false0000077360 0000077360 2020-01-22 2020-01-22


 
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): January 22, 2020
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)

Regal House, 70 London Road, Twickenham, London, TW13QS United Kingdom
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 44-74-9421-6154
 
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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Ordinary Shares, nominal value $0.01 per share
PNR
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (17 CFR 230.405) or Rule 12b-2 of the Exchange Act (17 CFR 240.12b-2).

☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 




ITEM 2.02 Results of Operations and Financial Condition
On January 28, 2020, Pentair plc (the “Company”) issued a press release announcing its earnings for the fourth quarter and full year of 2019 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-generally accepted accounting principles (“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 GAAP.
The 2019 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 and other activities, deal-related costs and expenses, impairments, inventory step-up, gain/loss on sale of businesses, pension and other post-retirement mark-to-market gain/loss and certain tax items. The 2018 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 and other activities, corporate allocations, impairments, deal-related costs and expenses, loss on sale of businesses, pension and other post-retirement mark-to-market loss, interest expense adjustments, loss on early extinguishment of debt and certain tax items.
We use the term “core sales” to refer to GAAP net sales 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 (“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.
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. In addition, adjusted EPS is used as a criterion to measure and pay long-term incentive compensation. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
The Company uses free cash flow to assess its cash flow performance. The Company believes free cash flow is an important measure of liquidity 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 a 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
 
On January 22, 2020, Mark Borin, the Company’s Executive Vice President, Chief Financial Officer and Chief Accounting Officer, informed the Company of his intention to resign from his position in connection with accepting an operational leadership opportunity at a private, employee-owned company. The Company has commenced a search for the Company’s next chief financial officer, and Mr. Borin plans to remain in his role at the Company through the search process and to assist with an orderly transition.
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



EXHIBIT INDEX
Exhibit
 
Description
  
Pentair plc press release dated January 28, 2020 announcing earnings results for the fourth quarter and full year of 2019
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)




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 January 28, 2020.
 
PENTAIR PLC
 
Registrant
 
 
 
 
By
/s/ John L. Stauch
 
 
John L. Stauch
 
 
President and Chief Executive Officer



1

Exhibit 99.1
PENTAIRLOGO001A15.JPG
News Release
Pentair Reports Fourth Quarter and Full Year 2019 Results
•
Fourth quarter sales of $755 million; full year 2019 sales of $2.96 billion.
•
Fourth quarter GAAP EPS of $0.61 and adjusted EPS of $0.68; full year 2019 GAAP EPS of $2.12 and adjusted EPS of $2.38.
•
The company introduces its 2020 GAAP EPS guidance of approximately $2.36 to $2.41 and on an adjusted basis of approximately $2.50 to $2.55.
Reconciliations of GAAP to Non-GAAP measures are in the attached financial tables.
LONDON, United Kingdom — January 28, 2020 — Pentair plc (NYSE: PNR) today announced fourth quarter 2019 sales of $755 million. Sales were up 2 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales declined 1 percent in the fourth quarter. Fourth quarter 2019 earnings per diluted share from continuing operations (“EPS”) were $0.61 compared to $0.54 in the fourth quarter of 2018. On an adjusted basis, the company reported EPS of $0.68 compared to $0.60 in the fourth quarter of 2018. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.
Fourth quarter 2019 operating income was $122 million, up 8 percent compared to operating income for the fourth quarter of 2018, and return on sales (“ROS”) was 16.2 percent, an increase of 90 basis points when compared to the fourth quarter of 2018. On an adjusted basis, the company reported segment income of $141 million for the fourth quarter, up 5 percent compared to segment income for the fourth quarter of 2018, and ROS was 18.6 percent, an increase of 50 basis points when compared to the fourth quarter of 2018.
Full year net cash provided by operating activities of continuing operations was $345 million and free cash flow from continuing operations was $287 million.
Pentair paid dividends of $0.18 per share in the fourth quarter of 2019. Pentair previously announced on December 9, 2019 that its Board of Directors approved a 6 percent increase in the company’s regular quarterly cash dividend rate (from $0.18 per share to $0.19 per share) that it will pay on February 7, 2020 to shareholders of record at the close of business on January 24, 2020. 2020 will mark the 44th consecutive year that Pentair has increased its dividend.
John L. Stauch, Pentair’s President and Chief Executive Officer commented: “We are very pleased to deliver fourth quarter and full year results in line with our expectations. During 2019, we completed two strategic acquisitions that allowed us to move closer to the consumer. We made great strides in accelerating our growth investments around marketing, brand building and innovation.”
“In addition, we finalized a detailed North America segmentation analysis that has provided us information on how consumers make purchase decisions, in essence, codifying the customer journeys with Pentair and our products. This segmentation data helped inform us to re-organize into two reporting segments, Consumer Solutions, which are business-to-consumer related businesses, and Industrial & Flow Technologies, which are primarily business-to-business oriented. This new segment structure is focused on better alignment around our product and service offerings by customer type to maximize the customer experience and drive profitable growth.”
“Despite macro challenges in 2019, we made great progress with respect to our vision to build a high-performance growth culture. Our outlook for 2020 reflects us returning to growth and we continue to have a strong balance sheet to fund our most attractive growth opportunities, both organically and inorganically, while also returning capital to our shareholders. We continue to invest in our top priorities and have made solid progress in further positioning Pentair as a leading water treatment company.”




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OUTLOOK
The company introduces its 2020 GAAP EPS guidance of $2.36 to $2.41 and on an adjusted basis of $2.50 to $2.55. The company anticipates full year 2020 sales up approximately 1 to 3 percent on a reported basis and up approximately 2 to 4 percent on a core basis. The company expects to deliver full year free cash flow greater than 100 percent of net income.
In addition, the company introduces first quarter 2020 GAAP EPS from continuing operations guidance of $0.44 to $0.47 and on an adjusted EPS basis of $0.48 to $0.51. The company expects first quarter sales to be up approximately 3 to 5 percent on a reported basis and up approximately 4 to 6 percent on a core basis compared to first quarter 2019.
EARNINGS CONFERENCE CALL
Pentair President and Chief Executive Officer John L. Stauch and Chief Financial Officer Mark C. Borin will discuss the company’s fourth quarter and full year 2019 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 Investor Relations 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 presentations, each of which can be found on Pentair’s website. The webcast and presentations will be archived at the company’s website following the conclusion of the event.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This 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 overall global economic and business conditions impacting our business, including the strength of housing and related markets; demand, competition and pricing pressures in the markets we serve; volatility in currency exchange rates; failure of markets to accept new product introductions and enhancements; the ability to successfully identify, finance, complete and integrate acquisitions; the ability to successfully integrate the Aquion and Pelican Water Systems acquisitions; the ability to achieve the benefits of our restructuring plans and cost reduction initiatives; risks associated with operating foreign businesses; the impact of material cost and other inflation; the impact of seasonality of sales and weather conditions; our ability to comply with laws and regulations; the impact of changes in laws, regulations and administrative policy, including those that limit U.S. tax benefits or impact trade agreements and tariffs; the outcome of litigation and governmental proceedings; the ability to realize the anticipated benefits from the separation of nVent Electric plc from Pentair; 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 Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2018. All forward-looking statements speak only as of the date of this release. Pentair plc assumes no obligation, and disclaims any obligation, to update the information contained in this release.

ABOUT PENTAIR PLC
At Pentair, we believe the health of our world depends on reliable access to clean, safe water. We deliver a comprehensive range of smart, sustainable water solutions to homes, business and industry around the world. Our industry leading and proven portfolio of solutions enables our customers to access clean, safe water. Whether it’s improving, moving or enjoying water, we help manage the world’s most precious resource. Smart, Sustainable, Water Solutions. For Life.
Pentair had revenue in 2019 of $3 billion, and trades under the ticker symbol PNR. With approximately 120 locations in 25 countries and 10,000 employees, we believe that the future of water depends on us. To learn more, visit Pentair.com.





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PENTAIR CONTACTS:
Jim Lucas
Rebecca Osborn
Senior Vice President, Investor Relations and Treasurer
Senior Manager, External Communications
Direct: 763-656-5575
Direct: 763-656-5589
Email: jim.lucas@pentair.com
Email: rebecca.osborn@pentair.com

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4


Pentair plc and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
 
 
 
 
 
 
 
Three months ended
 
Twelve months ended
In millions, except per-share data
December 31,
2019
December 31,
2018
 
December 31,
2019
December 31,
2018
Net sales
$
755.2

$
740.5

 
$
2,957.2

$
2,965.1

Cost of goods sold
481.0

472.5

 
1,905.7

1,917.4

Gross profit
274.2

268.0

 
1,051.5

1,047.7

% of net sales
36.3
%
36.2
%
 
35.6
%
35.3
%
Selling, general and administrative
134.2

135.3

 
540.1

534.3

% of net sales
17.8
%
18.3
%
 
18.3
%
18.0
%
Research and development
17.7

19.7

 
78.9

76.7

% of net sales
2.3
%
2.7
%
 
2.7
%
2.6
%
Operating income
122.3

113.0

 
432.5

436.7

% of net sales
16.2
%
15.3
%
 
14.6
%
14.7
%
Other expense (income):
 
 
 
 
 
Loss (gain) on sale of businesses
1.1

0.9

 
(2.2
)
7.3

Loss on early extinguishment of debt
—

—

 
—

17.1

Other expense (income)
8.8

1.6

 
(2.9
)
(0.1
)
Net interest expense
6.5

4.7

 
30.1

32.6

% of net sales
0.9
%
0.6
%
 
1.0
%
1.1
%
Income from continuing operations before income taxes
105.9

105.8

 
407.5

379.8

Provision for income taxes
3.0

11.6

 
45.8

58.1

Effective tax rate
2.8
%
11.0
%
 
11.2
%
15.3
%
Net income from continuing operations
102.9

94.2

 
361.7

321.7

(Loss) income from discontinued operations, net of tax
(5.1
)
(1.3
)
 
(6.0
)
25.7

Net income
$
97.8

$
92.9

 
$
355.7

$
347.4

Earnings (loss) per ordinary share
 
 
 
 
 
Basic
 
 
 
 
 
Continuing operations
$
0.61

$
0.55

 
$
2.14

$
1.83

Discontinued operations
(0.03
)
(0.01
)
 
(0.04
)
0.15

Basic earnings per ordinary share
$
0.58

$
0.54

 
$
2.10

$
1.98

Diluted
 
 
 
 
 
Continuing operations
$
0.61

$
0.54

 
$
2.12

$
1.81

Discontinued operations
(0.03
)
(0.01
)
 
(0.03
)
0.15

Diluted earnings per ordinary share
$
0.58

$
0.53

 
$
2.09

$
1.96

Weighted average ordinary shares outstanding
 
 
 
 
 
Basic
168.2

172.9

 
169.4

175.8

Diluted
169.3

174.0

 
170.4

177.3

Cash dividends paid per ordinary share
$
0.18

$
0.175

 
$
0.72

$
1.05



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5

Pentair plc and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
 
 
 
 
December 31,
2019
December 31,
2018
In millions
Assets
Current assets
 
 
Cash and cash equivalents
$
82.5

$
74.3

Accounts and notes receivable, net
502.9

488.2

Inventories
377.4

387.5

Other current assets
99.1

89.4

Total current assets
1,061.9

1,039.4

Property, plant and equipment, net
283.2

272.6

Other assets
 
 
Goodwill
2,258.3

2,072.7

Intangibles, net
339.2

276.3

Other non-current assets
196.9

145.5

Total other assets
2,794.4

2,494.5

Total assets
$
4,139.5

$
3,806.5

Liabilities and Equity
Current liabilities
 
 
Accounts payable
$
325.1

$
378.6

Employee compensation and benefits
71.0

111.7

Other current liabilities
352.9

328.4

Total current liabilities
749.0

818.7

Other liabilities
 
 
Long-term debt
1,029.1

787.6

Pension and other post-retirement compensation and benefits
96.4

90.0

Deferred tax liabilities
104.4

105.9

Other non-current liabilities
206.7

168.2

Total liabilities
2,185.6

1,970.4

Equity
1,953.9

1,836.1

Total liabilities and equity
$
4,139.5

$
3,806.5


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Pentair plc and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
Years ended December 31
In millions
2019
2018
Operating activities
 
 
Net income
$
355.7

$
347.4

Loss (income) from discontinued operations, net of tax
6.0

(25.7
)
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities of continuing operations
 
 
Equity income of unconsolidated subsidiaries
(3.5
)
(8.4
)
Depreciation
48.3

49.7

Amortization
31.7

34.9

(Gain) loss on sale of businesses
(2.2
)
7.3

Deferred income taxes
(18.4
)
(4.1
)
Share-based compensation
21.4

20.9

Trade name and other impairment
21.2

12.0

Loss on early extinguishment of debt
—

17.1

Pension and other post-retirement expense
1.9

13.2

Pension and other post-retirement contributions
(20.9
)
(8.9
)
Changes in assets and liabilities, net of effects of business acquisitions
 
 
Accounts and notes receivable
(17.5
)
(15.3
)
Inventories
13.6

(40.1
)
Other current assets
(18.4
)
31.2

Accounts payable
(63.6
)
58.3

Employee compensation and benefits
(19.1
)
(22.8
)
Other current liabilities
(0.4
)
(3.3
)
Other non-current assets and liabilities
9.4

(5.3
)
Net cash provided by operating activities of continuing operations
345.2

458.1

Net cash provided by (used for) operating activities of discontinued operations
7.8

(19.0
)
Net cash provided by operating activities
353.0

439.1

Investing activities
 
 
Capital expenditures
(58.5
)
(48.2
)
Proceeds from sale of property and equipment
0.6

0.2

Proceeds from (payments due to) sale of businesses
15.3

(12.8
)
Acquisitions, net of cash acquired
(287.8
)
(0.9
)
Other
(1.5
)
—

Net cash used for investing activities of continuing operations
(331.9
)
(61.7
)
Net cash used for investing activities of discontinued operations
—

(7.1
)
Net cash used for investing activities
(331.9
)
(68.8
)
Financing activities
 
 
Net receipts of commercial paper and revolving long-term debt
51.5

39.7

Proceeds from long-term debt
600.0

—

Repayments of long-term debt
(401.5
)
(675.1
)
Premium paid on early extinguishment of debt
—

(16.0
)
Distribution of cash from nVent, net of cash transferred
—

919.4

Shares issued to employees, net of shares withheld
12.5

13.3

Repurchases of ordinary shares
(150.0
)
(500.0
)
Dividends paid
(122.7
)
(187.2
)
Other
(6.9
)
(2.0
)
Net cash used for financing activities
(17.1
)
(407.9
)
Change in cash held for sale
—

27.0

Effect of exchange rate changes on cash and cash equivalents
4.2

(1.4
)
Change in cash and cash equivalents
8.2

(12.0
)
Cash and cash equivalents, beginning of year
74.3

86.3

Cash and cash equivalents, end of year
$
82.5

$
74.3

 
 
 

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Pentair plc and Subsidiaries
Reconciliation of the GAAP operating activities cash flow to the non-GAAP free cash flow (Unaudited)
 
 
 
 
Years ended December 31
In millions
2019
2018
Net cash provided by operating activities of continuing operations
$
345.2

$
458.1

Capital expenditures
(58.5
)
(48.2
)
Proceeds from sale of property and equipment
0.6

0.2

Free cash flow from continuing operations
$
287.3

$
410.1

Net cash provided by (used for) operating activities of discontinued operations
7.8

(19.0
)
Capital expenditures of discontinued operations
—

(7.4
)
Proceeds from sale of property and equipment of discontinued operations
—

2.3

Free cash flow
$
295.1

$
386.0




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Pentair plc and Subsidiaries
Supplemental Financial Information by Reportable Segment (Unaudited)
 
 
 
 
 
 
 
2019
In millions
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full
Year
Net sales
 
 
 
 
 
Aquatic Systems
$
220.5

$
270.6

$
218.7

$
275.5

$
985.3

Filtration Solutions
239.3

285.6

273.5

268.5

1,066.9

Flow Technologies
228.7

243.0

221.0

210.9

903.6

Other
0.4

0.3

0.4

0.3

1.4

Consolidated
$
688.9

$
799.5

$
713.6

$
755.2

$
2,957.2

Segment income (loss)
 


 

Aquatic Systems
$
52.4

$
76.8

$
54.8

$
84.9

$
268.9

Filtration Solutions
33.7

50.0

45.1

42.5

171.3

Flow Technologies
30.1

41.9

37.9

28.5

138.4

Other
(17.5
)
(14.6
)
(15.0
)
(15.2
)
(62.3
)
Consolidated
$
98.7

$
154.1

$
122.8

$
140.7

$
516.3

Return on sales
 
 
 
 
 
Aquatic Systems
23.8
%
28.4
%
25.1
%
30.8
%
27.3
%
Filtration Solutions
14.1
%
17.5
%
16.5
%
15.8
%
16.1
%
Flow Technologies
13.2
%
17.2
%
17.1
%
13.5
%
15.3
%
Consolidated
14.3
%
19.3
%
17.2
%
18.6
%
17.5
%

Pentair plc and Subsidiaries
Supplemental Financial Information by Reportable Segment (Unaudited)
 
 
 
 
 
 
 
2018
In millions
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full
Year
Net sales
 
 
 
 
 
Aquatic Systems
$
240.4

$
276.2

$
232.7

$
276.8

$
1,026.1

Filtration Solutions
251.6

262.1

240.4

246.9

1,001.0

Flow Technologies
240.3

241.9

238.0

216.5

936.7

Other
0.3

0.4

0.3

0.3

1.3

Consolidated
$
732.6

$
780.6

$
711.4

$
740.5

$
2,965.1

Segment income (loss)
 
 
 
 
 
Aquatic Systems
$
60.0

$
79.6

$
59.9

$
78.1

$
277.6

Filtration Solutions
33.7

52.3

38.4

44.1

168.5

Flow Technologies
38.7

44.4

36.6

25.9

145.6

Other
(15.4
)
(12.2
)
(13.1
)
(14.2
)
(54.9
)
Consolidated
$
117.0

$
164.1

$
121.8

$
133.9

$
536.8

Return on sales
 
 
 
 
 
Aquatic Systems
25.0
%
28.8
%
25.7
%
28.2
%
27.1
%
Filtration Solutions
13.4
%
20.0
%
16.0
%
17.9
%
16.8
%
Flow Technologies
16.1
%
18.4
%
15.4
%
12.0
%
15.5
%
Consolidated
16.0
%
21.0
%
17.1
%
18.1
%
18.1
%


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Pentair plc and Subsidiaries
Reconciliation of the GAAP year ended December 31, 2019 to the non-GAAP
excluding the effect of 2019 adjustments (Unaudited)
 
 
 
 
 
 
 
In millions, except per-share data
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
 
Full
Year
Net sales
$
688.9

$
799.5

$
713.6

$
755.2

 
$
2,957.2

Operating income
67.6

133.8

108.8

122.3

 
432.5

% of net sales
9.8
%
16.7
%
15.2
%
16.2
%
 
14.6
%
Adjustments:


 
 
 
 
 
Restructuring and other
1.1

6.7

5.9

7.3

 
21.0

Intangible amortization
8.2

8.3

7.6

7.6

 
31.7

Asset impairment
15.3

2.9

—

3.0

 
21.2

Inventory step-up
1.7

0.5

—

—

 
2.2

Deal related costs and expenses
4.2

—

—

—

 
4.2

Equity income of unconsolidated subsidiaries
0.6

1.9

0.5

0.5

 
3.5

Segment income
98.7

154.1

122.8

140.7

 
516.3

Return on sales
14.3
%
19.3
%
17.2
%
18.6
%
 
17.5
%
Net income from continuing operations—as reported
52.4

115.1

91.3

102.9

 
361.7

(Gain) loss on sale of businesses
(3.5
)
0.1

0.1

1.1

 
(2.2
)
Pension and other post-retirement mark-to-market (gain) loss
—

(12.2
)
0.4

8.4

 
(3.4
)
Adjustments to operating income
30.5

18.4

13.5

17.9

 
80.3

Income tax adjustments
(5.4
)
(3.8
)
(7.4
)
(14.8
)
 
(31.4
)
Net income from continuing operations—as adjusted
$
74.0

$
117.6

$
97.9

$
115.5

 
$
405.0

Continuing earnings per ordinary share—diluted


 
 
 
 
 
Diluted earnings per ordinary share—as reported
$
0.30

$
0.68

$
0.54

$
0.61

 
$
2.12

Adjustments
0.13

0.01

0.04

0.07

 
0.26

Diluted earnings per ordinary share—as adjusted
$
0.43

$
0.69

$
0.58

$
0.68

 
$
2.38



(more)
10

Pentair plc and Subsidiaries
Reconciliation of the GAAP year ending December 31, 2020 to the non-GAAP
excluding the effect of 2020 adjustments (Unaudited)
 
 
 
 
 
 
 
Forecast
In millions, except per-share data
 
First
Quarter
Full
Year
Net sales
 
approx
Up 3 - 5 %

approx
Up 1 - 3 %

Operating income
 
approx
 Up 47 - 53 %

approx
Up 15 - 19 %

Adjustments:
 
 


 


Intangible amortization
 
approx
$
7

approx
$
28

Equity income of unconsolidated subsidiaries
 
approx
$
1

approx
$
4

Segment income
 
approx
 Up 9 - 13 %

approx
Up 3 - 6 %

 
 
 

 

Net income from continuing operations—as reported
 
approx
$75 - $81

approx
$397 - $408

Adjustments to operating income
 
approx
7

approx
28

Income tax adjustments
 
approx
(1
)
approx
(5
)
Net income from continuing operations—as adjusted
 
approx
$81 - $87

approx
$420 - $431

Continuing earnings per ordinary share—diluted
 
 


 


Diluted earnings per ordinary share—as reported
 
approx
$0.44 - $0.47

approx
$2.36 - $2.41

Adjustments
 
approx
0.04

approx
0.14

Diluted earnings per ordinary share—as adjusted
 
approx
$0.48 - $0.51

approx
$2.50 - $2.55


(more)
11

Pentair plc and Subsidiaries
Reconciliation of Net Sales Growth to Core Net Sales Growth by Segment
For the Quarter and Year Ended December 31, 2019 (Unaudited)
 
 
 
 
 
 
 
Q4 Net Sales Growth
 
Full Year Net Sales Growth
 
Core
Currency
Acq. / Div.
Total
 
Core
Currency
Acq. / Div.
Total
Total Pentair
(0.6
)%
(0.7
)%
3.3
 %
2.0
 %
 
(1.3
)%
(1.5
)%
2.5
 %
(0.3
)%
Aquatic Systems
0.6
 %
(0.3
)%
(0.8
)%
(0.5
)%
 
(2.8
)%
(0.4
)%
(0.8
)%
(4.0
)%
Filtration Solutions
(1.7
)%
(1.2
)%
11.6
 %
8.7
 %
 
(0.7
)%
(2.4
)%
9.7
 %
6.6
 %
Flow Technologies
(1.0
)%
(0.8
)%
(0.7
)%
(2.5
)%
 
(0.4
)%
(1.5
)%
(1.6
)%
(3.5
)%

Pentair plc and Subsidiaries
Reconciliation of Net Sales Growth to Core Net Sales Growth by Segment
For the Quarter Ending March 31, 2020 and Year Ending December 31, 2020 (Unaudited)
 
 
 
 
 
 
 
 
Forecast
 
 
Q1 Net Sales Growth
 
Full Year Net Sales Growth
 
 
Core
Currency
Acq. / Div.
Total
 
Core
Currency
Acq. / Div.
Total
Total Pentair
approx
4 - 6 %
(1) %
— %
3 - 5 %
 
2 - 4 %
— %
(1) %
1 - 3 %





(more)
12

Pentair plc and Subsidiaries
Reconciliation of the GAAP year ended December 31, 2018 to the non-GAAP
excluding the effect of 2018 adjustments (Unaudited)
 
 
 
 
 
 
 
In millions, except per-share data
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
 
Full
Year
Net sales
$
732.6

$
780.6

$
711.4

$
740.5

 
$
2,965.1

Operating income
92.7

122.6

108.4

113.0

 
436.7

% of net sales
12.7
%
15.7
%
15.2
%
15.3
%
 
14.7
%
Adjustments:
 
 
 
 
 


Restructuring and other
5.6

19.0

3.5

3.7

 
31.8

Intangible amortization
9.3

9.1

8.6

7.9

 
34.9

Tradename and other impairment
—

6.0

—

6.0

 
12.0

Corporate allocations
8.8

2.2

—

—

 
11.0

Deal related costs and expenses
—

—

—

2.0

 
2.0

Equity income of unconsolidated subsidiaries
0.6

5.2

1.3

1.3

 
8.4

Segment income
117.0

164.1

121.8

133.9

 
536.8

Return on sales
16.0
%
21.0
%
17.1
%
18.1
%
 
18.1
%
Net income from continuing operations—as reported
58.4

77.9

91.2

94.2

 
321.7

Loss on sale of businesses
5.3

0.9

0.2

0.9

 
7.3

Loss on early extinguishment of debt
—

17.1

—

—

 
17.1

Interest expense adjustment
6.0

2.4

—

—

 
8.4

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

—

2.2

1.4

 
3.6

Adjustments to operating income
23.7

36.3

12.1

19.6

 
91.7

Income tax adjustments
(4.5
)
(7.1
)
(10.3
)
(11.5
)
 
(33.4
)
Net income from continuing operations—as adjusted
$
88.9

$
127.5

$
95.4

$
104.6

 
$
416.4

Continuing earnings per ordinary share—diluted
 
 
 
 
 


Diluted earnings per ordinary share—as reported
$
0.32

$
0.44

$
0.52

$
0.54

 
$
1.81

Adjustments
0.17

0.27

0.02

0.06

 
0.54

Diluted earnings per ordinary share—as adjusted
$
0.49

$
0.71

$
0.54

$
0.60

 
$
2.35