Q1 2024 EARNINGS
APRIL 23, 2024
Forward-Looking Statements
This presentation 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," "could," "positioned," "strategy," or "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 overall global economic and business conditions impacting our business, including the strength of housing and related markets and conditions relating to international hostilities; supply, demand, logistics, competition and pricing pressures related to and in the markets we serve; the ability to achieve the benefits of our restructuring plans, cost reduction initiatives and Transformation Program; the impact of raw material, logistics and labor costs and other inflation; volatility in currency exchange rates and interest rates; failure of markets to accept new product introductions and enhancements; the ability to successfully identify, finance, complete and integrate acquisitions; risks associated with operating foreign businesses; 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; and the ability to achieve our long-term operating and environmental, social and governance ("ESG") goals and targets.
Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023. All forward-looking statements, including all financial forecasts, speak only as of the date of this presentation. Pentair assumes no obligation, and disclaims any obligation, to update the information contained in this presentation.
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Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved. | |||
Key Definitions
- Except as otherwise noted, our results represent continuing operations for the period indicated, presented on an adjusted basis
- Core sales refers to GAAP net sales from continuing operations excluding: (1) the impact of currency translation and (2) the impact of net sales from acquired businesses recorded prior to the first anniversary of the acquisition, excluding the excess over prior year net sales of the acquired business less the amount of net sales attributable to divested product lines not considered discontinued operations
- Segment income represents equity income of unconsolidated subsidiaries and operating income from continuing operations exclusive of non-cash intangible amortization, certain acquisition related expenses, costs of transformation and restructuring activities, impairments, and other unusual non-operating items
- Return on sales ("ROS") equals segment income divided by net sales
- Results of Transformation initiatives reflected in Price column in Sales walks and Growth/Price/Acq. and Productivity columns in Segment Income walks; Mix included in Growth/Price/Acq. column
- See appendix for GAAP to non-GAAP reconciliations
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Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved. | |||
Executive Summary
Sales
- Q1'24 Performance:
Segment Income
ROS | Adjusted EPS | |
21.4% |
- Sales down 1%
- Segment Income up 3%
- ROS expanded 90 bps
- Adjusted EPS increased 3%
$1,029M | $1,017M |
(1%) | |
YoY | |
Q1'23 | Q1'24 |
$211M | $217M |
3% | |
YoY | |
Q1'23 | Q1'24 |
20.5% | $0.91 | $0.94 | ||||||||
90 bps | 3% | |||||||||
YoY | YoY | |||||||||
Q1'23 | Q1'24 | Q1'23 | Q1'24 |
- Balanced water portfolio reflects diversification across our Move, Improve, and Enjoy segments
- Solid execution delivered strong margin expansion for the 8th consecutive quarter
- Transformation initiatives remained on track to deliver margin expansion
- Believe we are returning to a more normal operating environment
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Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved. | |||
Q1 Segment Pulse
Pool Poised for Q2 Growth; Continued Resilience in Commercial and Industrial Verticals
Flow
- Commercial and Industrial verticals performed well in Q1
- Residential and Agriculture verticals impacted by higher interest rates
Water Solutions
- Foodservice and Hospitality verticals performed as expected
- Residential verticals expected to improve as year-over-year challenges moderate
Pool
- Sunbelt states remained resilient in Q1; California slightly impacted by weather
- High-end in-groundpool demand resilience; other new pool demand impacted by higher interest rates
- Remodeled pool project inquiries increased
- Pool servicers recently surveyed by Pentair are optimistic about the Aftermarket
5 Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved.
Sustainability Strategic Targets and 2023 Progress1
TARGETS
Carbon Footprint | Water | Product Design | Responsible | Diversity and |
Reduction | Reduction | for Sustainability | Supply Chain | Inclusion |
Reduce our Scope 1 and 2 | 30% reduction in overall | Further assess, design, and | In partnership with our | Achieve an inclusive and |
greenhouse gas emissions | water withdrawal from a | commercialize our products for | suppliers, we are expanding | diverse workforce with a |
by 50% from a 2019 baseline | 2019 baseline by 2030 | environmental sustainability | our social responsibility | focus on increasing |
by 2030; aim to achieve | to reduce our customers' | strategy beyond operations to | women / persons of color | |
carbon neutrality by 2050 | impact on climate change | build sustainable supply chain | in leadership globally | |
PROGRESS
30.9% | 22.9% | 100% | New Supplier | baseline including for the |
Continued progress since 2019 | ||||
Reduction | Water Withdrawal | of New Products | ESG Assessment | Representation |
process and assessed the | ||||
in Scope 1 and 2 GHG | Decrease* | assessed using our new | ESG maturity of ~73% of | of Women |
emissions* | product sustainability | our top 80% of existing | in our workforce and in | |
scorecard | suppliers by spend | leadership positions globally | ||
1As of December 31, 2023. Assured data. *Compared to a 2019 baseline
Advancing Our Efforts to be a Leading Sustainability Company
6 Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved.
CEO Summary
Delivered Better-than-Expected Q1 Results
Investor Day Key Themes Remain on Track
80/20 Training & Workshops Underway with What We Believe are Promising Early Readouts
2024 Outlook: Reiterating Full Year and Introducing Strong Q2 Guidance
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Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved. | |||
Q1'24 Pentair Performance
Sales
$1.03B | $29M | Flat | $1.02B | |||||||||
($1M) | ||||||||||||
($40M) | (1%) | |||||||||||
YoY | ||||||||||||
(4 pts) | 3 pts | 0 pts | 0 pts | (1pt) | ||||||||
Acq./Div. | (1 pt) | |||||||||||
Q1'23 | Volume | Price | FX | |||||||||
Q1'24 |
Total Sales down 1%
Core Sales down 1%
- Flow down 2%
- Water Solutions up 1%
- Pool down 1%
8 Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved.
Segment Income
$211M | $25M | Flat | $4M | $217M | ||||||||
($23M) | 3% | |||||||||||
YoY | ||||||||||||
ROS | 2.8% | 0.0% | (2.3%) | 0.4% | ROS | |||||||
20.5% | 21.4% | |||||||||||
Q1'23 | Growth/ | FX | Inflation | Prod. | Q1'24 | |||||||
Price/Acq. | ||||||||||||
Segment Income up 3%
ROS 21.4% ... up 90 bps
Adjusted EPS $0.94 … up 3%
- Adjusted Tax Rate of 16.5%
- Net interest expense of $28M; Shares 167.2M
Q1'24 Flow Performance
Sales
$392M | $8M | Flat | $1M | $384M | |||||||
($17M) | (2%) | ||||||||||
YoY | |||||||||||
(4 pts) | 2 pts | 0 pts | 0 pts | (2 pts) | |||||||
(1 pt) | |||||||||||
Q1'23 | Volume | Price | Acq./Div. | FX | |||||||
Q1'24 |
Flow
- Residential sales down 12%
- Commercial sales up 9%
Industrial Solutions
- Sales up 2%
Note: Not included in Segment Income is non-cash amortization of $1M in Q1'23 and Q1'24.
9 Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved.
Move Water
Segment Income
$65M | $11M | Flat | $10M | $77M | ||||||||
($9M) | 19% | |||||||||||
YoY | ||||||||||||
ROS | 3.2% | 0.0% | (2.3%) | 2.6% | ROS | |||||||
16.6% | 20.1% | |||||||||||
Q1'23 | Growth/ | FX | Inflation | Prod. | Q1'24 | |||||||
Price/Acq. | ||||||||||||
Segment Income up 19%
ROS 20.1% ... up 350 bps
- Price and Mix more than offset Inflation
- Transformation drove significant margin expansion
Improve Water
Q1'24 Water Solutions Performance
Sales | Segment Income | |
$272M | $4M | Flat | $273M | ||||||||
($1M) | |||||||||||
($2M) | |||||||||||
Flat | |||||||||||
YoY | |||||||||||
(1 pt) | 2 pts | 0 pts | (1 pt) | 0 pts | |||||||
(1 pt) | |||||||||||
Q1'23 | Volume | Price | Acq./Div. | FX | |||||||
Q1'24 |
$52M | $9M | $4M | $56M | ||
($2M) | |||||
($7M) | |||||
6% | |||||
YoY | |||||
ROS | 2.6% | (0.5%) | (2.6%) | 1.6% | ROS |
19.3% | 20.4% | ||||
Q1'23 | Growth/ | FX | Inflation | Prod. | Q1'24 |
Price/Acq. | |||||
Commercial
- Sales up 1%
Residential
- Sales down 1%
Note: Not included in Segment Income is non-cash amortization of $11M in Q1'23 and Q1'24.
10 Q1 2024 Earnings Release. @2024 Pentair. All Rights Reserved.
Segment Income up 6%
ROS 20.4% ... up 110 bps
- Higher margin businesses drove mix favorability
- Transformation drove strong margin expansion
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Pentair plc published this content on 23 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 April 2024 11:08:08 UTC.