ordinary share—as reported
 
$
0.65

$
0.84

$
0.63

 
approx
$0.52 - $0.54

 
approx
$2.64 - $2.66

Adjustments
 
0.11

0.24

0.34

 
approx
0.51

 
approx
1.20

Diluted earnings per ordinary share—as adjusted
 
$
0.76

$
1.08

$
0.97

 
approx
$1.03 - $1.05

 
approx
$3.84 - $3.86



(more)
9

Pentair plc and Subsidiaries
Reconciliation of Net Sales Growth to Core Net Sales Growth by Vertical
for the quarter ending September 26, 2015 (Unaudited)
 
Q3 Net Sales Growth
 
Core
Currency
Acq./
Div.
Total
Valves & Controls
(17.6
)%
(9.9
)%
—
%
(27.5
)%
Industrial
(18.1
)%
(8.0
)%
—
%
(26.1
)%
Energy
(17.3
)%
(11.0
)%
—
%
(28.3
)%
Flow & Filtration Solutions
(1.0
)%
(7.0
)%
—
%
(8.0
)%
Industrial
(18.5
)%
4.0
 %
—
%
(14.5
)%
Residential & Commercial
(4.7
)%
(8.4
)%
—
%
(13.1
)%
Food & Beverage
11.2
 %
(9.6
)%
—
%
1.6
 %
Infrastructure
5.7
 %
(10.2
)%
—
%
(4.5
)%
Water Quality Systems
2.8
 %
(3.5
)%
—
%
(0.7
)%
Residential & Commercial
3.8
 %
(3.3
)%
—
%
0.5
 %
Food & Beverage
(0.1
)%
(3.8
)%
—
%
(3.9
)%
Technical Solutions
2.0
 %
(6.5
)%
3.0
%
(1.5
)%
Industrial
(0.8
)%
(5.8
)%
1.0
%
(5.6
)%
Residential & Commercial
8.6
 %
(5.6
)%
10.1
%
13.1
 %
Energy
8.6
 %
(5.3
)%
1.5
%
4.8
 %
Infrastructure
(16.9
)%
(5.1
)%
4.1
%
(17.9
)%
Total Pentair
(5.3
)%
(7.1
)%
0.7
%
(11.7
)%
Industrial
(10.9
)%
(6.2
)%
0.4
%
(16.7
)%
Residential & Commercial
2.2
 %
(5.4
)%
1.5
%
(1.7
)%
Energy
(10.1
)%
(9.7
)%
0.3
%
(19.5
)%
Food & Beverage
7.4
 %
(7.3
)%
—
%
0.1
 %
Infrastructure
(4.7
)%
(8.0
)%
2.0
%
(10.7
)%


(more)
10

Pentair plc and Subsidiaries
Reconciliation of the GAAP “As Reported” year ended December 31, 2014 to the “Adjusted” non-GAAP
excluding the effect of 2014 adjustments (Unaudited)
 
 
 
 
 
 
 
In millions, except per-share data
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
 
Full
Year
Total Pentair
 
 
 
 
 
 
Net sales
$
1,644.0

$
1,834.1

$
1,758.4

$
1,802.5

 
$
7,039.0

Operating income—as reported
182.1

226.4

267.4

176.0

 
851.9

% of net sales
11.1
%
12.3
%
15.2
%
9.8
%
 
12.1
%
Adjustments:
 
 
 
 
 
 
    Restructuring and other
17.0

44.1

—

48.5

 
109.6

Intangible amortization
28.5

29.0

28.4

28.1

 
114.0

Pension and other post-retirement mark-to-market loss
—

—

—

49.9

 
49.9

Redomicile related expenses
1.5

8.8

—

—

 
10.3

Operating income—as adjusted
229.1

308.3

295.8

302.5

 
1,135.7

% of net sales
13.9
%
16.8
%
16.8
%
16.8
%
 
16.1
%
Net income from continuing operations—as reported
125.5

159.2

192.5

129.8

 
607.0

    Adjustments, net of tax
38.1

63.5

21.5

87.6

 
210.7

Net income from continuing operations—as adjusted
$
163.6

$
222.7

$
214.0

$
217.4

 
$
817.7

Continuing earnings per ordinary share—diluted
 
 
 
 
 
 
Diluted earnings per ordinary share—as reported
$
0.63

$
0.81

$
1.00

$
0.70

 
$
3.14

Adjustments
0.19

0.32

0.11

0.47

 
1.09

Diluted earnings per ordinary share—as adjusted
$
0.82

$
1.13

$
1.11

$
1.17

 
$
4.23




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