Pentair Reports First Quarter 2019 Results

Pentair plc (NYSE: PNR) today announced first quarter 2019 sales of $689 million. Sales were down 6 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales declined 4 percent in the first quarter. First quarter 2019 earnings per diluted share from continuing operations ("EPS”) were $0.30 compared to $0.32 in the first quarter of 2018. On an adjusted basis, the company reported EPS of $0.43 compared to $0.49 in the first quarter of 2018. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.

First quarter 2019 operating income was $68 million, down 27 percent compared to operating income for the first quarter of 2018, and return on sales ("ROS”) was 9.8 percent, a decrease of 290 basis points when compared to the first quarter of 2018. On an adjusted basis, the company reported segment income of $99 million for the first quarter, down 16 percent compared to segment income for the first quarter of 2018, and ROS was 14.3 percent, a decrease of 170 basis points when compared to the first quarter of 2018.

Net cash used for operating activities of continuing operations was $257 million and free cash flow usage from continuing operations was $274 million for the quarter.

Pentair paid a regular cash dividend of $0.18 per share in the first quarter of 2019. Pentair previously announced on December 10, 2018 that its Board of Directors approved a 3 percent increase in the company's regular annual cash dividend rate for 2019 to $0.72 from $0.70, adjusted for the spin-off of nVent Electric plc. This marks the 43rd consecutive year that Pentair has increased its dividend.

"Wet and cold weather delayed pool construction activity in several key markets,” said John L. Stauch, Pentair President and Chief Executive Officer. "We have not seen any significant changes in demand trends within the important Aquatics markets. The inclement weather also impacted our higher margin Specialty Ag Spray business within Flow Technologies. As a result of slower sell-through during the first quarter, inventory levels were not reduced to the levels we originally anticipated. We expect inventory levels in the channel to come down as stronger sell-through resumes in the second and third quarters.”

"We believe this is a 2019 event and we expect to be even better positioned for the season next year. We continue to invest in our prioritized growth initiatives around advancing pool growth and accelerating residential and commercial water treatment. We are accelerating our productivity initiatives across operations and material sourcing and optimizing our cost structure. We have a strong capital structure, solid free cash flow generation, and we are continuing to invest in our strategy to be the leading residential and commercial water treatment company.”

OUTLOOK

The company reiterates its estimated 2019 GAAP EPS from continuing operations of approximately $2.04 - $2.09 and on an adjusted EPS basis of approximately $2.30 - $2.35. The company reiterates its full year 2019 sales guidance of up approximately 1 to 2 percent on a reported basis and approximately flat to up 1 percent on a core basis compared to full year 2018. The company expects full year free cash flow to approximate adjusted net income.

In addition, the company introduces second quarter 2019 GAAP EPS from continuing operations guidance of approximately $0.58 - $0.61 and on an adjusted EPS basis of approximately $0.63 - $0.66. The company expects second quarter sales to be up approximately 1 to 2 percent on a reported basis and approximately flat to up 1 percent on a core basis compared to second quarter 2018.

EARNINGS CONFERENCE CALL

Pentair President and Chief Executive Officer John L. Stauch and Chief Financial Officer Mark C. Borin will discuss the company’s first quarter 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 presentation, each 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 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 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 2018 of $3 billion, and trades under the ticker symbol PNR. With approximately 130 locations in 34 countries and 10,000 employees, we believe that the future of water depends on us. To learn more, visit www.pentair.com.

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