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Form 8-K PENTAIR plc For: Oct 25

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October 25, 2016 7:04 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 25, 2016
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 25, 2016, Pentair plc (the "Company") issued a press release announcing its earnings for the third quarter of 2016 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, segment income, return on sales, adjusted net income from continuing operations, adjusted diluted 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 2016 segment income, return on sales, adjusted net income from continuing operations and adjusted diluted earnings per share from continuing operations ("EPS") include equity income from unconsolidated subsidiaries and eliminate intangible amortization, certain targeted restructuring activities and certain tax items. The 2015 segment income, return on sales, adjusted net income from continuing operations and adjusted EPS include equity income from unconsolidated subsidiaries and eliminate intangible amortization, certain targeted restructuring activities, acquisition-related expenses, "mark-to-market" gain for pension and other post-retirement plans, loss on sale of a business 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 net 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 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 25, 2016 announcing earnings results for the third quarter of 2016.





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 25, 2016.
 
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 25, 2016 
Exhibit Number
 
Description
99.1
  
Pentair plc press release dated October 25, 2016 announcing earnings results for the third quarter of 2016.



1

Exhibit 99.1
pentairlogo001a02.jpg
News Release
Pentair Reports Third Quarter 2016 Results
•
Third quarter sales of $1.2 billion.
•
Third quarter GAAP EPS of $0.64 and adjusted EPS of $0.78.
•
Net cash provided by operating activities of continuing operations of $139 million and free cash flow from continuing operations of $125 million in the quarter. The company expects to deliver full year free cash flow of approximately 100 percent of adjusted net income.
•
The company updates its 2016 GAAP EPS guidance to approximately $2.50 and on an adjusted basis to approximately $3.00.
•
Pentair previously announced that it entered into a Share Purchase Agreement to sell its Valves & Controls business to Emerson Electric Co. for a purchase price of $3.15 billion in cash, subject to certain customary adjustments. The results of the Valves & Controls business, which was previously disclosed as a stand-alone reporting segment, have been presented as discontinued operations for all periods presented.
Reconciliations of GAAP to Non-GAAP measures are in the attached financial tables.
MANCHESTER, United Kingdom — October 25, 2016— Pentair plc (NYSE: PNR) today announced third quarter 2016 sales of $1.2 billion. Sales were up 9 percent compared to sales for the same period last year. Excluding currency translation ("FX") and contribution from acquisitions, core sales declined 2 percent in the third quarter. Third quarter 2016 earnings per diluted share from continuing operations ("EPS") were $0.64 compared to $0.52 in the third quarter of 2015. On an adjusted basis, the company reported EPS of $0.78 compared to $0.70 in the third quarter of 2015. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.
Third quarter 2016 operating income was $183 million, up 20 percent compared to operating income for third quarter of 2015, and return on sales ("ROS") was 15.1 percent, an increase of 140 basis points when compared to the third quarter of 2015. On an adjusted basis, the company reported segment income of $216 million for the third quarter, up 15 percent compared to segment income for the third quarter of 2015, and ROS was 17.9 percent, an increase of 110 basis points when compared to the third quarter of 2015.
Net cash provided by operating activities of continuing operations was $139 million and free cash flow from continuing operations was $125 million for the quarter. The company continues to expect to deliver full year free cash flow of approximately 100 percent of adjusted net income.
Pentair paid dividends of $0.34 per share in the third quarter of 2016. Pentair previously announced on December 8, 2015 that its Board of Directors approved a 5 percent increase in the company's regular annual cash dividend rate for 2016 to $1.34 from $1.28. 2016 marks the 40th consecutive year that Pentair has increased its dividend.
"We delivered third quarter earnings in line with our expectations on the back of strong cost and cash flow execution," said Randall J. Hogan, Pentair Chairman and Chief Executive Officer. "We are updating our fourth quarter guidance to reflect the ongoing sluggish industrial environment, and we no longer expect to see the typical end of year push on capital spending. We do not believe it is prudent to enter our planning cycle for next year expecting any dramatic recovery in growth and therefore we are aggressively aligning our cost structure with the reality of a continued slow growth world. We remain on track for the sale of our Valves & Controls business to be completed at the end of this year or early next year, at which point we expect to have a dramatically stronger balance sheet and be positioned to allocate resources in a disciplined manner."

OUTLOOK
The company updates its 2016 GAAP EPS to approximately $2.50 and on an adjusted basis to approximately $3.00. The company anticipates full year 2016 sales of $4.9 billion, or up approximately 7 percent on a reported basis and down approximately 1 percent on a core basis. The company expects to deliver full year free cash flow of approximately 100 percent of adjusted net income.

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2

In addition, the company introduced fourth quarter 2016 GAAP EPS guidance of approximately $0.63 and on an adjusted basis approximately $0.73, down approximately17 percent on an adjusted basis versus the same quarter last year. The company expects fourth quarter revenue to be approximately $1.22 billion, which would be down approximately 6 percent on a reported basis and down approximately 6 percent on a core basis compared to fourth quarter 2015 revenue.


EARNINGS CONFERENCE CALL
Pentair Chairman and CEO Randall J. Hogan and Chief Financial Officer John L. Stauch will discuss the company's performance, third quarter and first nine months 2016 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 company’s ability to complete the sale of the Valves & Controls business on anticipated terms and timetable; overall global economic and business conditions, including worldwide demand for oil and gas; 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 U.S. Securities and Exchange Commission ("SEC"), including in our 2015 Annual Report on Form 10-K. All forward-looking statements speak only as of the date of this report. We assume no obligation, and disclaim any obligation, to update the information contained in this report.

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 2015 revenues of $4.6 billion, Pentair employs approximately 28,000 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

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3


Pentair plc and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
In millions, except per-share data
September 30,
2016
September 26,
2015
 
September 30,
2016
September 26,
2015
Net sales
$
1,210.7

$
1,112.8

 
$
3,701.9

$
3,327.4

Cost of goods sold
769.8

718.1

 
2,347.9

2,161.1

Gross profit
440.9

394.7

 
1,354.0

1,166.3

% of net sales
36.4
%
35.5
%
 
36.6
%
35.1
%
Selling, general and administrative
228.4

217.0

 
728.2

649.6

% of net sales
18.8
%
19.6
%
 
19.7
%
19.5
%
Research and development
29.7

24.8

 
86.9

72.3

% of net sales
2.5
%
2.2
%
 
2.3
%
2.2
%
Operating income
182.8

152.9

 
538.9

444.4

% of net sales
15.1
%
13.7
%
 
14.6
%
13.4
%
Other (income) expense:
 
 
 
 
 
Equity income of unconsolidated subsidiaries
(1.2
)
(0.2
)
 
(2.7
)
(1.3
)
Net interest expense
34.3

30.9

 
105.9

67.5

% of net sales
2.8
%
2.8
%
 
2.9
%
2.0
%
Income from continuing operations before income taxes
149.7

122.2

 
435.7

378.2

Provision for income taxes
32.2

27.5

 
93.7

85.1

Effective tax rate
21.5
%
22.5
%
 
21.5
%
22.5
%
Net income from continuing operations
117.5

94.7

 
342.0

293.1

Income from discontinued operations, net of tax
22.9

20.5

 
48.6

88.6

Gain (loss) from sale of discontinued operations, net of tax
0.6

—

 
0.6

(4.8
)
Net income
$
141.0

$
115.2

 
$
391.2

$
376.9

Earnings per ordinary share
 
 
 
 
 
Basic
 
 
 
 
 
Continuing operations
$
0.65

$
0.53

 
$
1.89

$
1.63

Discontinued operations
0.13

0.11

 
0.27

0.46

Basic earnings per ordinary share
$
0.78

$
0.64

 
$
2.16

$
2.09

Diluted
 
 
 
 
 
Continuing operations
$
0.64

$
0.52

 
$
1.87

$
1.61

Discontinued operations
0.13

0.11

 
0.27

0.45

Diluted earnings per ordinary share
$
0.77

$
0.63

 
$
2.14

$
2.06

Weighted average ordinary shares outstanding
 
 
 
 
 
Basic
181.4

180.2

 
181.1

180.1

Diluted
183.6

182.6

 
183.0

182.6

Cash dividends paid per ordinary share
$
0.34

$
0.32

 
$
1.00

$
0.96



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4

Pentair plc and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
 
 
 
 
September 30,
2016
December 31,
2015
In millions
Assets
Current assets
 
 
Cash and cash equivalents
$
170.9

$
126.3

Accounts and notes receivable, net
689.5

773.2

Inventories
556.2

564.7

Other current assets
287.7

220.0

Current assets held for sale
1,042.7

1,093.4

Total current assets
2,747.0

2,777.6

Property, plant and equipment, net
547.3

539.8

Other assets
 
 
Goodwill
4,251.7

4,259.0

Intangibles, net
1,683.0

1,747.4

Other non-current assets
162.2

161.1

Non-current assets held for sale
2,287.8

2,348.6

Total other assets
8,384.7

8,516.1

Total assets
$
11,679.0

$
11,833.5

Liabilities and Equity
Current liabilities
 
 
Accounts payable
348.2

403.8

Employee compensation and benefits
159.3

162.6

Other current liabilities
416.7

487.1

Current liabilities held for sale
363.9

433.0

Total current liabilities
1,288.1

1,486.5

Other liabilities
 
 
Long-term debt
4,411.3

4,685.8

Pension and other post-retirement compensation and benefits
248.5

244.6

Deferred tax liabilities
636.4

670.2

Other non-current liabilities
199.5

192.4

Non-current liabilities held for sale
539.9

545.2

Total liabilities
7,323.7

7,824.7

Equity
4,355.3

4,008.8

Total liabilities and equity
$
11,679.0

$
11,833.5


(more)
5

Pentair plc and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
Nine months ended
In millions
September 30,
2016
September 26,
2015
Operating activities
 
 
Net income
$
391.2

$
376.9

Income from discontinued operations, net of tax
(48.6
)
(88.6
)
(Gain) loss from sale of discontinued operations, net of tax
(0.6
)
4.8

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
(2.7
)
(1.3
)
Depreciation
64.3

59.8

Amortization
72.6

43.8

Deferred income taxes
(3.8
)
(0.9
)
Share-based compensation
28.7

27.5

Excess tax benefits from share-based compensation
(8.8
)
(6.0
)
Amortization of bridge financing fees
—

10.8

Loss (gain) on sale of assets
—

(7.7
)
Changes in assets and liabilities, net of effects of business acquisitions
 
 
Accounts and notes receivable
91.8

47.1

Inventories
14.0

(32.7
)
Other current assets
(62.5
)
(36.3
)
Accounts payable
(56.9
)
(45.6
)
Employee compensation and benefits
(5.2
)
(6.4
)
Other current liabilities
13.6

25.8

Other non-current assets and liabilities
(27.4
)
(16.5
)
Net cash provided by (used for) operating activities of continuing operations
459.7

354.5

Net cash provided by (used for) operating activities of discontinued operations
97.1

41.4

Net cash provided by (used for) operating activities
556.8

395.9

Investing activities
 
 
Capital expenditures
(94.5
)
(66.3
)
Proceeds from sale of property and equipment
24.1

3.6

Acquisitions, net of cash acquired
—

(1,913.0
)
Other
(3.8
)
—

Net cash provided by (used for) investing activities of continuing operations
(74.2
)
(1,975.7
)
Net cash provided by (used for) investing activities of discontinued operations
(4.3
)
45.1

Net cash provided by (used for) investing activities
(78.5
)
(1,930.6
)
Financing activities
 
 
Net repayments of short-term borrowings
—

(2.0
)
Net (repayments) receipts of commercial paper and revolving long-term debt
(291.1
)
276.5

Proceeds from long-term debt
—

1,714.8

Repayment of long-term debt
(0.7
)
(4.6
)
Debt issuance costs
—

(26.8
)
Excess tax benefits from share-based compensation
8.8

6.0

Shares issued to employees, net of shares withheld
20.1

21.9

Repurchases of ordinary shares
—

(200.0
)
Dividends paid
(181.6
)
(173.3
)
Net cash provided by (used for) financing activities
(444.5
)
1,612.5

Effect of exchange rate changes on cash and cash equivalents
10.8

(43.3
)
Change in cash and cash equivalents
44.6

34.5

Cash and cash equivalents, beginning of year
126.3

110.4

Cash and cash equivalents, end of year
$
170.9

$
144.9

 
 
 

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6

Pentair plc and Subsidiaries
Reconciliation of the GAAP operating activities cash flow to the non-GAAP free cash flow (Unaudited)
 
 
Nine months ended
In millions
September 30,
2016
September 26,
2015
 
 
 
Net cash provided by (used for) operating activities of continuing operations
$
459.7

$
354.5

Capital expenditures
(94.5
)
(66.3
)
Proceeds from sale of property and equipment
24.1

3.6

Free cash flow from continuing operations
$
389.3

$
291.8

Net cash provided by (used for) operating activities of discontinued operations
97.1

41.4

Capital expenditures of discontinued operations
(15.4
)
(34.3
)
Proceeds from sale of property and equipment of discontinued operations
3.2

21.2

Free cash flow
$
474.2

$
320.1



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7

Pentair plc and Subsidiaries
Supplemental Financial Information by Reportable Segment (Unaudited)
 
 
 
 
 
 
2016
In millions
First
Quarter
Second
Quarter
Third
Quarter
Nine
Months
Net sales
 
 
 
 
Water Quality Systems
$
331.5

$
397.1

$
328.6

$
1,057.2

Flow & Filtration Solutions
337.7

368.7

342.7

1,049.1

Technical Solutions
524.6

540.6

543.1

1,608.3

Other
(3.8
)
(5.2
)
(3.7
)
(12.7
)
Consolidated
$
1,190.0

$
1,301.2

$
1,210.7

$
3,701.9

Segment income (loss)
 



Water Quality Systems
$
61.7

$
98.2

$
69.6

$
229.5

Flow & Filtration Solutions
39.5

55.5

49.5

144.5

Technical Solutions
112.8

111.6

119.6

344.0

Other
(36.1
)
(24.3
)
(22.5
)
(82.9
)
Consolidated
$
177.9

$
241.0

$
216.2

$
635.1

Return on sales
 
 
 
 
Water Quality Systems
18.6
%
24.7
%
21.2
%
21.7
%
Flow & Filtration Solutions
11.7
%
15.0
%
14.4
%
13.8
%
Technical Solutions
21.5
%
20.6
%
22.0
%
21.4
%
Consolidated
14.9
%
18.5
%
17.9
%
17.2
%

 
2015
In millions
First
Quarter
Second
Quarter
Third
Quarter
Nine
Months
Net sales
 
 
 
 
Water Quality Systems
$
306.9

$
387.7

$
322.0

$
1,016.6

Flow & Filtration Solutions
350.1

374.6

362.7

1,087.4

Technical Solutions
395.8

407.1

432.3

1,235.2

Other
(5.3
)
(2.3
)
(4.2
)
(11.8
)
Consolidated
$
1,047.5

$
1,167.1

$
1,112.8

$
3,327.4

Segment income (loss)



—

Water Quality Systems
$
51.8

$
88.2

$
60.5

$
200.5

Flow & Filtration Solutions
36.4

57.1

53.2

146.7

Technical Solutions
77.6

86.4

101.0

265.0

Other
(30.3
)
(27.9
)
(27.2
)
(85.4
)
Consolidated
$
135.5

$
203.8

$
187.5

$
526.8

Return on sales
 
 
 
 
Water Quality Systems
16.9
%
22.7
%
18.8
%
19.7
%
Flow & Filtration Solutions
10.4
%
15.2
%
14.7
%
13.5
%
Technical Solutions
19.6
%
21.2
%
23.4
%
21.5
%
Consolidated
12.9
%
17.5
%
16.8
%
15.8
%

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8



Pentair plc and Subsidiaries
Reconciliation of the GAAP year ended December 31, 2016 to the non-GAAP
excluding the effect of 2016 adjustments (Unaudited)
 
 
 
 
 
 
 
 
 
 
Actual
 
Forecast
In millions, except per-share data
First
Quarter
Second
Quarter
Third Quarter
 
Fourth
Quarter
Full
Year
Total Pentair
 
 
 
 
 
 
 
 
Net sales
$
1,190.0

$
1,301.2

$
1,210.7

 
approx
$
1,220

approx
$
4,920

Operating income
152.7

203.4

182.8

 
approx
181

approx
719

% of net sales
12.8
%
15.6
%
15.1
%
 
approx
14.8
%
approx
14.6
%
Adjustments:


 
 
 
 
 
 
 
Restructuring and other
0.6

12.2

8.1

 
approx
—

approx
21

Intangible amortization
24.2

24.3

24.1

 
approx
24

approx
97

Equity income of unconsolidated subsidiaries
0.4

1.1

1.2

 
approx
1

approx
4

Segment income
177.9

241.0

216.2

 
approx
206

approx
841

% of net sales
15.0
%
18.5
%
17.9
%
 
approx
17.0
%
approx
17.1
%
Net income from continuing operations—as reported
91.8

132.7

117.5

 
approx
115

approx
458

Adjustments to operating income
24.8

36.5

32.2

 
approx
24

approx
118

Income tax adjustments
(5.4
)
(7.9
)
(7.0
)
 
approx
(5
)
approx
(26
)
Net income from continuing operations—as adjusted
$
111.2

$
161.3

$
142.7

 
approx
$
134

approx
$
550

Continuing earnings per ordinary share—diluted


 
 
 
 
 
 
 
Diluted earnings per ordinary share—as reported
$
0.50

$
0.73

$
0.64

 
approx
$
0.63

approx
$
2.50

Adjustments
0.11

0.15

0.14

 
approx
0.10

approx
0.50

Diluted earnings per ordinary share—as adjusted
$
0.61

$
0.88

$
0.78

 
approx
$
0.73

approx
$
3.00



(more)
9

Pentair plc and Subsidiaries
Reconciliation of Net Sales Growth to Core Net Sales Growth by Strategic Business Group
For the Quarter Ending September 30, 2016
 
 
Q3 Net Sales Growth
 
Core
Currency
Acq. / Div.
Total
Water Quality Systems
1.9
 %
0.1
 %
—
%
2.0
 %
Aquatic & Environmental Systems
6.0
 %
0.2
 %
—
%
6.2
 %
Water Filtration
(2.6
)%
(0.1
)%
—
%
(2.7
)%
Flow & Filtration Solutions
(5.5
)%
—
 %
—
%
(5.5
)%
Water Technologies
(3.1
)%
0.1
 %
—
%
(3.0
)%
Fluid Solutions
(0.6
)%
(0.1
)%
—
%
(0.7
)%
Process Filtration
(21.8
)%
(0.1
)%
—
%
(21.9
)%
Technical Solutions
(1.0
)%
—
 %
26.6
%
25.6
 %
Enclosures
(0.5
)%
0.5
 %
—
%
—
 %
Thermal Management
(4.6
)%
(0.7
)%
—
%
(5.3
)%
Engineered Fastening Solutions
—
 %
—
 %
100.0
%
100.0
 %
Total Pentair
(1.7
)%
—
 %
10.5
%
8.8
 %








(more)
10

Pentair plc and Subsidiaries
Reconciliation of the GAAP year ended December 31, 2015 to the non-GAAP
excluding the effect of 2015 adjustments (Unaudited)
 
 
 
 
 
 
 
In millions, except per-share data
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
 
Full
Year
Total Pentair
 
 
 
 
 
 
Net sales
$
1,047.5

$
1,167.1

$
1,112.8

$
1,289.0

 
$
4,616.4

Operating income
120.7

170.8

152.9

171.7

 
616.1

% of net sales
11.5
%
14.6
%
13.7
%
13.3
%
 
13.3
%
Adjustments:
 
 
 
 
 
 
Restructuring and other
0.1

16.1

3.9

22.3

 
42.4

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

—

—

(23.0
)
 
(23.0
)
Intangible amortization
14.2

14.8

14.8

24.3

 
68.1

Inventory step-up
—

1.5

1.4

32.8

 
35.7

Deal related costs and expenses
—

—

14.3

—

 
14.3

Equity income of unconsolidated subsidiaries
0.5

0.6

0.2

0.3

 
1.6

Segment income
135.5

203.8

187.5

228.4

 
755.2

% of net sales
12.9
%
17.5
%
16.8
%
17.7
%
 
16.4
%
Net income from continuing operations—as reported
80.0

118.4

94.7

104.0

 
397.1

Loss on sale of businesses
—

—

—

3.2

 
3.2

Amortization of bridge financing fees
—

—

10.7

—

 
10.7

Adjustments to operating income
14.3

32.4

34.4

56.4

 
137.5

Income tax adjustments
(5.0
)
(10.0
)
(12.7
)
(3.2
)
 
(30.9
)
Net income from continuing operations—as adjusted
$
89.3

$
140.8

$
127.1

$
160.4

 
$
517.6

Continuing earnings per ordinary share—diluted
 
 
 
 
 
 
Diluted earnings per ordinary share—as reported
$
0.44

$
0.65

$
0.52

$
0.57

 
$
2.17

Adjustments
0.05

0.12

0.18

0.31

 
0.66

Diluted earnings per ordinary share—as adjusted
$
0.49

$
0.77

$
0.70

$
0.88

 
$
2.83




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