Acquisition of Norit s s Clean Process Technologies Business

Transcription

1 Acquisition of Norit s s Clean Process Technologies Business Accelerating Pentair s s Growth Strategy April 4,

2 Any statements made about the anticipated benefits of the CPT acquisition or the company s or CPT s anticipated financial results are forward-looking statements subject to risks and uncertainties such as the company s ability to close the CPT acquisition on anticipated terms and schedule, including the ability to obtain regulatory approval of the acquisition; the company s ability to integrate the CPT acquisition successfully; increased risks associated with operating foreign businesses; the magnitude, timing and scope of recovery from the global economic downturn; the strength of housing and related markets; the risk that expected benefits from our recent restructuring and other cost reduction plans may not be fully realized, or may take longer to realize than expected; foreign currency effects; material inflation outpacing our productivity and pricing actions; retail, commercial and industrial demand; product introductions; pricing and other competitive pressures; and the company s ability to achieve its longterm strategic operating goals, as well as other risk factors set forth in our SEC filings. Forward-looking statements included herein are made as of the date hereof, and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results. 2

3 CPT is a Strong Fit with Pentair Strategically: Fast Growth Markets 100% Fit with Strategic Imperatives Strengths in China, Latin America & Middle East Innovative Filtration Technology Focus on Attractive Vertical Sectors World Leader in Ultrafiltration (UF) Membrane Technology Leader in Pre-filters for Desalination Leader in UF for Clean Water Leader in Side Stream Membrane Bioreactors (MBR) for Water Reuse Leader in Filtration & Separation in Beverage Financially: Expected to be Highly Accretive in 2012 Incredible Fit With Pentair High Fit, High Impact Drives Long term Shareholder Value 3

4 Clean Process Technologies (CPT) CPT Provides Sustainable Solutions to Attractive High Growth Water and Beverage Segments Proven, Proprietary Technology Leadership Position in UF Membrane Solutions Global Capabilities Based in Netherlands with >90% of Revenues Outside the U.S. Growing Installed Systems Base with Compelling Recurring Revenue Water ~50% 203M Products & Services Systems Desalination Wastewater/ Reuse Potable Water Process Water/ Industrial 222M CPT Sales > 250M 11% CAGR 2011E CPT Segments Served >40% in Fast Growth Regions >55% From Components and Services Double Digit Long Term Revenue Growth Target Broadens and Deepens Pentair s Water Portfolio Expands Beverage Capabilities in & Specialty Attractive ~50% Beverage Segment A Global, Value Added Business with Significant Growth Opportunities 4

5 CPT s s Portfolio Great Fit for Pentair CPT Water ~ 113M in 2010 Sales CPT Beverage and Specialty ~ 109M in 2010 Sales Product Examples X-Flow AquaFlex HP X-Flow Seaguard UF Membranes X-Flow Airlift MBR Nijhuis Super Duplex Pump X-Flow Crossflow MBR & BMF Sudmo SVP Valve Haffmans CO2 4U Recovery System Brands Leader in Many Attractive Segments Leader in Desalination Proprietary UF Membrane Technology Globalizes Engineered Pumps Expansion into Attractive $5B Global Beverage Segment (Beer, Soft Drinks, Dairy) Immediate Leadership Position Highly Valued Expertise Intimate with Customer Operations CPT Competencies Core to Serving Growing Critical Water Needs 5

6 Sustainable Solutions to Solve Critical Needs Water Scarcity PNR + CPT Solutions 40% Water Gap 2030 Water Demand 2030 Water Resources Group Existing Sustainable Water Supply Global Water Intelligence. Global Water Market 2011 Economic Growth & Development = Growing Demands for Water Supply Agricultural Demand, Water Consumption per Capita & Industrialization Driving Demand Business as Usual is Insufficient to Close the Water Gap Water Technology Innovation Plays a Major Role in Closing the Supply-Demand Gap Desalination and Industrial & Commercial Efficiency (Water Reuse) are Key Securing Upstream Water Resource Availability is Prerequisite for Accessible, Clean Water Supply CPT Competencies Core to Serving Growing Critical Water Needs 6

7 Aligns with Pentair s s Water Strategy Global Growth Pentair Water Expand Fast Growth Markets Further Strengthen Position in Global Infrastructure Pentair + CPT Strengthened Presence in China, Latin America and Middle East Leader in Desalination Pre-Treatment Ultrafiltration Innovation (Product & Market) PIMS (Pentair Integrated Mgmt System) Lead in Water Reuse and Desalination Building Smart Filtration & Separation Systems Expanding Technology Portfolio Take Lean Enterprise To the Next Level & Leverage Rapid Growth Process Proprietary, High Growth Membrane Technologies More Integrated Solutions in Attractive Applications Strengthens Core Leading Position in Food/Beverage Segment Leverage Pentair s Lean Enterprise Disciplines and Op Excellence to Drive CPT Growth & Productivity CPT Provides Immediate Global Reach, Technology & Market Access 7

8 United States ~66% Expands Global Reach 2010 Sales Mix 2010 Sales Mix proforma with CPT $3B Fast Growth ~14% Developed Non US ~20% Pentair United States ~60% $3.3B Fast Growth <20% Developed Non US >20% Pentair Geographic Mix More Global ~40% of Sales Outside the U.S. Increases Pentair Strength & Customer Relevance Globally United States ~65% Fast Growth ~14% Pentair Water United States ~55% Fast Growth ~20% Pentair Water Geographic Mix Strengthened Presence in Fast Growth Regions $2B Developed Non US ~21% $2.3B Developed Non US ~25% Provides Global Water Capabilities & Sales Distribution Network Driving Leading Presence in Fast Growth Markets 8

9 Provides Leading Technology Platforms + CPT Proprietary Technology Ultrafiltration Desal pre-treatment Water reuse Drinking water Membrane Bioreactors Water reuse Filtration Reverse Osmosis Nanofiltration Desalination Industrial Wastewater Ion Exchange Smart Systems Emerging Desalination UV Disinfection Ozone, ClO2 Pentair Today Early Cycle Emerging Maturing Harvest Proprietary, High Growth Technology = Growth Accelerator 9

10 Operating Model and Opportunities Bolt On & Leverage Immediately Operates as Part of Filtration Solutions Global Business Unit Strong Local Management Team Leverage PIMS, driving Lean Enterprise and Operational Excellence Sales and Technology Opportunities Advances Pentair s Presence in Fast Growth Markets including China, Latin America and Middle East Broadens and Deepens Pentair s Global Water Portfolio Accelerates Pentair s Momentum in Integrated Solutions Leverage Pentair and CPT s Technology Platforms Together To Accelerate Growth Across Entire Water Portfolio Create Pull for CPT s Products through Pentair s Well-Established U.S. Distributor Channels Compounding Growth Catalysts 10

11 Transaction Overview Purchase Price is 503 million (~$705M) (~13X 2011 Expected EBITDA or ~11X adj. for more favorable 20-25% tax rate) Transaction Funding Combination of: Cash on Hand, Revolving Credit Facility, and Long Term Debt Expecting to Maintain Investment Grade Rating Reported 2011 Expected to be ~($0.15) Dilutive to EPS; Modest Accretion Expected on Adjusted 2011 EPS ~$0.03 Accretive in 2011 before ~($0.18) Impact from Customer Contracts/Inventory Step-ups & Customary Deal Costs Significant Accretion Expected in 2012 Expected to Close in Q2, Subject to Customary Conditions and Regulatory Approvals Expected to be Accretive in Year One on Adjusted EPS 11

12 Expected 2011 EPS Impact (~7 Months) Expected Revenue: (~$230M) ~$35M ~15% ~($14M) ~$21M Modestly Accretive Assumptions: Preliminary Purchase Accounting Adjustments & Analysis $1.40/Euro FX Rate Q2 Close ~($18M) ~($0M) ~$0.03 ~($0.12) ~($0.15) Inclusive of Deal Costs ~($0.06) ~($0.15) 2011 EBITDA (~7 Months) D&A Op Income (Includes New) Interest Taxes Adjusted EPS Impact Customer Contracts/ Inventory Step-Ups Deal Costs Reported EPS Impact Expect to be Accretive to 2011 Adjusted EPS ~($0.15) Including Deal Costs 12

13 Targeted Sources of Value Creation Grow CPT Business 10%+ per year Strong Participation in Fast Growth Markets High Value Add to Beverage and Integrated Solutions Leader in Desalination + Sustainable Solutions Leading Presence in Rapid Growth Technologies Op Income Synergies of ~ $10M Assumed by 2014 (~50/50 Revenue/Cost) PNR Leads in U.S., CPT Leads International Improve Systems Profitability Supply Synergies Sourcing Combinations Lean/Standardization Improvements Expected Double Digit Revenue Growth + Synergies = Accelerated Growth 13

14 2012 and Longer Term Impact Expected 2012 Revenue: (~$390M) ~$65M ~17% 2012 EBITDA (Full Year) ~($23M) ~$42M D&A Op Income (Includes New) Expected ~$ $0.20 Accretive in 2012 ~($25M) Interest ~($0M) Taxes ~$0.15 to $0.20 Reported 2012 EPS Impact 2012 Assumptions Based on Preliminary Purchase Accounting Adjustments & Analysis $1.40/Euro FX Rate 2014 Financial Targets* Additive to Sales, Op Income, and EPS Targets ~$0.50 Consistent with 15% ROS Target Targeted Acquisition ROIC >10% by 2014; Mildly Dilutive to 15% ROIC Target ~14% A Great Strategic & Financial Fit Expected to Yield ~$0.15 $0.20 of EPS Accretion in 2012 Additive to 2014 Targets *per Sept Investor Day 14

15 Compelling Value Creation Fully Aligns with and Accelerates Growth Strategy Significantly Expands Global Reach Provides Leading, Proprietary Membrane Technology Strengthens Pentair s Global Leadership Position in Water Filtration and Separation Solutions Aligned with Short Term and Longer Term Financial Goals and Metrics Great Strategic and Financial Fit for Pentair 15