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PENTAIR
PENTAIR: DIFFERENTIATED GROWTHPENTAIR INVESTOR & ANALYST EVENT
1
Randall J. Hogan
Chairman and Chief Executive Officer
November 13, 2013
2013 Houston Investor & Analyst Event
PENTAIR 2
FORWARD-LOOKING STATEMENTS
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This communication 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
successfully integrate Pentair, Inc. and the Flow Control business and achieve expected benefits from the Merger; 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 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 Quarterly Report on Form 10-Q for the quarter ended
September 28, 2013 and our 2012 Annual Report on Form 10-K. All forward-looking statements speak only as of the date of
this communication. Pentair Ltd. assumes no obligation, and disclaims any obligation, to update the information contained
in this communication.
2013 Houston Investor & Analyst Event
PENTAIR 32013 Houston Investor & Analyst Event
KEY DEFINITIONS FOR TODAY’S PRESENTATION
• All 2015T References Represent Our 2015 Long Term Goals
• All 2013F References Represent Our 2013 Full Year Expected Results
• All References to 2012 are Presented on a Pro Forma Basis to Include the Results ofFlow Control for the Full Year
• All References to 2011 are Presented on a Pro Forma Basis to Include the Results ofFlow Control for the Full Year
• All 2013, 2012, and 2011 Amounts are Presented on an Adjusted Basis and Excludethe Impact of Severance, Asset Impairment, Deal-Related, and Other Costs
Please Refer to the Appendices for Reconciliations of Non-GAAP Measures and Pro Forma Results
PENTAIR 4
AGENDA
1) Strategy Overview & Trends Randy Hogan 8:30 – 9:15
2) Thermal Management Overview Alok Maskara 9:15 – 10:00
3) Valves & Controls Overview David Dunbar 10:15 – 11:00
4) Q&A Leadership Team 11:00 – 11:30
5) Transportation to Pasadena 11:45 – 12:30
6) Pasadena Service Center Tour 12:45 – 2:00
Welcome!2013 Houston Investor & Analyst Event
PENTAIR 5
LAST YEAR’S THEME AND KEY MESSAGES
A New Company Building Off Proven Platforms for Success
A StrongerCompany
MoreOpportunities
ProvenOperatingDisciplines
Setting &Meeting
Expectations
1
The NewPentair
2
3
4
• More Balanced• More Global• More Diversified
• Growth• Cost• Standardization
• PIMS: Focus on Lean Enterprise
• Aggressive & Achievable
• Smart Capital Deployment
2013 Houston Investor & Analyst Event
PENTAIR 6
A StrongerCompany
Many Indicators of Our Strength
PROGRESS TO DATE …
+ Added to S&P 500
+ Share Price up 53% (+31% versus S&P 500)
+ Recognized in Bloomberg BusinessWeek Top 50
+ Recognized Forbes Top 100 Innovators
+ Two Shingo Silver Medallion Awards in 12 months
+ 30,000 Employees … Leadership in Key Verticals
2013 Houston Investor & Analyst Event
PENTAIR 7
A Successful Year One
PROGRESS TO DATE …+ Integration Synergies Expected to be $120M in 2013
• Original Target ~ $90M• Overdriving Lean / Sourcing and StandardizationMore
Opportunities
ProvenOperatingDisciplines
+ PIMS Aggressively Adopted
• All 100+ Mfg. Facilities Driving PIMS’ Lean Enterprise• Standardization Actions Underway for ’14 & ’15
+ Solid Financial Returns YTD
• Adj. EPS* Up 18% … Free Cash Flow >100% of NI• Adj. Operating Margins* Up 120 Basis Points• Smart Capital Allocation: Buy Backs = $875 Million
of $1.2 BillionSetting &Meeting
Expectations+ Significant Opportunities Remain
• G&A Complexity and ERP Consolidations• More Growth Synergies Anticipated as Programs Take Off• Capital Deployment Flexibility
2013 Houston Investor & Analyst Event* All year-over-year comparisons against 2012 adjusted results on a pro forma basis for the Flow Control acquisition.See Appendix for reconciliation of non GAAP measures.
PENTAIR 8
PENTAIR STRATEGY – CONSISTENT APPROACH
• Higher Organic Growth: Verticals & Innovation Focus
‒ Where We Lead and Can Drive Differentiated Growth
‒ Aligned with Growth Trends
• Successfully Integrate Company
‒ PIMS … One Pentair Culture / Win Right … Aligned Verticals
‒ Targeting Synergies and Base Performance to Deliver ~$5.00 EPS in ’15
• Drive Operational Excellence
‒ Known as World-Class in Lean and Growth
‒ Destination Company for Customers and Top Talent
Continue to Execute These Strategic Imperatives2013 Houston Investor & Analyst Event
PENTAIR 9
PENTAIR: A BALANCED & DIVERSE PORTFOLIO
Broad Diversification
By Reporting Segment By Vertical
•Balanced GeographicExposure with 25% in FastGrowth Regions
•Current Trends: USStrength and WesternEurope has Stabilized
Resi/Comm,~24%
Energy,~28%
Infrastructure,~13%
Industrial,~26%
Food & Beverage,~9%
Water &Fluid
Solutions,~44%
TechnicalSolutions,
~23%
Valves &Controls,
~33%
By Geography
U.S. andCanada,
~42%WesternEurope,
~18%Fast
Growth,~25%
DevelopedNon-U.S.,
~15%
•Balanced Across Verticals
•Current Trends: Strength inNorth American Residentialand Food & Beverage;Industrial has Stabilized;Energy Mixed
100% = 2012 sales* of $7.3B
•Long & Short CycleBalanced Portfolio
•Global Solutions Leader /Recognized Brands
•Largest “Valve Company”Globally
2013 Houston Investor & Analyst Event *2012 sales. Adjusted results on a pro forma basis for the Flow Control acquisition. See appendix for reconciliation of non GAAP measures.
PENTAIR 10
KEY GROWTH VERTICALS
Leveraging Global Mega Trends
• Oil & Gas
• Power
• Mining
• Chemical
• Pharma
• Manufacturing
• Agriculture
• Aquaculture
• Food & Beverage
• Municipal
• Telecom &Networks
• Transport
• Commercial
• Residential
• Recreation &Leisure
*2012 sales. Adjusted results on a pro forma basis for the Flow Control acquisition. See appendix for reconciliation of non GAAP measures.
** PNR estimates.
~28% ~26% ~9%~13%~24%% ofSales*
~4-6% ~2-3% ~6-8%~Flat~5-8%Long-TermGrowthRate**
2013 Houston Investor & Analyst Event
PENTAIR 11
OUR SUCCESS
Positioned Well to be the Next Great Industrial Company
Cultural Transformation… Energized and Committed
Our Strategies are Working… 2013 a Great Example
Trends in Our Favor… Must Seize Opportunities
A Stronger Portfolio… Global Leadership
New Growth Framework… to Drive More Organic Growth
2013 Houston Investor & Analyst Event
PENTAIR 12
OUR SUCCESS
Positioned Well to be the Next Great Industrial Company
Cultural Transformation… Energized and Committed
Our Strategies are Working… 2013 a Great Example
Trends in Our Favor… Must Seize Opportunities
A Stronger Portfolio… Global Leadership
New Growth Framework… to Drive More Organic Growth
2013 Houston Investor & Analyst Event
PENTAIR 13
HighPerformance Co.
Today +
Operating Co.2001 - 2012
Holding Company1966 - 2000
Strong Executionof Strategies:
• Portfolio Transformation—Exited Tools—Expanded in Water—Added Energy
• PIMS
—Lean / Ops Excellence—Growth (3D / RGP)—Talent Management
• Solid Merger Integration
• Technology Innovation
• “Win Right” Culture
COMPANY TRANSFORMATION ~ 45+ YEARS
Executing on Strategies Profoundly Changed Company
• Advancing andMaximizingPIMS
• A Leader in KeyRegions andVerticals
• One Pentair
• Strongly AlignedLeadershipDriving Growth
• PIMS
• Strategic Focus
• Branding
• More Global
• Water &TechnicalProductsCompany
• EntrepreneurialStart
• De-centralizedBusinesses
• Strong Focus onFinancial Metrics
• Grew intoIndustrialCompany
$1B$4B
>$13BMarket Cap
2013 Houston Investor & Analyst Event
PENTAIR 14
ROBUST STANDARD OPERATING MODEL
TalentManagementOur Global TalentProcess to Select,Develop, and RetainTop Talent
LeanEnterpriseThe Way We DriveValue to OurCustomers ThroughoutAll Our BusinessProcesses by ReducingWaste andImproving Speedand Efficiency
Pentair Integrated Management System
PIMS
Proven Operating Disciplines
Rapid GrowthProcessThe Tools and Languageto Drive Above-AverageGrowth Consistently
3D Processfor InnovationWorks in Concert withRapid Growth to BringNew Products to MarketThrough Three Key Phases:
• Discover• Develop• Deploy
Growth
2013 Houston Investor & Analyst Event
PENTAIR
36%
146% 156% 164% 187% 198%244% 265%
341%
472%
655%705%
1324%
S&P 500 EMR MidCap400
HON MMM DOV ITW UTX DHR ETN PNR ROP AME
15
(1/1/2001 to 11/07/2013)
Pentair Performance is Firmly in the Upper Quartile
’01 – ‘13 TOTAL STOCK RETURN AGAINST SELECT INDUSTRIALS
2013 Houston Investor & Analyst Event
PENTAIR 16
TRANSFORMATION … MORE GLOBAL
Portfolio Diversification to “Control Destiny “
$2B
2001
$7.4B
2013F
$8.4B
2015T
U.S.
80%
15%Other Dev.Fast Growth 5%
~40%
~35%
~25%
27%+
~33%
~40%
2013 Houston Investor & Analyst Event
PENTAIR
2012 2013F 2015T
17
FAST GROWTH REGIONS
Current Strength• Scale and Resource Numbers
• Good Manufacturing / Service Footprint
• Starting to Build Brand Awareness
• Win Right Culture
Execute on Vision to Make Fast Growth Regions Work
Focus Areas For Growth
Developed
FastGrowth
$7.3B ~$7.4B
$5.6B ~$5.7B
$1.7B ~$1.8B • Grow at GDP+ (~10%+ / Year)
• More Marketing Talent
• Each Vertical Has Focus Area …Energy = Middle East …
• Continue to Localize Products
• More Cross Selling /Collaboration
$8.4B+
$6.1B+
$2.3B+
2013 Houston Investor & Analyst Event
PENTAIR 18
STANDARDIZATION
Significant Savings Opportunity in Operating Expenses
G&A Reductions Through LeanEnterprise to Fuel Growth
Key Synergy Initiatives: ~$175M Funnel
• Operating Expense as % of Sales … Goal toDrop ~200 basis points 2013 to 2015
• Drive 2013 Savings (Repositioning) andStandardization Targets for 2014, 2015and Beyond:
− Major Repositioning
− Aggressive ERP and Back-office Consolidations (Most Savings 2014+)
− G&A: From 8% of Sales to 6% (Legacy PNR Businesses are Under 4%)
− ERP: Reduce from ~66 to ~16
− Reporting Entities Reduced by 65%
− Other: Reduce Payroll / Acctg. Centers
2013 Houston Investor & Analyst Event
2012 2013F 2015T
~20%
~22%
>22%Opex.
PENTAIR 19
MARGIN EXPANSION
2012 2013F 2015T
Robust Margin Expansion Highlights Execution Capabilities
Operating Margins
Key Drivers 2012 2013
Pricing
Cost Productivity
Standardization
Expanding Margins
• Pricing− Execute on Pricing Management
− Targeting >1% of Sales
• Cost Productivity− PIMS: Rapid Adoption / Implementation
− Growth While Leveraging Structure
− Productivity > Inflation & Mix
• Standardization (previous slide)
− $90M Cost-Out in 2013
− 2 Points of G&A Reduction Targeted by 2015
− Reduce Complexity and Continue Functional Standardization
~11%~13%
>16%
2013 Houston Investor & Analyst Event
PENTAIR 20
OUR SUCCESS
Positioned Well to be the Next Great Industrial Company
Cultural Transformation… Energized and Committed
Our Strategies are Working… 2013 a Great Example
Trends in Our Favor… Must Seize Opportunities
A Stronger Portfolio… Global Leadership
New Growth Framework… to Drive More Organic Growth
2013 Houston Investor & Analyst Event
PENTAIR 21
OUR FUTURE: POSITIONING FOR DIFFERENTIATED GROWTH
• In Strong Position with Mega Trends
• Maximize Growth with Platform / Vertical Prioritization
• Driving in New Geographies and Growth Capabilities
Driving Core Important … But Must Pursue Differentiation2013 Houston Investor & Analyst Event
PENTAIR 22
CURRENT TRENDS
US: Steady Recovery (Bright Spot)+ Housing Back Strong+ Petrochemical Opportunity– Fiscal Uncertainty
Developed Regions Fast Growth Regions
Europe: Could Be Good Growth+ Stabilizing Now+ Could Surprise to Upside– Difficult Decisions Ahead
FGR: Mixed but Slowed in ’12 & ’13+ China 5-yr Plan Attractive+/– China Slow but Still Important– India, Brazil Bouncing Around
Resource Rich: Infrastructure Build+ Significant Energy Investment+ Adding Lots of Jobs– Mining Slow … For Now
In Position to Take Advantage of Trends U.S. Housing Remains Strong and Europe Improving Continuing to Add Talent to Key Growth Regions PIMS Executes on Our Strategies Aggressively
Generally Good-To-Improving Environment2013 Houston Investor & Analyst Event
PENTAIR 23
THE TRENDS INFORMING OUR STRATEGIC THINKING
Driven by the “New-New” World
The Nexus of Demands Driving “Food – Water – Energy”
• Changing Population & Demographics
• Increasing Energy Demands
• Shifts in Food Consumption
• Water Crises
2013 Houston Investor & Analyst Event
PENTAIR 24
GROWTH* OVER THE NEXT TWO DECADES
Today: 7B
9BWorld’s
Population
Today: $50T
$110TWorld GDP More
than Doubles
Today: $20T
$60TMiddle ClassPurchasing
Power Triples
Today: ~55%
75%Population inAPAC & Africa
Today: 2B
5BGlobal Middle
Class
Today: 5 out of 10
7of 10People Living in
Urban Areas
Drives Much of Our Thinking and Strategy
• More Food/Protein Consumption
• Increased Housing Needs
• Increased Power Consumption
• Increased Water Consumption
• Middle-Class Aspirations
• More Industrial Production
• Water / Waste Water Infrastructure
• More Cars, Rail, Airplanes
• Increased Oil & Gas Demand
• Better Living Conditions
2013 Houston Investor & Analyst Event * PNR Estimates
PENTAIR 25
PENTAIR: POSITION TO BENEFIT
Well Positioned
FOOD WATER ENERGY+ Ag Pumps / Spray+ Aquaculture+ Food & Bev Process+ Food Service- Not Yet Global Ag
+ Global Pump+ Global Filtration+ Flood Control+ Advanced Systems- Limited 50Hz Pump
+ Leader in Valves+ Leader in Thermal+ Separations Technology+ Service Model- Limited Energy Pumps
2013 Houston Investor & Analyst Event
PENTAIR
3 Reporting Segments
ORGANIZING FOR SUCCESS – CURRENT ALIGNMENT
Platforms are Where We Serve Customers … GBU’s + ELT Aligned to ImproveGrowth and Productivity Trajectory
26
Water & Fluid SolutionsValves &Controls
Technical Solutions
Executive Leadership Team (ELT)
AquaticSystems
EquipmentProtection
ThermalManagement
7 Global Business Units
Filtration &Process
FlowTechnologies
WESValves &Controls
24 Operating Platforms
Standard Pumps
Engineered Pumps
Fluid Motion
Advanced Filtration Electrical/Cooling
Aquaculture
Ag Spray
Pool
Oil & Gas Separation
F & B Processing
Water Purification
Bldg. Infra. Solutions
Actuation & Controls
Adv. Ind. Solutions
Food Service
Quarter Turn
ElectronicsPressure Relief
Gate, Globe, & Check
Water Services
Mega-Projects
Water Transmission
Water Dynamics
Clean Air Systems
CEO + COO + CFO + Growth + HR + Legal/Compliance
2013 Houston Investor & Analyst Event
PENTAIR 27
ALIGNING PLATFORMS TO DRIVE GROWTH
Platforms Aligned with Key Growth Verticals
FOOD &BEVERAGE F & B Processing
Food ServiceAquaculture
Ag Spray
RESI &COMMERCIAL
Fluid Motion
Water Purification
Bldg. Infra. SolutionsStandard Pumps
Pool
ENERGYQuarter Turn
Gate, Globe, & Check
Adv. Ind. Solutions
Mega-Projects
Water Transmission
Electrical/Cooling
Oil & Gas Separation
Actuation & Control
Pressure Relief
INDUSTRIALActuation & Control
Quarter Turn Gate, Globe, & Check
Electrical/Cooling
Water Services
Clean Air Systems
Advanced FiltrationAdv. Ind. Solutions
Pressure Relief
INFRA-STRUCTURE Advanced Filtration
Water Dynamics Electronics
Engineered Pumps
Water Transmission
2013 Houston Investor & Analyst Event
PENTAIR 28
MAINTAINING LEADERSHIP IN ENERGY
Pentair’s Capabilities and Solutions
WAYS TO WIN
1
2
4
3
5
Product Innovation for CriticalApplications – Sub-sea, Cryogenic
Expanded Solutions & ServiceOfferings – HRT, HIPPS, Rentals
Fast Growth Region Expansion –Mid-East, China, Russia / CIS, Africa
Global Strategy Serving Local Needs
PIMS … Best in Class Quality,Delivery, and Standardization
2013F: ~$2.1B~75% Direct Sales~25% Indirect Sales~225 Sales Engineers~600 Distributors
Actuation & Control
Electrical/Cooling
Oil & Gas Separation
Adv. Ind. Solutions
Quarter Turn
Pressure Relief
Gate, Globe, & Check
Mega-Projects
Water Transmission
2013 Houston Investor & Analyst Event
PENTAIR 29
EXPANDING OFFERINGS IN INDUSTRIAL
Led by North American Industrial Recovery
2013F: ~$1.9B~55% Direct Sales~45% Indirect Sales~300 Sales Engineers~2000 Distributors
WAYS TO WIN
1
2
4
3
5
Expanded Service Offerings –Cooling Audits, Plant Services
Fast Growth Region Expansion –Russia, Middle-East, China
Maximize NA Distribution Channels
Product Innovation for SevereService Applications
PIMS … Best in Class Quality,Delivery, and Standardization
Water Services
Clean Air Systems
Adv. Ind. Solutions
Pressure Relief
Actuation & Control
Quarter Turn
Gate, Globe, & Check
Electrical/Cooling
Advanced Filtration
2013 Houston Investor & Analyst Event
PENTAIR 30
MAINTAINING LEADERSHIP IN RESIDENTIAL & COMMERCIAL
Taking Advantage of Residential / Commercial Recovery
WAYS TO WIN
1
2
4
3
5
2013F: ~$1.9B~5% Direct Sales~95% Indirect Sales~500 Sales Engineers~1200 Distributors
Fast Growth Region Expansion –Middle East & Southeast Asia
Led by the US Residential Recovery
Expand Eco-Select Offerings andExecute Hybrid DI
Product Innovation – EnergyEfficiency
PIMS … Best in Class Quality,Delivery, and Standardization
Standard Pumps
Fluid Motion
Pool
Water Purification
Bldg. Infra. Solutions
2013 Houston Investor & Analyst Event
PENTAIR 31
ESTABLISHING LEADERSHIP IN INFRASTRUCTURE
Selectively Choose Where to Play
WAYS TO WIN
1
2
4
3
5
2013F: ~$1B~70% Direct Sales~30% Indirect Sales~200 Sales Engineers~900 Distributors
Fast Growth Region Expansion –Middle East, SE Asia, Africa
Global Flood Control Leadership
More Systems / Solutions With OurProducts
Establish Membrane TechnologyLeadership – Nano Filtration
PIMS … Best in Class Quality,Delivery, and Standardization
Engineered Pumps
Advanced Filtration
Electronics
Water Dynamics
Water Transmission
2013 Houston Investor & Analyst Event
PENTAIR 32
EXPANDING LEADERSHIP IN FOOD & BEVERAGE
Food & Bev Offers the Fastest Growth for Pentair
WAYS TO WIN
1
2
4
3
5
2013F: ~$700M~60% Direct Sales~40% Indirect Sales~40 Sales Engineers~60 Distributors
Fast Growth Region Expansion –Lead in Africa
Aquaculture Leadership
Globalize Agriculture Strategy
Application Expertise – Breweries,Dairy, etc.
PIMS … Best in Class Quality,Delivery, and Standardization
Aquaculture
Ag Spray
Beverage Systems
F & B Processing
2013 Houston Investor & Analyst Event
PENTAIR 33
OUR CURRENT LANDSCAPE – FAST GROWTH REGIONS
We Have Real & Global Capabilities
China
Africa
India
Middle East
Eastern Europe
Latin America
$360M
3,340
6South East Asia
$350M
1,150
2
$200M
65
-$390M
2,860
6
$200M
400
2
$100M
1,340
4$100M
60
1Total FGRs - Additional Info:
Sales & Mktg HeadcountR&D Headcount# of Distributors & Agents
950350
1,100
Legend:
2013F Ship-to-SalesHeadcount
Manufacturing Sites
2013 Houston Investor & Analyst Event
PENTAIR 34
FOCUS AREAS – BIG BETS
Several Ways To Win … Increasing Odds by Prioritizing
RESI &COMMERCIAL
INFRA-STRUCTURE
ENERGY
INDUSTRIAL
FOOD &BEVERAGE
= Priority / Focus Area
ChinaMiddleEast
Brazil /LAM IndiaSEA Eastern
EuropeAfrica
2013 Houston Investor & Analyst Event
PENTAIR 35
FOCUS AREAS – ADDITIONAL PRIORITIES
… Without Forgetting the Other Nice Opportunities
ChinaMiddleEast
Brazil /LAM IndiaSEA Eastern
EuropeAfrica
RESI &COMMERCIAL
INFRA-STRUCTURE
ENERGY
INDUSTRIAL
FOOD &BEVERAGE
= Priority / Focus Area
= Opportunity / Core
2013 Houston Investor & Analyst Event
PENTAIR 36
OUR SUCCESS
Positioned Well to be the Next Great Industrial Company
Cultural Transformation… Energized and Committed
Our Strategies are Working… 2013 a Great Example
Trends in Our Favor… Must Seize Opportunities
A Stronger Portfolio… Global Leadership
New Growth Framework… to Drive More Organic Growth
2013 Houston Investor & Analyst Event
PENTAIR
STRATEGY
PENTAIR … DRIVING HIGH PERFORMANCE
37
ALIGNMENT
HOW WE DIFFERENTIATE PENTAIR
• Purpose, Vision & Strategic Priorities
• Value Proposition & Competitive Advantage
• Controlling Our Destiny
HOW WE EXECUTE
• Standard Operating Model … PIMS
• Organization Design … Corporate, GBUs, Fast Growth Regions
• Functional Excellence … Standards & Practices
HOW WE WIN RIGHT
• Win Right … Pentair Values
• Leadership Behaviors … Top Talent
• How We Work Together
Three Levers … Aligned To Achieve Our Goals
PROCESS &STRUCTURE
CULTURE &TALENT
2013 Houston Investor & Analyst Event
PENTAIR
30,000 People Understand “What”, “How” and “Why”38
PENTAIR … WHAT WE STAND FOR
HOW WE MAKE A DIFFERENCE IN THE WORLD
HOW WE ACHIEVE OUR VISION
HOW WE WIN RIGHT
Purpose
We Improve the Quality of Life of PeopleAround the World
Mission & Vision
Be the Next Great Industrial Company
Destination Company for Customers,Top Talent, & Shareholders
Strategic Principles
• Invest in Attractive Markets … Where We Compete
• Control Our Destiny … How We Compete
— “Right-To-Left” Thinking & Actions
— Positioning to Win
Operating Principles … PIMS
• Growth
• Talent Management
• Lean Enterprise
WINCustomer First
Accountability for Performance
Innovation and Adaptability
RIGHTPositive Energy
Respect and Teamwork
Absolute Integrity
2013 Houston Investor & Analyst Event
PENTAIR
ORGANIZING FOR SUCCESS – NEW ALIGNMENT
Simplified & Aligned to Drive Growth & Productivity39
Executing Growth & Productivity of Prioritized Platforms
5 Global Business UnitsExecuting the PNR Priorities as Strategic and Operating Leaders
Executive Leadership Team
CEO + Executive Officers + Presidents = Aligned Priorities & Agenda
TechnicalSolutions
Alok Maskara~$1.7B*
Valves &Controls
David Dunbar~$2.4B*
Filtration &Process
Netha Johnson~$1.1B*
AquaticSystems
Karl Frykman~$0.7B*
FlowTechnologies
Phil Pejovich~$1.7B*
4 ExecutiveOfficers Driving
PNR-WideLean Enterprise
John Stauch/CFO/ITDriving G&A Transformation
Todd Gleason/GrowthDriving Marketing,
Strategy, and Sales Excellence
Fred Koury/HRGlobal Talent Management
Angela Lageson/LegalGlobal Compliance & Legal
ERP’s, Lean Enterprise, and Financial Performance
Aligned and Prioritized Strategies for Growth
Deployment of Top Talent Against Most Important Priorities
Ensuring Global Compliance
2013 Houston Investor & Analyst Event * Estimated 2013 sales.
PENTAIR 40
VALUE CREATION: 2015 GOALS
Road Map to ~$5.00 EPS Goal
~$2.73 ~($0.21)~$2.52
~$1.80
~$0.68 ~$5.00
2012*Pre-Deal
2012*Pro Forma
Impact
2012*Pro Forma Performance
CapitalAllocation
2015Goal
~$0.80
~$1.00
IST
Base
* 2012 adjusted results and 2013 guidance on an adjusted pro forma basis, see appendix for reconciliation of non GAAP measures.2013 Houston Investor & Analyst Event
PENTAIR 2013 Houston Investor & Analyst Event
THERMAL MANAGEMENTPENTAIR INVESTOR & ANALYST EVENT
Alok Maskara
President, Pentair Thermal Management
November 13, 2013
41
PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES
• Thermal Management is a Great Addition to the Pentair Portfolio
• Heat Tracing is an Attractive Industry with Favorable Mega Trends
• Thermal Management Expects to Deliver Above Average Growthand has Mega Project Upside
• Integration is Yielding Desired Synergies and PIMS is Expected toAccelerate Margin Expansion
Thermal: Proud to be Part of Pentair!42
PENTAIR 2013 Houston Investor & Analyst Event
WE PROTECT PIPES FROM FREEZING
Where We Began and Our #1 Application
Sometimes Solving Simple Problems …. but Mostly Solving Difficult Challenges
43
PENTAIR 2013 Houston Investor & Analyst Event
HEAT TRACING: HOW WE PROTECT PIPES
Heat Tracing MaintainsTemperature of Fluids byReplacing Heat LostThrough Thermal Insulationon Pipes, Vessels, andAssociated Equipment
Heat-trace Panel(may include circuitbreakers, controllersand alarms)
Transformer
Lighted End Seal
Remote Configuration AndMonitoringwith DigiTrace Supervisorsoftware
Insulation Systems
Power Connection
Heating Cable
Pentair Thermal Provides Complete Solution to Customers44
PENTAIR 2013 Houston Investor & Analyst Event
Product QualityPortfolio to Meet Customer’s NeedInnovative TechnologyProduct ReliabilityEase of Use
OUR VALUE PROPOSITION
Leading Product Attributes
Global Field Service NetworkCustomer ServiceProduct Brand – RaychemService Brand – Tracer
A Leader in Brand Equity, Product Quality, Innovation, and Service
Leading Service and Brand Reputation
45
PENTAIR 2013 Houston Investor & Analyst Event
North America
Fast GrowthRegions
DevelopedNon-NA
Heat Tracing& SpecialtyCables
Control,Monitoring,& Sensing
Services
BUSINESS OVERVIEW
Attractive Growth Portfolio
• Service Enables Customer toReceive “Warm Pipe Guarantee”
• Control Monitoring and SensingExpands Our Core Product
• Heat Tracing and SpecialtyCables Remains Our CoreProduct
• North America GrowthDriven by Oil Sands andBakken
• Fast Growth Regions Drivenby Russia, China, Indonesia
• Developed Non-NA Drivenby Scandinavia & Offshore
• Oil & Gas Driven by ProcessTemp. & Freeze Protection
• Chemical Driven by CurrentNatural Gas Price Dynamics
• Commercial Driven by SafetyApplications and Luxury Needs
By Vertical
Oil & Gas
Chemical
Commercial &Residential
Power
Other
By Product / Service By Geography
Energy –Oil & Gas
Industrial –Chemical
Residential &Commercial
Energy –Power
Other
100% = ~$0.7B* 100% = ~$0.7B* 100% = ~$0.7B*
* 2013 estimated sales. 46
PENTAIR 2013 Houston Investor & Analyst Event
AdvancedIndustrialSolutions
Building &Infrastructure
Solutions
MegaProjects
THERMAL: GO-TO-MARKET OVERVIEW
Broad and Diversified Portfolio
By Sub Platforms
• Advanced Industrial Solutions:‒ Oil & Gas 60%, Chemical 20%, Other
Industrial 20%‒ Green Field 30% vs. MRO 70%‒ EPC 20%, EP 50%, P only 30%
• Building & Infrastructure Solutions:‒ Commercial 50%, Infra 30%, Resi 20%‒ Mostly Product Only Sales
• Mega Projects‒ Oil & Gas Projects that are $100M+
Direct Sales
Indirect(Distributors,Wholesale)
By Channel
• Direct Sales are Sales Through Ourown Employees or Exclusive Reps. Thisis Our Typical Go-to-Market Approach
• Indirect Sales Through Distributorsare Used for Harder to Reach EndUsers Such as Light Commercial andFast Growth Regions
100% = ~$0.7B*100% = ~$0.7B*
* 2013 estimated sales. 47
PENTAIR 2013 Houston Investor & Analyst Event
Strong Industrial and Refining Position with Opportunities in Mid/Upstream
THERMAL: ADVANCED INDUSTRIAL SOLUTIONS
48
PENTAIR 2013 Houston Investor & Analyst Event
EXAMPLE: QATARGAS SULPHUR TRANSFER LINE
• Application:
– 35Km, Dual, 12-inch Sulphur Pipeline toTransfer Molten Sulphur from 11Producers to a Pelletizer Facility
– Temperature Maintain at 135 C with TightAllowable Range from 125 C to 145 C
• Scope: Heating System Design, Specification,Engineering, Procurement, Construction,and Commissioning
• Pentair Sulphur Flow Thermal TechnologyIncludes Fiber Optic Temperature Sensing
• Future Opportunities Could Include MROServices and Leak Detection
A World Leader in Heated Sulphur Pipelines
Sulphur flowsimulation
49
PENTAIR 2013 Houston Investor & Analyst Event
THERMAL: BUILDING & INFRASTRUCTURE SOLUTIONS
Building & Infrastructure Solutions: Utilizing Pentair Channels50
PENTAIR 2013 Houston Investor & Analyst Event
EXAMPLE: BEIJING CAPITAL AIRPORT
• Application:
– 48Km of Heat Tracing to PreventSnow and Ice from Forming on theGuideway and Running Surfaces ofthe Automated People Mover
• Scope:
– Heating System Design,Specification, and Material Supply
Snow Melting System for Tracks51
PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES
• Thermal Management is a Great Addition to the Pentair Portfolio
• Heat Tracing is an Attractive Industry with Favorable Mega Trends
• Thermal Management Expects to Deliver Above Average Growthand has Mega Project Upside
• Integration is Yielding Desired Synergies and PIMS is Expected toAccelerate Margin Expansion
Thermal: Proud to be Part of Pentair!52
PENTAIR 2013 Houston Investor & Analyst Event
ATTRACTIVE MEGA TRENDS
• Increased Extraction of Heavy Crude(Oil Sands, Africa, Russia, etc.) NeedsHeat Tracing
• Growth in Oil Extraction in ColderClimate Requires Heat Tracing
• Lower US Natural Gas PricesIncreasing Petrochemical Investments
Energy• Infrastructure Investments Especially
in Colder Climate (North China,Russia / CIS)
• Increased Safety Focus DrivingDemand for Fire Alarm and FireSprinkler System Protection
• Growing Demand for Radiant FloorHeating Continues (Electric SmallAreas / Hydronic Large Areas)
• Commercial Building ConstructionDriving Demand for Gutter FreezeProtection and Hot WaterTemperature Applications
Quality of Life• Clean Water and Energy Concerns
Pushing More Customers TowardsElectrical Heat Tracing vs. Steam
• Pipeline Leak Environmental ImpactDriving Growth of More AccurateWire Based Leak DetectionTechnology
Environment
Global Trends Contribute to Thermal’s Growth Outlook
Infrastructure
53
PENTAIR
ADVANCED INDUSTRIAL SERVICES LANDSCAPE(TAM)
0
20
40
60
80
PTM129
A 108
B 70
C 30
LargerRegional
Providers 100
SmallRegional
Providers713
PTM
74
A35
Sm
allRegio
nalP
rov
iders
191
PLC/D
CS
Sys
tem
Pro
viders
100
Small
RegionalProviders
922
J 818
K 90
Electric & Steam HT Services
Other EPCs, Electrical & Mechanical Contractors 11,950
$13,950M100%
Heat
Tracing& Specialty
Wiring
$1,150M
Control,Monitoring
& Sensing
$400M
SteamProducts
$2,000MTotal =$17,500M
AIS Business More Global in Nature than BIS
Product TAM = $3.5Bn Services TAM = $14.0Bn
Pentair Thermal Management
2013 Houston Investor & Analyst Event
Source: PNR Estimates
54
PENTAIR
BUILDING & INFRASTRUCTURE LANDSCAPE (TAM)
Highly Fragmented, Services Led By Regional Players
Electric TAM = $3.4Bn Hydronic TAM = $6.1Bn
0
20
40
60
80
100%
Heat Tracing& Specialty
Wiring
N 96
O 85
Q 42
A 30
S 30
T 30U 20
LDetection 20
SmallRegionalProviders
497
$1,020M
Control,Monitoring& Sensing
PTM 64
N 64
O 65
Q 10
W 40
Small
Regional
Providers
375
$680M
Electric
Services
Regional SystemDesigners 300
Regional Installers
900
Global System Designers150
Global Installers 350
$1,700M
Hydronic Product
P 650
V 370
Larger Regional Providers 500
Small Regional Providers 1,530
$3,050M
Hydronic Services
Hydronic Service Providers 3,050
$3,050M
Total =$9,500M
2013 Houston Investor & Analyst Event
Source: PNR Estimates
Pentair Thermal Management
55
PENTAIR 2013 Houston Investor & Analyst Event
KEY COMPETITORS
Fragmented Industry Structure
Building & Infrastructure SolutionsAdvanced Industrial Solutions
56
PENTAIR 2013 Houston Investor & Analyst Event
BROAD AND DIVERSIFIED CUSTOMER BASE
Top 20 Customers Make up Only 30% of Total Revenues
41 42.3
Top 20 Customers Total Customer Base
Gross Margin Average %*
Top 20 Customers by Geography
Canada
APAC
FGR
US
W. Europe
Top 20 Customers by Type
Oil & Gas
EPC
Distributors
Top 20Customers
~30%
Remaining 1000+Customers
~70%
* 2013 estimate
57
PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES
• Thermal Management is a Great Addition to the Pentair Portfolio
• Heat Tracing is an Attractive Industry with Favorable Mega Trends
• Thermal Management Expects to Deliver Above Average Growthand has Mega Project Upside
• Integration is Yielding Desired Synergies and PIMS is Expected toAccelerate Margin Expansion
Thermal: Proud to be Part of Pentair!58
PENTAIR 2013 Houston Investor & Analyst Event
2011 2012 2013F 2015T
2011 2012 2013F 2015T
+ megaprojects
+ megaprojects
THERMAL: PERFORMANCE OVERVIEW
Strong Earnings Increase, Steady Base Business Growth
Drivers of 6% Anticipated Future Growth
• Services (Excluding Mega Projects)
• Fast Growth Regions
• Innovative New Products
Future Margin Growth: Operational Excellence
• Integration Synergies
• Material and Labor Productivity
• Standardization to Lower G&A - 35%Reduction in the Next 3 Years
Sales ($M)
Operating Income ($M)
ROS 10.5%
656
~6-10%
Mega
Mega
669637
735+
6787
105150+
13% 16% 20.5%
59
PENTAIR 2013 Houston Investor & Analyst Event
2012 2015T
Innovation
THERMAL: 2012 – 2015 GROWTH DRIVERS
RGP Driven Detailed Growth Playbook
Key Drivers
• Engineering Services
• Field Construction Services
• MRO Services
• Remote Monitoring Services
Key Drivers
• Russia / CIS
• China
• Middle East and Africa
Key Drivers
• Applications
• Basic Wire and Cables
• Control, Monitoring,and Sensing
2012 2015T
Fast Growth Regions
2012 2015T
ServicesRevenue Revenue Vitality
$105M $80M $70M
60
PENTAIR 2013 Houston Investor & Analyst Event
THERMAL GLOBAL FOOTPRINT
Our Strength: 50+ Global Sales & Service Centers
Pentair Service Center Example: Fort McMurray• Year of Construction: 2007• Employees: 50 Plus up to 500 Field Personnel for Projects• Size: 24K sq ft• Pentair Annual Revenues: ~ $50 - 100 M• Cross-GBU Opportunities
– Currently Shared with Pentair Valves & Controls– Future Opportunity for Water & Fluid Solutions
THERMAL GLOBAL FOOTPRINT
61
PENTAIR 2013 Houston Investor & Analyst Event
FAST GROWTH REGIONS: RUSSIA / CIS EXAMPLE
Broad Coverage, Strong Growth
Tuymen
5.1 5.75.4
12.416.2
25.6
18.4
23.7
34.5
39.1
FY0
3FY
04
FY0
5FY
06
FY0
7FY
08
FY0
9FY
10
FY1
1FY
12
Revenue ($M)
62
PENTAIR 2013 Houston Investor & Analyst Event
HIGHLIGHTS OF POTENTIAL PROJECT FUNNEL
Actively Pursuing Global Projects
Goliat – Korea / NorwayGoliat – Korea / Norway Bayer Golden Tiger - ChinaBayer Golden Tiger - China Seadrill MOSS CS60 - SingaporeSeadrill MOSS CS60 - Singapore
NWR - CanadaNWR - Canada Fort Hills - CanadaFort Hills - Canada Chevron Gorgon - AustraliaChevron Gorgon - Australia
50k bbd Refinery Near EdmontonSanctioned in 2012
Suncor Operated Mine with 160kbpd Bitumen Froth Capacity
Marine LNG Offloading Facility.Liquid Fuel and Water LeakDetection Opportunity
Korean Built Floating Production,Storage and Offloading Facility forBarents Sea. Pentair Supplied HeatTracing and Anti-Icing/De-Icing
Heat Management System forExpansion at Bayer MaterialScience Facility in the ShanghaiChemical Industry Park
Winterized Semi-Submersible DrillingRig Built in Singapore for NorthAtlantic Deployment. Includes HeatTracing, Anti-Icing and De-Icing
63
PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES
• Thermal Management is a Great Addition to the Pentair Portfolio
• Heat Tracing is an Attractive Industry with Favorable Mega Trends
• Thermal Management Expects to Deliver Above Average Growthand has Mega Project Upside
• Integration is Yielding Desired Synergies and PIMS is Expected toAccelerate Margin Expansion
Thermal: Proud to be Part of Pentair!64
PENTAIR 2013 Houston Investor & Analyst Event
ONE PENTAIR: INTEGRATION UPDATEIndia Office Consolidation China Plant Consolidation
GBU Meeting or Exceeding IST Targets
Thermal Site at Legacy Pentair Brazil
Moscow Office Consolidation Redwood City Lean Transformation Control Panel Insourcing: Hoffman
$400K Annual Savings + Growth $2M Savings in 2014Secured $4.8M Petrobras Order
$500K Annual Savings Plus Growth $~4M Lean Savings in 2013
Eliminated One Shift with Same Output$2M+ Annual Sales Synergies
65
PENTAIR 2013 Houston Investor & Analyst Event
Scrap Before Scrap Now
PIMS LEAN EXAMPLE: SCRAP REDUCTION
Key Actions: PIMS Playbook
• Created LeanTransformation Plan forScrap Reduction
• Created Pareto to PrioritizeOpportunities
• Held Kaizen to IdentifyWays to Reduce Wire Scrap
• Implemented Team’sProcess ImprovementRecommendations
• Created VisualManagement to EnsureSustainability
• Investigated VariousCauses of Wire Breaks (SixSigma Project) - AddressedMechanical Defect inBraider
Lowering Our Scrap Costs … One Initiative at a Time66
PENTAIR 2013 Houston Investor & Analyst Event
PIMS EXAMPLE: REDUCING MATERIALS COSTS
• Rationalization of Existing Lighted EndSeal Products with Brighter LEDs andUnique Lens
• Reducing Costs While ImprovingPerformance and Durability
Delivering 5%+ Net Material Savings this Year … Strong Funnel for Future Years
Indirect Materials SavingsDirect Materials Savings
• Freight Savings Using ConsolidatedPentair Rate
• Telecommunication Savings UsingPentair Renegotiated Contracts
• Travel Savings from Policy Changesand Better Rates
• Other Miscellaneous SavingsIncluding Office Supplies, TemporaryLabor, etc.
$1+M Savings in 2013
Rap
idN
ego
tiat
ion
s
Val
ue
Engi
ne
eri
ng
• Renegotiated Prices of High VolumePolymers by On-Boarding AlternateSuppliers and Consolidating Purchases
• Renegotiated Prices of Raw Metals byLeveraging Pentair Metals’ Expertise
Stra
tegi
cSo
urc
ing
• Consolidated Molding Supply Base toImprove Costs, Quality, and JIT Delivery
• Cost Modeling to Reduce Conductors’Fabrication Costs. Qualify Alternates
$5+M Savings in 2013
67
PENTAIR 2013 Houston Investor & Analyst Event
PIMS RGP – NAM MRO SERVICES EXAMPLE
Alpha Test Underway
• Offer Tiered MRO Services on an Annuity Contract Basis to Petrochemical
Plants in the Gulf Coast Region to a Combination of Small to Large PTM &
Competitive Installations through Direct Channels to Plant /
Maintenance Managers
• US MRO Industrial Market Opportunity Estimated at $150M Annually
(2010)
Concept
68
PENTAIR 2013 Houston Investor & Analyst Event
Product Overview
• LSTMI Offers a Lower SheathTemperature on the Outer Portion ofthe Heated Section as Compared to theStandard Alloy 825 MI Heating Product
• Provides the Customer withConstructible Designs at a PremiumMaterial Price that is Off-Set byReductions in Field Installation Laborand On-Going Maintenance Costs
DeployDevelopDiscover
Pre-CharterComplete
CharterComplete
StartDevelopment
CompletePrototype (3P)
Final DesignFreeze
CompleteCommercialization Plan
CompleteProduct & ProcessValidation
Launch(Jan/2014)
3D Project Status
PIMS 3D INNOVATION: LOW SHEATH TEMPERATURE MI
Enhancing Technology Differentiation
Sectional view of Design D LST MI cable
69
PENTAIR 2013 Houston Investor & Analyst Event
PIMS: HIGH PERFORMANCE “WIN RIGHT” CULTURE
Quick Adoption of Pentair Values
POSITIVE ENERGYWe Display a Positive Outlook at
All Times
ABSOLUTE INTEGRITYWe are Committed to Honest and
Ethical Business Practices
RESPECT AND TEAMWORKWe Treat Others With Respect /
We Collaborate for Team Success
CUSTOMER FIRSTWe Make it Easy for Customers to
Do Business With Pentair
ACCOUNTABILITY FOR PERFORMANCEWe Commit to High Standards
of Performance
INNOVATION AND ADAPTABILITYWe Adapt to Changing
Circumstances and Excel at ApplyingNew Ideas
NPS Strategy Deployment 3 D
Key Leadership Criteria Feedback & CoachingCode of BusinessConduct & Ethics
70
PENTAIR 2013 Houston Investor & Analyst Event
KEY MESSAGES
• Thermal Management is a Great Addition to the Pentair Portfolio
• Heat Tracing is an Attractive Industry with Favorable Mega Trends
• Thermal Management Expects to Deliver Above Average Growthand has Mega Project Upside
• Integration is Yielding Desired Synergies and PIMS is Expected toAccelerate Margin Expansion
Thermal: Proud to be Part of Pentair!71
PENTAIR
VALVES & CONTROLSPENTAIR INVESTOR & ANALYST EVENT
David Dunbar
President, Pentair Valves & Controls
November 13, 2013
722013 Houston Investor & Analyst Event
PENTAIR
KEY MESSAGES
73
Valves & Controls Positioned to Deliver Superior Value
• Pentair Valves & Controls is a Leading Solution Provider in a Growing,High Demand, Fragmented Segment
• We Believe We are Well Positioned to Win Through:
— Breadth of Offering
— Superior Application Expertise
— Strong Global Presence
— Project and Aftermarket Opportunities
• We Expect to Deliver Shareholder Value Through:
— Organic Revenue Growth
— Operation Improvements (PIMS)
— Simplification and Standardization (Lean Enterprise)
2013 Houston Investor & Analyst Event
PENTAIR 74
WE CONTROL FLOW
We are a World Leader in Valves and Controls74
ACTUATOR: The MusclesA Mechanical Device Usedto Open and Close a Valve
CONTROLS: The BrainsInstruments Used to Monitor,Control, or Diagnose a Valve andActuator Package
VALVE: The BonesA Mechanical Device thatControls the Flow of aLiquid, Gas, or Vapor in aPiping System
2013 Houston Investor & Analyst Event
PENTAIR
VALVES—CRITICAL TO GLOBAL INFRASTRUCTURE
Our Products Enable Safer, More Efficient, and More Sustainable Operations
From Oil & GasUpstream Applicationsin FPSO Vessels that are6X Larger than anAircraft Carrier…
… to Relief Valves Beingthe Last Line of DefensePreventing CatastrophicEquipment Failure inNuclear Power Plants
… and Control Valves inSupercritical Steam Power
Plants to Meet the EverIncreasing Electricity Demand
in the Emerging World
… to High IntegrityIsolation Valves at anAlumina Refinery withHighly Caustic, HighTemperature Fluids
Isolation Valves forLiquid Natural GasTerminals Operating atExtremely LowTemperatures of -320 F
Zero Leakage Valves PreventingEscape of Hazardous Gases LikePhosgene in Petrochem Plants
75
Valves are Highly Critical Components for Energy and Industrial Infrastructure
752013 Houston Investor & Analyst Event
PENTAIR
• $2.4 Billion in Global Sales*
• 140 Years of Experience
• 10,000 Employees
• 50+ Sales Offices
• 42 Manufacturing Sites
• 80 Service Centers
• 900 Patent Filings in Last 20 Years
• 900+ Technical Sales Staff
• 1,000+ Application and Customer Service Specialists
• Our Products
– Sizes Range from 1 Inch to 7 Feet in Diameter
– Weights from Ounces to Over 30 Tons
– Operate from -370 F to Over 1,100 F
– Are Installed on Every Continent on the Planet
Fasani Gate Valve• 23 Feet High & e31 Tons• Flare Line Isolation at
Petrochemical Plant
VALVES & CONTROLS FAST FACTS
V&C Offers Significant Experience in a Broad Array of Solutions76
FCT Ball Valve• Subsea Pipeline Operation• 1,000 Feet Water Depth
2013 Houston Investor & Analyst Event * 2013 estimated sales.
PENTAIR
SEGMENT CHARACTERISTICS
Diversified Industry and Geographical Presence77
Oil & Gas
Mining
Power
Chemical
OtherProcess
Middle East
ROW
Dev. Asia
LatinAmerica
N. America
China
India
Europe
Next 10Competitors
OtherCompetitors
OtherLocal &RegionalCompetitors
PVC
2013 Houston Investor & Analyst Event
• Target Complex, DifficultApplications
• Customers are Super-Majors/ Majors
• Requires High Technology &Expertise
• Developed Regions HaveLarge Installed Base andAftermarket Activity
• Emerging Markets BuildingNew Infrastructure to SupportGrowth
• PVC is a Leader
• ~15 True Global Players
• Thousands of Small LocalCompetitors; Limited Reachand Range
Valve ManufacturersIndustry Geography100% = ~$38B 100% = ~$38B 100% = ~$38B
PENTAIR
KEY TRENDS
Overall Trends Favorable for Strong Growth
CUSTOMER TRENDSINDUSTRY TRENDSDEMAND TRENDS
+ Increasingly HarshOperating Environments
+ Increasing GlobalCoordination of LargeComplex Projects
+ Growing Focus on Safety
+ Tightening ofEnvironmentalRegulations
‒ Increasing EPCCompetition
+ Oil & Gas Growth atRecord Levels
+ Growth in NAPetrochemical
+ Power Industry SeeingCoal to Gas Transition
+ Power Growth in MiddleEast / Asia
‒ Mining InvestmentSlowing in theShort Term
+ Increasing Populationand Growing MiddleClass Resulting inGreater Demand forEnergy and Power
Total Primary Energy Demand
Source: World Energy Outlook 2012Presentation by Dr. Fatih Birol, IEA ChiefEconomist.
Mto
e
Source: Citi, JPMorgan, Jefferies, UBS, MorganStanley, Deutsche Bank, Bloomberg, BMI
782013 Houston Investor & Analyst Event
PENTAIR
2325
3032
3634
30
3638 38
4042
44
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GROWTH DYNAMICS ARE EXPECTED TO BE SOLID
Forecasting Moderate Growth Through Next 3 Years
• Global Opportunity forValves has Grown ~5%CAGR Since 2004
• Recent Peak to TroughDecline of 15%
• We Expect 4-6% SalesGrowth Through 2016
– Continued Demand forCritical Infrastructure inDeveloping Markets
– Marginal Strengtheningin Developed Economies
– Increased ProjectInvestments after MinorSlowdown in 2013
CAGR5%
CAGR
Global V&C Total Addressable Market (TAM)$ Billions
Source: EIF 2012, PNR Estimates
2013 Houston Investor & Analyst Event 79
PENTAIR
CONSISTENT THROUGH THE CYCLE GROWTH
A Result of Product and Industry Breadth80
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Pentair V&C Sales
6.3% CAGRThrough the Cycle
2013 Houston Investor & Analyst Event
$M
PENTAIR
0
20
40
60
80
100%
Pentair
Others
Pentair
Others
Pentair
Others
Pentair
Others
Pentair
Others
VALVES USE ACROSS INDUSTRIES
Pentair is a Leader in Targeted Industry Segments
Source: EIF 2012, PNR Estimates
81
• Total Segment Opportunity: $38B
• Pentair Share: ~6%
• Fragmentation in Current Segments Points to Continued GrowthOpportunities Through Share Gain and Acquisitions
2013 Houston Investor & Analyst Event
(Includes Water, Food & Beverage, Pulp & Paper,HVAC, Marine, etc.)
Oil & Gas Mining Power Chemical
PENTAIR 2013 Houston Investor & Analyst Event
VALVES PROCUREMENT IN PROJECT CYCLE
Valves Procured Late in Large Capital Projects
Long Cycle•Compressors•AutomationSystem
•Pumps•Heat Exchangers
“Mid Cycle”•Control Valves•AutomatedValves
•SpecialInstruments
Short Cycle•Manual Valves•Safety Valves•StandardInstruments
FEEDDetailedDesign
Constructionand
InstallationPRE-FEED
EquipmentOrdering
ProjectApproval
Start-Up
Project Approval to Start-up Time in Months• Combined Cycle Power Plant: ~18-24• Ethylene Plant: ~36-48• Offshore Platform: ~48-60• FPSO: ~48-60
~12-36 Months fromProject Approval to
Valves Orders
Operation
82
PENTAIR
CUSTOMER REQUIREMENTS
Customers Value Better Products83
32%
13%
13%
9%
9%
8%
7%
5%
Valve Performance
Lead Time
On-Time Delivery
Ease of Maintenance
Sales Support
Technical Support
Brand
After-Market Service
Customer Key BuyingCriteria*
Valve Performance Defined:• Cycle Life
• Leakage (Both Inside andOutside the Pipe)
Better Performance Provides:• Process Reliability / Uptime
• Process Safety / Lower Risk
• Improved EnvironmentalPerformance
• Lower Capital Costs
• Lower Operating Costs
*Non-price attributesSource: PV&C market research
2013 Houston Investor & Analyst Event
PENTAIR
KEY MESSAGES
84
Valves & Controls Positioned to Deliver Superior Value
• Pentair Valves & Controls is a Leading Solution Provider in a Growing,High Demand, Fragmented Segment
• We Believe We are Well Positioned to Win Through:
— Breadth of Offering
— Superior Application Expertise
— Strong Global Presence
— Project and Aftermarket Opportunities
• We Expect to Deliver Shareholder Value Through:
— Organic Revenue Growth
— Operation Improvements (PIMS)
— Simplification and Standardization (Lean Enterprise)
2013 Houston Investor & Analyst Event
PENTAIR
VALVES & CONTROLS OFFERINGS
85
Leading Global Valves & Controls Supplier … $2.4B
Actuation& Controls
QuarterTurn
Valves
PressureManagement
Valves
GGC &ControlValves
SALES BY PRODUCT PLATFORM
100% = ~$2.4B*
SALES BY VERTICAL
100% = ~$2.4B*
Energy
Industrial
OtherDeveloped
FastGrowth
U.S. &Canada
WesternEurope
SALES BY GEOGRAPHY
100% = ~$2.4B*
SALES BY CHANNEL
100% = ~$2.4B*
Projects
Installed
2013 Houston Investor & Analyst Event * 2013 estimated sales.
PENTAIR
QUARTER TURN VALVES
~$1B Estimated Quarter Turn Valves Revenue in 201386
SALES BY VERTICAL
EnergyIndustrial
SALES BY REGIONSALES BY CHANNEL
MAJOR BRANDS
SAMPLE CUSTOMERSKEY GROWTH DRIVERS / VERTICALSPRODUCT
• Keystone
• KTM
• Vanessa
Installed
Projects
U.S. &Canada
FastGrowth
OtherDeveloped
WesternEurope
ButterflyValve Ball
Valve
• Offshore O&G Platforms
• FPSO (FloatingProduction, Storage,and Offloading)
• Chemical &Petrochemical
• LNG Terminals
• Food & Beverage
• Cryogenic Isolation
• Corrosive ChemicalIsolation
2013 Houston Investor & Analyst Event
Triple OffsetValve
100% = ~$1.0B* 100% = ~$1.0B* 100% = ~$1.0B*
* 2013 estimated sales.
PENTAIR
PRESSURE MANAGEMENT VALVES
87
SALES BY VERTICAL
Energy
Industrial
SALES BY REGIONSALES BY CHANNEL
MAJOR BRANDS
SAMPLE CUSTOMERSKEY GROWTH DRIVERS / VERTICALSPRODUCT
• Anderson Greenwood
• Crosby
• Sempell
Aftermarket Project
Direct SpringRelief Valve
PilotOperatedReliefValve
~$600M Estimated Pressure Management Valves Revenue in 2013
• Steam Power Plants
• Nuclear Power Plants
• Oil and Gas Explorationand Refining
• Petrochemical TankFarms
• LNG Terminals
• Power Plant SteamBoiler Protection
• Refinery Tank Protection
U.S. &CanadaFast
Growth
OtherDeveloped
WesternEurope
Installed
Projects
2013 Houston Investor & Analyst Event
100% = ~$0.6B* 100% = ~$0.6B* 100% = ~$0.6B*
* 2013 estimated sales.
PENTAIR
GATE, GLOBE, CHECK & CONTROL VALVES
88
SALES BY VERTICAL
Energy
Industrial
SALES BY REGIONSALES BY CHANNEL
MAJOR BRANDS
SAMPLE CUSTOMERSKEY GROWTH DRIVERS / VERTICALSPRODUCT
• Clarkson
• Fasani
• Sempell
Installed
Projects
U.S. &Canada
FastGrowth
OtherDeveloped
WesternEurope
Knife GateValve
Globe Valve
~$400M Estimated Gate, Globe, & Check Valves Revenue in 2013
• Steam Control forPower Plants
• Mining Tailings Isolation
• Steam Power Plants
• Nuclear Power Plants
• Copper and GoldMining
• Alumina Refining
• Oil and Gas Explorationand Refining
2013 Houston Investor & Analyst Event
100% = ~$0.4B*100% = ~$0.4B*100% = ~$0.4B*
* 2013 estimated sales.
PENTAIR
ACTUATION & CONTROLS
89
SALES BY VERTICAL
Energy Industrial
SALES BY REGIONSALES BY CHANNEL
MAJOR BRANDS
SAMPLE CUSTOMERSKEY GROWTH DRIVERS / VERTICALSPRODUCT
• Biffi
• Morin
• Westlock
Installed
Projects
U.S.
FastGrowth
OtherDeveloped
W. Europe
Valve Actuator
ValvePositioner
~$400M Estimated Actuation & Controls Revenue in 2013
• ~30% Captive V&C
• ~70% Other ValveCompanies
• O&G Pipelines
• O&G Upstream
• FPSO (FloatingProduction, Storage,and Offloading)
• Chemical &Petrochemical
• LNG Terminals
U.S. &Canada
FastGrowth
OtherDeveloped
WesternEurope
EnergyIndustrial
2013 Houston Investor & Analyst Event
100% = ~$0.4B* 100% = ~$0.4B* 100% = ~$0.4B*
* 2013 estimated sales.
PENTAIR
0
20
40
60
80
100%
Pentair
Target Market
Non-Target
Pentair
TargetMarket
Non-Target
Pentair
Target Market
Non-Target
TargetMarket
Pentair
TargetMarket
Pentair
Target Market
Non-Target
Pentair
Non-Target
WINNING THROUGH PRODUCT BREADTH
Pentair Valves & Controls is a Leader in all Segments90
#2#1 #1
• Most Product Segments Also Very Fragmented
• PVC Targets the Highly Engineered and Technical Segments of Each Product Space ($23B)
2013 Houston Investor & Analyst Event
(Includes valve parts (seals, etc.), solenoid valves,fittings, etc.; Excludes control, pressure reducing,plug, and manual diaphragm valves)
QT PMV GGC A&C OtherService
$9B $4B $12B $2B $9B$2B
Non-TargetMarket
Non-Target Market Non-TargetMarket
Non-Target Market
Quarter Turn PressureManagement
Gate, Globe, Check A&C Service Other(Includes Valve Parts,
Solenoid Valves, Fittings, etc.)Source: EIF 2012, PNR Estimates
PENTAIR
WINNING THROUGH APPLICATION EXPERTISE
Leading Brands are Trusted for Critical Applications91
• 75 Years ofExperience
• The World’s FirstSupplier of FullBore, Split BodyType Ball Valves
• Developed theResilient SeatedButterfly Valvein 1951
• Provides MarketLeading Cycle Life
• Started in 1874
• Trusted to ProtectNuclear Submarinesand CommercialNuclear Plants in theUS and Across theWorld
• A Leading Supplier ofRelief Valves with a TrackRecord of ProductInnovations andTechnical Breakthroughsto Solve the ToughestApplication Challenges
ANDERSON GREENWOOD
CROSBYKEYSTONE
KTM
2013 Houston Investor & Analyst Event
PENTAIR
WINNING THROUGH APPLICATION EXPERTISE
Leading Brands are Trusted for Critical Applications92
• Developed the MetalSeat Valve with “ZeroLeakage”
• Used in HighlyChallenging IsolationApplications
• Pioneer of the DualElastomer SleeveSlurry Valve
• One of the Highest Qualityand Most TechnologicallyAdvanced Slurry Valves onthe Market
• 140 Years of Experience
• Deep Expertise in PowerPlant Valve Applicationsfor Both Nuclear andConventional Fuels
• A Leading ActuatorManufacturer for Over50 Years
• Wide Range of Standardand Custom DesignedAutomation Solutions
SEMPELL
BIFFICLARKSON
VANESSA
2013 Houston Investor & Analyst Event
PENTAIR
WINNING WITH GLOBAL PRESENCE
We Can Make Commitments at a Global Level and Execute Consistently Locally
Service Center
Mobile Service CenterMajor Manufacturing Location
Major Sales Office
50+ Sales Offices80 Service Centers
42 Manufacturing Plants
1900
780
1100
2800
1050
650
675350
932013 Houston Investor & Analyst Event
# Employees
PENTAIR
WINNING WITH GLOBAL PRESENCE
Pentair Provides Global Scale to Serve Our Customers’ Needs
DownstreamActivity
UNITED STATES
UpstreamActivity
Jetty
Pipeline
DownstreamActivty
AUSTRALIA
LNG Storage Tanks
FRANCE
Chevron Wheatstone Project Scope…
• LNG Plant in Western Australia• $29B Project• 25M Tonnes / Year LNG Production• 650M / Day Cubic Feet Domestic Gas
942013 Houston Investor & Analyst Event
PVC InvolvementProject Management
Sales OfficesPlants
Service
Pentair Valves & Controls Supplied:
Anderson Greenwood & Crosby Relief Valves
Biffi Actuators
Vanessa Triple Offset Valves
Richards Ball Valves
EPC 1
LNG Tank Supplier
EPC 1
EPC 2
JettyConsortium
PipelineSupplier
PENTAIR
WINNING WITH GLOBAL PRESENCE
95
Latin America•Hiter Acquisition in Brazil•Localized Assembly andTest for Actuators, PressureRelief, Butterfly, Knife Gate,and Control Valves
China•Localized Assembly andTest for Actuators,Butterfly, Ball, PressureRelief, and Knife GateValves
India• Localized Assembly and
Test for Actuators,Butterfly, and SlurryValves
Middle East•KEF Acquisition in UAE•Localized Assemblyand Test for Gate,Globe, Check, and BallValves
• Local Design & Development to Meet Regional Needs• Local Assembly & Test to Reduce Lead Times
Using Our Global Footprint to Better Serve Our Customers2013 Houston Investor & Analyst Event
PENTAIR
WINNING WITH PROJECT AND AFTERMARKET
Valve Growth Driven by Infrastructure Expansion and Operation96
Refinery (300,000 Barrels Per Day)
• ~$200M in Valves for Greenfield Site
• ~$7M in Annual Aftermarket Opportunity
LNG Liquefaction Plant (8 MTPA)
• ~$150M in Valves for Greenfield Site
• ~$12M in Annual Aftermarket Opportunity
Alumina Refinery(5 MTPA)
• ~$50M in Valves forGreenfield Site
• ~$5M in AnnualAftermarketOpportunity
Power Plant (600MW Coal Fired)
• ~$6M in Valves forGreenfield Site
• ~$1M in AnnualAftermarketOpportunity
2013 Houston Investor & Analyst Event
PENTAIR
KEY MESSAGES
97
Valves & Controls Positioned to Deliver Superior Value
• Pentair Valves & Controls is a Leading Solution Provider in a Growing,High Demand, Fragmented Segment
• We Believe We are Well Positioned to Win Through:
— Breadth of Offering
— Superior Application Expertise
— Strong Global Presence
— Project and Aftermarket Opportunities
• We Expect to Deliver Shareholder Value Through:
— Organic Revenue Growth
— Operation Improvements (PIMS)
— Simplification and Standardization (Lean Enterprise)
2013 Houston Investor & Analyst Event
PENTAIR
2011 2012 2013F 2015T
2011 2012 2013F 2015T
PNR V&C EXPECTATIONS
Higher Quality of Revenue and Stronger Operating Performance
Top 2014 / 2015 Priorities
1. Drive Organic Revenue GrowthThrough New ProductDevelopments
2. Capture Growth ThroughImproved Customer Serviceand Operations Improvements
3. Simplify Our Business
2013 Houston Investor & Analyst Event
Sales ($B)
Operating Income ($M)
2.4>4%
2.42.3
2.7
232 244295
400+
ROS 10.2% 10.3% 12.5% >15%
98
PENTAIR
RENEWED PRODUCT INNOVATION
PIMS Tools Driving Standardized Approach to Product Development99
New Product Sales Have Grown from$0 in 2010 to an Estimated $40M+ in2013 with a Strong Funnel for 2014+
1990's 2000's 2010's
Patent Filings
Patent Filings are Back to 1990sLevels Showing Reinvestment inProduct Technology
~60 / Year
~28 / Year
~60 / YearDiscover23 Projects
~ $50M+
Develop
Deploy
25 Projects~ $80M+
17 Projects~ $50M+
New Product Development Funnel3 Year Run Rate Revenue Estimate
2013 Houston Investor & Analyst Event
PENTAIR
RENEWED PRODUCT INNOVATION
Pentair Valves are Innovative100
Keystone GR Series Butterfly Valves are More Durable• Independent Lab Testing Verifies Cycle Life of 2.5X Our
Nearest Competitor• Sizes Ranging from 2” – 72” and 1,000+ Trim Configurations
Vonk Choke Valves Last Longer• Unique Rotating Disc Technology Provides 3X Longer Cycle Life than
Competing Products• Customer Field Testing in Shale Gas Applications have Shown 4X Longer
Cycle Life Leading to Lower Maintenance Costs
Clarkson Knife Gate Valve Solves Customer Problem• Canadian Oil Sands Customer was Replacing Knife Gate Valves Every 6 Weeks• Pentair Used Computational Fluid Dynamics to Determine Root Cause of
Wear and Designed a New Valve• Redesigned Valve now Lasts 2 years—17X Longer than Competing Valve
2013 Houston Investor & Analyst Event
PENTAIR
RENEWED PRODUCT INNOVATION
Pentair Valves are Innovative101
Narvik CircTemp Desuperheater Perform More Effectively• Optimized for Supercritical Boilers Operating at 1,100 F and to Withstand
2,000 Cycles Annually• Independent Lab Testing Verifies a 50% Reduction in Evaporation Rates
Leading to Shorter Pipe Distances, Saving Installation, and Operating Costs
Keystone CompoSeal Butterfly Valves are More Environmentally Friendly• Patented Composite Two Piece Housing can Operate at 10 Bar and 250 F,
Giving a Light Weight Alternative to Metal Body Valves• 70% Lower Carbon Foot Print Compared to an Ordinary Butterfly Valve
with Fully Recyclable Material
Vanessa Triple Offset Valves Give Best Isolation• First Triple Offset Valve with True Zero Leakage Performance• The Preferred Triple Offset Valve in Cryogenic Applications• Over $500 Million in Project Wins in Last 5 Years
2013 Houston Investor & Analyst Event
PENTAIR
RENEWED PRODUCT INNOVATION
Pentair Valves are Innovative102
Wellbond High Pressure Globe Valve is Easily Repaired• Design-for-Maintenance Approach Offers Fastest and Lowest Cost In-
Line Repair vs. Competitors• Typical Plant with 100 Valves may see up to $1M in Life Cycle Savings
Clarkson Slurry Knife Gate Valves provide more process uptime• Patented Sleeve Design Resists Jamming and Provides Bubble Tight
Shut Off for Slurry Flows• Field Replaceable Sleeves Reduce Repair Time and Increase
Operating Up-Time
Biffi OLGAS Hydraulic Actuator Provides Record Operating Time• Designed for Operation in High-Integrity Pressure Protection
Systems (HIPPS) to Prevent Over-Pressurization• Unique Design Allows for Record Closing Time While Preventing
Impact Damage to the Valve
2013 Houston Investor & Analyst Event
PENTAIR
ORGANIC GROWTH—LEAN
Lean Efforts Driving ~12% Increase in Aftermarket Sales
Aftermarket Focus• Focused Resources, Programs, and Incentives to Drive MRO Product Sales• Lean Transformation to Simplify RFQ Process and Improve Organization Capability to
Handle Increased Volume• Target Inventory Program to Support Off-the-Shelf• Rapid Growth Process (RGP) to Test Sites with Opportunities
1032013 Houston Investor & Analyst Event
Q1 Q2 Q3 Q4 Q1 Q2 Q3
+12%
0
0.1
0.2
0.3
0.4
Jan Feb Mar Apr May Jun Jul Aug Sep
Global MRO Sales
2012 2013
Pasadena Inside Sales ProductivityQuotes/Person/Hour
Lean Kaizen Event
PENTAIR
SERVICE FACTS
104
• 80 Locations• 600 Technicians• Over 5,000 Customers• Over 55,000 Square Meters of Shop Space• 200,000 Order Transactions
• 80 Locations• 600 Technicians• Over 5,000 Customers• Over 55,000 Square Meters of Shop Space• 200,000 Order Transactions
A Leading Global Valves Services Network2013 Houston Investor & Analyst Event
PENTAIR
GROWTH THROUGH SERVICE CENTER EXPANSION
October 2013Macae, Brazil
New February 2011:Port Arthur, TX
New March 2012:Coatzacoalcos, Mexico
New August 2013:Tampico, Mexico
Extension 2012Baton Rouge, LA
Extension 2012Pasadena, TX Latin America
April 2013Buenos Aires
Argentina
VizagDec 2013
HaziraDec 2013
Asia
Rayong, ThailandMarch 2011
Songkla, ThailandOctober 2010
Pacific
September 2011Karratha, AUS
Extension 2012Gladstone, AUS … and Others in
Europe, US,Canada
Following Our Customers to Support Them Locally1052013 Houston Investor & Analyst Event
PENTAIR
GROWTH THROUGH AN EXPANDED OFFERING
106
Automation
Valves Asset Management
Turnaround Planning
Turnaround Execution
Project Commissioning
Diagnostics
Spare Parts Supply
On Site Repair
In Shop Repair
• Many Service Centers Have Developed LocalInnovative Services Offerings
• Service Centers were Brought Under Single GlobalManagement in 2013 to Drive Standardizationand Best Practices Across the Network
Innovating to Improve Customers Total Cost of Ownership
BasicServices
Higher ValueServices
2013 Houston Investor & Analyst Event
PENTAIR
Key Account Program Creates Organic Growth107
• Domain Expertise within Supply Base toSolve Difficult Application Requirements
• Supplier Rationalization to SimplifySupply Chain Operations
• Standardization to Improve Operationsand Reduce Maintenance Costs
• Peace of Mind that Products WillPerform Efficiently, Reliably, and Safely
V&C Customer Buying Trends
ORGANIC GROWTH—GLOBAL KEY ACCOUNTS
Value of V&C Key Account Management
• Leading Engineering CapabilitiesEnables Breakthrough Solutions
• Single Point of Contact Aligns withCustomer Supply Chain Strategy
• Portfolio of World Class ProductsCovers Wide Range of Needs
• Global Service Footprint SupportsCustomer Facilities
2011 2012 2013F
24%CAGR
15% of PV&C Revenue with Strong Growth
Oil & Gas Petrochem Mining Process Power
Global Key Accounts Across Multiple Industries
BPChevronConocoPhillipsExxonMobilShellTotal
BASFBayerDowSabic
BHPFreeport-McMoRanNewmontRioTinto
Air ProductsPraxairSiemensVeolia
Alstom
2013 Houston Investor & Analyst Event
PENTAIR
IMPROVE CUSTOMER EXPERIENCE
PIMS Toolkit Supports Growth for V&C108
0.31
-0.23
-0.39
0.08
0.30
0.22
0.31
0.05
Valve Performance
Lead Time
On-Time Delivery
Ease of Maintenance
Sales Support
Technical Support
Brand
After-Market Service
V&C Performance vs.Competitors
PIMS as Growth Tool
Source: PV&C market research
• Customers Prefer OurProducts, Support, andServices
• Key Priority is ImprovingCustomer Experience Via:
Lean FactoryImprovements
Global Sourcing
Office Based Lean
2013 Houston Investor & Analyst Event
PENTAIR 109
FAST LEAN EXECUTION
Valves & Controls Adopted LEAN Successfully within 12 Months
Expansionof “4 Wall”
Lean toEnterprise
Servicesand Sales
OfficesLEAN
BeginsLegacyOpEx
LeanAssessment
12 LEANFocus Sites
42 SitesLean Plans
CCF / MMF/ PFEPEvents
Mar 12 Jun 12 Sep 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14
LEAN inOur DNA!
PNR / TYCAnnouncement
1st PIMSMeetings
PNR / FlowControlMerger
*Lean Transformation Plan
12 Focus Sites Cover$1B Sales
2013 Houston Investor & Analyst Event
PENTAIR
IMPROVE CUSTOMER EXPERIENCE—LEAN FACTORYImproved Lead Times—Sample Results to Date:• High Performance Butterfly Valve Lead Times Reduced from 20 Weeks to 6 Weeks
(Breda, Netherlands)
• Safety Relief Valves Lead Time Reduced from 12 Weeks to 6 Weeks (JOS) and from 12Weeks to 7 Weeks for OMNIs and 80s (Stafford, TX)
15+ Product Lines Have Seen Lead Time Reductions in Last 9 months110
Example: Breda, Netherlands After: Productivity Increased by 200%,WIP Reduced by 99%, and Space by 75%
2013 Houston Investor & Analyst Event
PENTAIR
IMPROVE CUSTOMER EXPERIENCE—LEAN FACTORYImproved Quality—Sample Results to Date:
• Reduced Rejects on RPI Actuator Line by 47%
• 38% Reduction in Slurry Knife Gate Valve Defects
• Defects on Safety Relief Valve Line Reduced by 62%
Improved Quality Leading to Shorter Lead Times and Lower Costs111
Example: Armentieres, France After: Building All Small Valves in “OnePiece Flow” Reduced Rejects Significantly
Improved FirstPass Yields andLess Rework
2013 Houston Investor & Analyst Event
PENTAIR
IMPROVE CUSTOMER EXPERIENCE—LEAN FACTORYIncrease Available Space—Results to Date:• Overall 10%+ Reduction in Space in Our Major Focus Sites Freeing Up Over
250,000 Square Feet of Available Factory Space
Utilizing Space to Expand Localization Efforts — Further Reducing Lead Times to Customers
112
Example: Qingpu, China
Example: Black Mountain, NC
2013 Houston Investor & Analyst Event
PENTAIR
IMPROVE CUSTOMER EXPERIENCE—OFFICE LEAN
• V&C Multi-Million $ Projects are Complex
– Custom Engineered Products
– Multiple Plants
– Multiple Constituents: Suppliers, InspectionAgencies, Freight Companies, End Users, andEPC Firms
– Detailed Testing and CertificationPaperwork Required
• Applying Lean Principles to Managing Projects:
– Variable Staffing to Match Project Phase
– Co-Located Office Teams for HyperCommunication
– Standard Work for Project Control
– Daily Gemba Walks to Identify Issues andResolve Quickly
– Daily Objectives to Drive Results
Customers Praise the Dedicated Focus113
Daily Gemba Walk for Project Team
Early Results Show Improved Delivery,Improved Quality, Reduced Costs, andHappier Customers
2013 Houston Investor & Analyst Event
PENTAIR
SIMPLIFICATION—LEAN ENTERPRISE
Key Metrics 2010 2013F 2017T
Plants 48 ~40 < 40
ERP 39 29 TBD
% Production in DestinationRegion
61% 66% > 75%
Product Groups 30+ 12 5
MILESTONES
• 2010-2011: Dissolved RegionalOrganizations and Created Global VerticalIndustry Focus
• 2012: Creation of Global Functional GroupIncreased Speed and Efficiency of DecisionMaking and Execution
• 2013: Consolidating Product ManagementUnder 4 Core Global Product Platforms
• 2014: Begin Rollout of Global ERP Templateand System Consolidation
Aggressively Reducing Complexity114
We are Building a Lean Business Model to:• Improve the Customer Experience• Use Our Global Portfolio• Create an Efficient High Performance
Global Organization
2013 Houston Investor & Analyst Event
PENTAIR
KEY MESSAGES
115
Valves & Controls Positioned to Deliver Superior Value
• Pentair Valves & Controls is a Leading Solution Provider in a Growing,High Demand, Fragmented Segment
• We Believe We are Well Positioned to Win Through:
— Breadth of Offering
— Superior Application Expertise
— Strong Global Presence
— Project and Aftermarket Opportunities
• Expect to Deliver Shareholder Value Through:
— Organic Revenue Growth
— Operation Improvements (PIMS)
— Simplification and Standardization (Lean Enterprise)
2013 Houston Investor & Analyst Event
PENTAIR 2013 Houston Investor & Analyst Event
APPENDIX: VALVES 101
116
PENTAIR
VALVES 101—WHAT IS A VALVE
Valve: A Valve is a Mechanical Device Whose Function isto Control the Flow of Fluids in a Piping System
– Control Applied to These Fluids can Take MultipleForms
• Starting and Stopping Flow (Isolation or On/Off)
• Limiting or Managing Fluid Pressure
• Preventing Reverse Flow (Backflow)
• Changing Flow Direction
• Regulating Flow Volume (Throttling)
– Fluids can be Liquids, Gases, and Vapors, and canalso be Liquids Carrying Suspended Solid Particles(Slurries)
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
A “Globe” Valve, Used toStart and Stop Flow
A “Pressure Relief” Valve,Used to Regulate Pressure
2013 Houston Investor & Analyst Event 117
PENTAIR
VALVES 101—QUARTER TURN VALVESQuarter-Turn Valves: Category of Valves (Such as Ball or Butterfly) Which Require 90Degree Turn of the Stem to Move from the Fully Open to the Fully Closed Position.Typically Used for Isolation and Throttling Applications.
Ball ValveA Quarter-Turn Valve with a BallShaped Closing Element held BetweenTwo Seats. Ball Valves are Widely Usedas On/Off Valves, but Some SpecialDesigns are Available for ThrottlingApplications.
Butterfly ValveA Quarter-Turn Valve Which has a Circular Disk as itsClosing Element. The Standard Design has the ValveStem Running Through the Disk, Giving aSymmetrical Appearance. Later Designs Off-Set theStem, so that the Disk ‘Cams’ into the Valve Seat.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
118
PENTAIR
VALVES 101—GATE AND GLOBE VALVESGate ValveA Multi-Turn Valve Used for Isolation ApplicationsWhich has a Gate as its Closing Element. The GateMoves Linearly, Perpendicular to the Direction of Flow.Gate Valves Provide Robust Sealing and are usedExtensively in the Petrochemicals Industries. This Classof Valves also Includes Knife Gate Valves, which havemuch Thinner Gates with a Knife-like Edge, Makingthem Suited to use with Floating Solids.
Globe ValveA Multi-Turn Valve with a Closing Elementthat Moves Perpendicularly to the ValveBody Seat and Generally Seals in a PlaneParallel to the Direction of Flow. This Typeof Valve is Suited both to Throttling andGeneral Flow Control.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
119
PENTAIR
VALVES 101—CHECK AND CONTROL VALVESCheck ValveA Valve that is Designed to Allow the Fluidto Flow in a Given Direction but Closes toPrevent Backflow. Check Valves (alsocalled Non-Return Valves) are Usually Self-Acting.
Control ValveA Valve which Regulates the Flow or Pressure of aFluid. Control Valves Normally Respond to SignalsGenerated by Independent Devices such as FlowMeters, Temperature Gauges, etc. Control Valvesare Normally Fitted with Actuators andPositioners.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
120
PENTAIR
VALVES 101—PRESSURE MANAGEMENT VALVESPressure Management Valves: Category of Valves used to Reduce Excess Pressure inPressurized Systems, for Example a Steam Boiler. Pressure Management ValvesAutomatically Open to Relieve Overpressure which Prevents Potentially ViolentEquipment Failure.
Direct Spring Relief ValvesTypically use a Spring to Hold the discor Piston on the Seat.
Pilot Operated Relief ValvesThe Difference Between PORV and Spring LoadedPRV is that Pilot Valves use System Pressure to Sealthe Valve.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
121
PENTAIR
VALVES 101—ACTUATORS AND CONTROLS
ActuatorActuators are Mechanical Devicesthat use Hydraulic, Pneumatic, orElectric Power to Provide theMuscle (Torque or Thrust) Neededto Move a Valve to Open, Closed,or Stop Positions.
Actuators & Controls: Valves can be Operated with a Variety of Mechanisms from SimpleLever Handles and Hand-Wheels to Very Complex Valve Automation Systems.
GearsGears are Mechanical DevicesUsed with Valves and / orActuators to Provide the Muscle(Torque or Thrust) Needed toMove a Valve to Open, Closed, orStop Positions.
Controls
Controls are the Brains whichCommand the Actuators’ Power.They are Instruments and / orSystems Necessary to Provide Localor Remote Monitoring, Control,and Diagnostics of Valves.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
122
PENTAIR 123
APPENDIXGAAP to Non-GAAP Measurements & Reconciliations
2013 Houston Investor & Analyst Event
PENTAIR 124
REPORTED TO ADJUSTED 2013 RECONCILIATION
Pentair Ltd. and Subsidiaries
Reconciliation of the GAAP “As Reported” year ended December 31, 2013 to the “Adjusted” non-GAAP
excluding the effect of 2013 adjustments (Unaudited)
Actual
In millions, except per-share data
FirstQuarter
SecondQuarter
ThirdQuarter
FullYear
Total PentairNet sales $ 1,774.5 $ 1,963.7 $ 1,824.8 approx $ 7,400
Operating income—as reported 74.3 225.9 240.0 approx 782% of net sales 4.2% 11.5% 13.2% approx 10.6%
Adjustments:Inventory step-up and customer backlog 76.8 10.1 — approx 88Restructuring and other 27.4 32.4 8.7 approx 70
Operating income—as adjusted 178.5 268.4 248.7 approx 940% of net sales 10.1% 13.7% 13.6% approx 12.7%
Net income attributable to Pentair Ltd.—as reported 51.7 154.1 172.8 approx 549
Gain on sale of business, net of tax (12.5) — — approx (13)Interest expense, net of tax — 1.6 — approx 2Adjustments, net of tax 80.8 33.5 1.1 approx 115
Net income attributable to Pentair Ltd.—as adjusted 120.0 189.2 173.9 approx 653
Earnings per common share attributable toPentair Ltd.—dilutedDiluted earnings per common share—as reported $ 0.25 $ 0.75 $ 0.85 approx $2.68 - $2.70Adjustments 0.33 0.17 0.01 approx 0.51
Diluted earnings per common share—as adjusted $ 0.58 $ 0.92 $ 0.86 approx $3.19 - $3.21
2013 Houston Investor & Analyst Event
PENTAIR 125
REPORTED TO ADJUSTED 2013 RECONCILIATIONPentair Ltd. and Subsidiaries
Reconciliation of the GAAP “As Reported” year ended December 31, 2013 to the “Adjusted” non-GAAP
excluding the effect of 2013 adjustments (Unaudited)
Actual
In millions
FirstQuarter
SecondQuarter
ThirdQuarter
FullYear
Water & Fluid Solutions
Net sales $ 782.0 $ 949.8 $ 814.3 approx $ 3,345
Operating income—as reported 74.8 136.1 105.9 approx 411-416
% of net sales 9.6% 14.3% 13.0% approx 12.4%
Adjustments:
Restructuring and other 7.5 6.6 3.5 approx 18
Inventory step-up and customer backlog 0.6 0.2 — approx 1
Operating income—as adjusted 82.9 142.9 109.4 approx 430-435
% of net sales 10.6% 15.0% 13.4% approx 13.0%
Valves & Controls
Net sales $ 585.8 $ 619.9 $ 611.5 approx $ 2,400
Operating income (loss)—as reported (18.6) 56.9 76.6 approx 187-192
% of net sales (3.2)% 9.2% 12.5% approx 7.9%
Adjustments:
Restructuring and other 7.3 17.0 3.7 approx 28
Inventory step-up and customer backlog 70.6 10.0 — approx 81
Operating income—as adjusted 59.3 83.9 80.3 approx 296-301
% of net sales 10.1% 13.5% 13.1% approx 12.4%
Technical Solutions
Net sales $ 410.0 $ 397.4 $ 405.9 approx $ 1,655
Operating income—as reported 53.3 65.1 82.2 approx 292-297
% of net sales 13.0% 16.4% 20.3% approx 17.8%
Adjustments:
Restructuring and other 10.7 4.9 1.5 approx 17
Inventory step-up and customer backlog 5.7 — — approx 6
Operating income—as adjusted 69.7 70.0 83.7 approx 315-320
% of net sales 17.0% 17.6% 20.6% approx 19.2%
2013 Houston Investor & Analyst Event
PENTAIR 126
REPORTED TO ADJUSTED 2012 RECONCILIATIONPentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ended December 31, 2012 to the "Adjusted" non-GAAPexcluding the effect of 2012 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter YearIn millions, except per-share data 2012 2012 2012 2012 2012
Total Pentair
Net sales 858.2$ 941.5$ 865.5$ 1,750.9$ 4,416.1$
Operating income (loss) - as reported 86.5 119.3 55.2 (304.1) (43.1)
% of net sales 10.1% 12.7% 6.4% (17.4%) (1.0%)
Adjustments:
Deal related costs and expenses 11.8 6.3 52.7 12.0 82.8
Inventory step-up and customer backlog — — — 179.6 179.6
Restructuring — 10.4 1.1 55.3 66.8
Trade name impairment — — — 60.7 60.7
Change in accounting method - pension and post-retirement (1.5) (1.5) (1.5) 146.2 141.7
Operating income - as adjusted 96.8 134.5 107.5 149.7 488.5
% of net sales 11.3% 14.3% 12.4% 8.5% 11.1%
Net income (loss) attributable to Pentair Ltd. - as reported 61.8 72.8 31.4 (273.1) (107.1)
Bond redemption and interest expense (0.8) — 1.8 51.9 52.9
Other adjustments net of tax 3.0 10.9 32.3 320.9 367.1
Net income from continuing operations attributable
to Pentair Ltd. - as adjusted 64.0 83.7 65.5 99.7 312.9
Continuing earnings per common share attributable to Pentair Ltd. - diluted
Diluted earnings (loss) per common share - as reported 0.62$ 0.72$ 0.31$ (1.31)$ (0.84)$
Adjustments 0.02 0.11 0.33 1.78 3.23
Diluted earnings per common share - as adjusted 0.64$ 0.83$ 0.64$ 0.47$ 2.39$
2013 Houston Investor & Analyst Event
PENTAIR 127Note: Inventory step-up and customer backlog reflect amortization of fair market value step-up associatedwith inventory and in process customer contracts.
REPORTED TO ADJUSTED 2012 RECONCILIATIONPentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ended December 31, 2012 to the "Adjusted" non-GAAP
excluding the effect of 2012 adjustments (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter YearIn millions 2012 2012 2012 2012 2012
Water & Fluid Solutions
Net sales 587.1$ 675.4$ 605.5$ 771.2$ 2,639.2$
Operating income (loss) - as reported 63.7 92.0 69.2 (56.9) 168.0% of net sales 10.8% 13.6% 11.4% (7.4%) 6.4%
Adjustments:
Restructuring — 6.9 1.1 42.5 50.5
Inventory step-up and customer backlog — — — 23.4 23.4
Trade name impairment — — — 49.1 49.1
Operating income - as adjusted 63.7 98.9 70.3 58.1 291.0% of net sales 10.8% 14.6% 11.6% 7.5% 11.0%
Valves & Controls
Net sales —$ —$ —$ 548.6$ 548.6$
Operating income (loss) - as reported — — — (76.8) (76.8)% of net sales 0.0% 0.0% 0.0% (14.0%) (14.0%)
Adjustments:
Restructuring — — — 5.1 5.1
Inventory step-up and customer backlog — — — 113.5 113.5
Operating income - as adjusted — — — 41.8 41.8% of net sales 0.0% 0.0% 0.0% 7.6% 7.6%
Technical Solutions
Net sales 272.6$ 267.5$ 261.5$ 434.8$ 1,236.4$
Operating income - as reported 50.5 50.6 52.3 11.6 165.0% of net sales 18.5% 18.9% 20.0% 2.7% 13.3%
Adjustments:
Restructuring — 3.1 — 9.7 12.8
Inventory step-up and customer backlog — — — 42.7 42.7
Trade name impairment — — — 11.6 11.6
Operating income - as adjusted 50.5 53.7 52.3 75.6 232.1% of net sales 18.5% 20.1% 20.0% 17.4% 18.8%
2013 Houston Investor & Analyst Event
PENTAIR 128
2012 PRO FORMA ADJUSTMENTS – TOTAL PENTAIR
Note: “Other” adjustments represent the elimination of certain large projects and sales to sanctioned countries (which wereterminated prior to the completion of the Flow Control acquisition), changes in corporate allocation assumptions,income taxes, and share count.
Pro Forma Adjustments
2012 Total Pentair(in millions, except
EPS )
Historical
Adjusted
Results
Historical Flow
Control
Acquisition
Depreciation &
Amortization
Other
Adjustments
Adjusted Pro
Forma Results
First Quarter
Sales 858.2$ 995.9$ -$ (74.0)$ 1,780.1$
Operating Income 96.8$ 124.9$ (17.1)$ (32.2)$ 172.4$
Net Income 64.0$ 93.7$ (12.8)$ (28.1)$ 116.8$
Diluted EPS 0.64$ 0.44$ (0.06)$ (0.48)$ 0.54$
Second Quarter
Sales 941.5$ 980.8$ -$ (33.2)$ 1,889.1$
Operating Income 134.5$ 143.5$ (17.2)$ (24.0)$ 236.8$
Net Income 83.7$ 107.6$ (12.9)$ (14.0)$ 164.4$
Diluted EPS 0.83$ 0.50$ (0.06)$ (0.50)$ 0.77$
Third Quarter
Sales 865.5$ 1,019.8$ -$ (16.0)$ 1,869.3$
Operating Income 107.5$ 119.9$ (17.3)$ 5.5$ 215.6$
Net Income 65.5$ 89.9$ (13.0)$ 6.3$ 148.8$
Diluted EPS 0.64$ 0.42$ (0.06)$ (0.31)$ 0.69$
Fourth Quarter
Sales 1,750.9$ -$ -$ (7.1)$ 1,743.8$
Operating Income 149.7$ -$ -$ 16.6$ 166.3$
Net Income 99.7$ -$ -$ 12.7$ 112.4$
Diluted EPS 0.47$ -$ -$ 0.06$ 0.53$
Full Year
Sales 4,416.1$ 2,996.5$ -$ (130.3)$ 7,282.3$
Operating Income 488.5$ 388.3$ (51.6)$ (34.1)$ 791.1$
Net Income 312.9$ 291.3$ (38.7)$ (23.1)$ 542.4$
Diluted EPS 2.39$ 1.36$ (0.18)$ (1.03)$ 2.54$
2013 Houston Investor & Analyst Event
PENTAIR 129
2012 PRO FORMA ADJUSTMENTS – WATER & FLUID SOLUTIONS
Note: “Other” adjustments represent changes in corporate allocation assumptions2013 Houston Investor & Analyst Event
PENTAIR 130
2012 PRO FORMA ADJUSTMENTS – VALVES & CONTROLS
Note: “Other” adjustments represent the elimination of sales to sanctioned countries (which were terminated prior to thecompletion of the Flow Control acquisition), and changes in corporate allocation assumptions2013 Houston Investor & Analyst Event
PENTAIR 131
2012 PRO FORMA ADJUSTMENTS – TECHNICAL SOLUTIONS
Note: “Other” adjustments represent the elimination of certain large projects and changes in corporate allocation assumptions.2013 Houston Investor & Analyst Event