Boost the utilization of your HCL environment by reevaluating use cases and f...
2013 q3 pentair presentation
1. 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 Differentiation
2013 Houston Investor & Analyst Event
2. 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 Environment
2013 Houston Investor & Analyst Event
3. PENTAIR
3 Reporting Segments
ORGANIZING FOR SUCCESS – CURRENT ALIGNMENT
Platforms are Where We Serve Customers … GBU’s + ELT Aligned to Improve
Growth and Productivity Trajectory 26
Water & Fluid Solutions
Valves &
Controls
Technical Solutions
Executive Leadership Team (ELT)
Aquatic
Systems
Equipment
Protection
Thermal
Management
7 Global Business Units
Filtration &
Process
Flow
Technologies
WES
Valves &
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
4. PENTAIR 28
MAINTAINING LEADERSHIP IN ENERGY
Pentair’s Capabilities and Solutions
WAYS TO WIN
1
2
4
3
5
Product Innovation for Critical
Applications – Sub-sea, Cryogenic
Expanded Solutions & Service
Offerings – 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
5. 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 Severe
Service 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
6. 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
6
South East Asia
$350M
1,150
2
$200M
65
-
$390M
2,860
6
$200M
400
2
$100M
1,340
4
$100M
60
1
Total FGRs - Additional Info:
Sales & Mktg Headcount
R&D Headcount
# of Distributors & Agents
950
350
1,100
Legend:
2013F Ship-to-Sales
Headcount
Manufacturing Sites
2013 Houston Investor & Analyst Event
7. PENTAIR 35
FOCUS AREAS – ADDITIONAL PRIORITIES
… Without Forgetting the Other Nice Opportunities
ChinaMiddle
East
Brazil /
LAM IndiaSEA Eastern
EuropeAfrica
RESI &
COMMERCIAL
INFRA-
STRUCTURE
ENERGY
INDUSTRIAL
FOOD &
BEVERAGE
= Priority / Focus Area
= Opportunity / Core
2013 Houston Investor & Analyst Event
9. 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
10. PENTAIR 74
WE CONTROL FLOW
We are a World Leader in Valves and Controls
74
ACTUATOR: The Muscles
A Mechanical Device Used
to Open and Close a Valve
CONTROLS: The Brains
Instruments Used to Monitor,
Control, or Diagnose a Valve and
Actuator Package
VALVE: The Bones
A Mechanical Device that
Controls the Flow of a
Liquid, Gas, or Vapor in a
Piping System
2013 Houston Investor & Analyst Event
11. PENTAIR
VALVES—CRITICAL TO GLOBAL INFRASTRUCTURE
Our Products Enable Safer, More Efficient, and More Sustainable Operations
From Oil & Gas
Upstream Applications
in FPSO Vessels that are
6X Larger than an
Aircraft Carrier…
… to Relief Valves Being
the Last Line of Defense
Preventing Catastrophic
Equipment Failure in
Nuclear Power Plants
… and Control Valves in
Supercritical Steam Power
Plants to Meet the Ever
Increasing Electricity Demand
in the Emerging World
… to High Integrity
Isolation Valves at an
Alumina Refinery with
Highly Caustic, High
Temperature Fluids
Isolation Valves for
Liquid Natural Gas
Terminals Operating at
Extremely Low
Temperatures of -320 F
Zero Leakage Valves Preventing
Escape of Hazardous Gases Like
Phosgene in Petrochem Plants
75
Valves are Highly Critical Components for Energy and Industrial Infrastructure
752013 Houston Investor & Analyst Event
12. 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 Solutions
76
FCT Ball Valve
• Subsea Pipeline Operation
• 1,000 Feet Water Depth
2013 Houston Investor & Analyst Event * 2013 estimated sales.
13. PENTAIR
SEGMENT CHARACTERISTICS
Diversified Industry and Geographical Presence
77
Oil & Gas
Mining
Power
Chemical
Other
Process
Middle East
ROW
Dev. Asia
Latin
America
N. America
China
India
Europe
Next 10
Competitors
Other
Competitors
Other
Local &
Regional
Competitors
PVC
2013 Houston Investor & Analyst Event
• Target Complex, Difficult
Applications
• Customers are Super-Majors
/ Majors
• Requires High Technology &
Expertise
• Developed Regions Have
Large Installed Base and
Aftermarket Activity
• Emerging Markets Building
New Infrastructure to Support
Growth
• PVC is a Leader
• ~15 True Global Players
• Thousands of Small Local
Competitors; Limited Reach
and Range
Valve ManufacturersIndustry Geography
100% = ~$38B 100% = ~$38B 100% = ~$38B
14. PENTAIR
KEY TRENDS
Overall Trends Favorable for Strong Growth
CUSTOMER TRENDSINDUSTRY TRENDSDEMAND TRENDS
+ Increasingly Harsh
Operating Environments
+ Increasing Global
Coordination of Large
Complex Projects
+ Growing Focus on Safety
+ Tightening of
Environmental
Regulations
Increasing EPC
Competition
+ Oil & Gas Growth at
Record Levels
+ Growth in NA
Petrochemical
+ Power Industry Seeing
Coal to Gas Transition
+ Power Growth in Middle
East / Asia
Mining Investment
Slowing in the
Short Term
+ Increasing Population
and Growing Middle
Class Resulting in
Greater Demand for
Energy and Power
Total Primary Energy Demand
Source: World Energy Outlook 2012
Presentation by Dr. Fatih Birol, IEA Chief
Economist.
Mtoe
Source: Citi, JPMorgan, Jefferies, UBS, Morgan
Stanley, Deutsche Bank, Bloomberg, BMI
782013 Houston Investor & Analyst Event
15. PENTAIR
23
25
30
32
36
34
30
36
38 38
40
42
44
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
40
42
44
GROWTH DYNAMICS ARE EXPECTED TO BE SOLID
Forecasting Moderate Growth Through Next 3 Years
• Global Opportunity for
Valves has Grown ~5%
CAGR Since 2004
• Recent Peak to Trough
Decline of 15%
• We Expect 4-6% Sales
Growth Through 2016
– Continued Demand for
Critical Infrastructure in
Developing Markets
– Marginal Strengthening
in Developed Economies
– Increased Project
Investments after Minor
Slowdown in 2013
CAGR
5%
CAGR
Global V&C Total Addressable Market (TAM)
$ Billions
Source: EIF 2012, PNR Estimates
2013 Houston Investor & Analyst Event 79
16. PENTAIR
CONSISTENT THROUGH THE CYCLE GROWTH
A Result of Product and Industry Breadth
80
$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% CAGR
Through the Cycle
2013 Houston Investor & Analyst Event
$M
17. 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 Growth
Opportunities Through Share Gain and Acquisitions
2013 Houston Investor & Analyst Event
(Includes Water, Food & Beverage, Pulp & Paper,
HVAC, Marine, etc.)
Oil & Gas Mining Power Chemical
18. PENTAIR 2013 Houston Investor & Analyst Event
VALVES PROCUREMENT IN PROJECT CYCLE
Valves Procured Late in Large Capital Projects
Long Cycle
•Compressors
•Automation
System
•Pumps
•Heat Exchangers
“Mid Cycle”
•Control Valves
•Automated
Valves
•Special
Instruments
Short Cycle
•Manual Valves
•Safety Valves
•Standard
Instruments
FEED
Detailed
Design
Construction
and
Installation
PRE-FEED
Equipment
Ordering
Project
Approval
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 from
Project Approval to
Valves Orders
Operation
82
19. PENTAIR
CUSTOMER REQUIREMENTS
Customers Value Better Products
83
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 Buying
Criteria*
Valve Performance Defined:
• Cycle Life
• Leakage (Both Inside and
Outside the Pipe)
Better Performance Provides:
• Process Reliability / Uptime
• Process Safety / Lower Risk
• Improved Environmental
Performance
• Lower Capital Costs
• Lower Operating Costs
*Non-price attributes
Source: PV&C market research
2013 Houston Investor & Analyst Event
20. 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
21. PENTAIR
VALVES & CONTROLS OFFERINGS
85
Leading Global Valves & Controls Supplier … $2.4B
Actuation
& Controls
Quarter
Turn
Valves
Pressure
Management
Valves
GGC &
Control
Valves
SALES BY PRODUCT PLATFORM
100% = ~$2.4B*
SALES BY VERTICAL
100% = ~$2.4B*
Energy
Industrial
Other
Developed
Fast
Growth
U.S. &
Canada
Western
Europe
SALES BY GEOGRAPHY
100% = ~$2.4B*
SALES BY CHANNEL
100% = ~$2.4B*
Projects
Installed
2013 Houston Investor & Analyst Event * 2013 estimated sales.
22. PENTAIR
QUARTER TURN VALVES
~$1B Estimated Quarter Turn Valves Revenue in 2013
86
SALES BY VERTICAL
Energy
Industrial
SALES BY REGIONSALES BY CHANNEL
MAJOR BRANDS
SAMPLE CUSTOMERSKEY GROWTH DRIVERS / VERTICALSPRODUCT
• Keystone
• KTM
• Vanessa
Installed
Projects
U.S. &
Canada
Fast
Growth
Other
Developed
Western
Europe
Butterfly
Valve Ball
Valve
• Offshore O&G Platforms
• FPSO (Floating
Production, Storage,
and Offloading)
• Chemical &
Petrochemical
• LNG Terminals
• Food & Beverage
• Cryogenic Isolation
• Corrosive Chemical
Isolation
2013 Houston Investor & Analyst Event
Triple Offset
Valve
100% = ~$1.0B* 100% = ~$1.0B* 100% = ~$1.0B*
* 2013 estimated sales.
23. 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 Spring
Relief Valve
Pilot
Operated
Relief
Valve
~$600M Estimated Pressure Management Valves Revenue in 2013
• Steam Power Plants
• Nuclear Power Plants
• Oil and Gas Exploration
and Refining
• Petrochemical Tank
Farms
• LNG Terminals
• Power Plant Steam
Boiler Protection
• Refinery Tank Protection
U.S. &
CanadaFast
Growth
Other
Developed
Western
Europe
Installed
Projects
2013 Houston Investor & Analyst Event
100% = ~$0.6B* 100% = ~$0.6B* 100% = ~$0.6B*
* 2013 estimated sales.
24. 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
Fast
Growth
Other
Developed
Western
Europe
Knife Gate
Valve
Globe Valve
~$400M Estimated Gate, Globe, & Check Valves Revenue in 2013
• Steam Control for
Power Plants
• Mining Tailings Isolation
• Steam Power Plants
• Nuclear Power Plants
• Copper and Gold
Mining
• Alumina Refining
• Oil and Gas Exploration
and Refining
2013 Houston Investor & Analyst Event
100% = ~$0.4B*100% = ~$0.4B*100% = ~$0.4B*
* 2013 estimated sales.
25. 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.
Fast
Growth
Other
Developed
W. Europe
Valve Actuator
Valve
Positioner
~$400M Estimated Actuation & Controls Revenue in 2013
• ~30% Captive V&C
• ~70% Other Valve
Companies
• O&G Pipelines
• O&G Upstream
• FPSO (Floating
Production, Storage,
and Offloading)
• Chemical &
Petrochemical
• LNG Terminals
U.S. &
Canada
Fast
Growth
Other
Developed
Western
Europe
Energy
Industrial
2013 Houston Investor & Analyst Event
100% = ~$0.4B* 100% = ~$0.4B* 100% = ~$0.4B*
* 2013 estimated sales.
26. PENTAIR
0
20
40
60
80
100%
Pentair
Target Market
Non-Target
Pentair
Target
Market
Non-Target
Pentair
Target Market
Non-Target
Target
Market
Pentair
Target
Market
Pentair
Target Market
Non-Target
Pentair
Non-
Target
WINNING THROUGH PRODUCT BREADTH
Pentair Valves & Controls is a Leader in all Segments
90
#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-Target
Market
Non-Target Market Non-Target
Market
Non-Target Market
Quarter Turn Pressure
Management
Gate, Globe, Check A&C Service Other
(Includes Valve Parts,
Solenoid Valves, Fittings, etc.)
Source: EIF 2012, PNR Estimates
27. PENTAIR
WINNING THROUGH APPLICATION EXPERTISE
Leading Brands are Trusted for Critical Applications
91
• 75 Years of
Experience
• The World’s First
Supplier of Full
Bore, Split Body
Type Ball Valves
• Developed the
Resilient Seated
Butterfly Valve
in 1951
• Provides Market
Leading Cycle Life
• Started in 1874
• Trusted to Protect
Nuclear Submarines
and Commercial
Nuclear Plants in the
US and Across the
World
• A Leading Supplier of
Relief Valves with a Track
Record of Product
Innovations and
Technical Breakthroughs
to Solve the Toughest
Application Challenges
ANDERSON GREENWOOD
CROSBYKEYSTONE
KTM
2013 Houston Investor & Analyst Event
28. PENTAIR
WINNING THROUGH APPLICATION EXPERTISE
Leading Brands are Trusted for Critical Applications
92
• Developed the Metal
Seat Valve with “Zero
Leakage”
• Used in Highly
Challenging Isolation
Applications
• Pioneer of the Dual
Elastomer Sleeve
Slurry Valve
• One of the Highest Quality
and Most Technologically
Advanced Slurry Valves on
the Market
• 140 Years of Experience
• Deep Expertise in Power
Plant Valve Applications
for Both Nuclear and
Conventional Fuels
• A Leading Actuator
Manufacturer for Over
50 Years
• Wide Range of Standard
and Custom Designed
Automation Solutions
SEMPELL
BIFFICLARKSON
VANESSA
2013 Houston Investor & Analyst Event
29. PENTAIR
WINNING WITH GLOBAL PRESENCE
We Can Make Commitments at a Global Level and Execute Consistently Locally
Service Center
Mobile Service Center
Major Manufacturing Location
Major Sales Office
50+ Sales Offices
80 Service Centers
42 Manufacturing Plants
1900
780
1100
2800
1050
650
675350
932013 Houston Investor & Analyst Event
# Employees
30. PENTAIR
WINNING WITH GLOBAL PRESENCE
Pentair Provides Global Scale to Serve Our Customers’ Needs
Downstream
Activity
UNITED STATES
Upstream
Activity
Jetty
Pipeline
Downstream
Activty
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 Involvement
Project Management
Sales Offices
Plants
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
Jetty
Consortium
Pipeline
Supplier
31. PENTAIR
WINNING WITH GLOBAL PRESENCE
95
Latin America
•Hiter Acquisition in Brazil
•Localized Assembly and
Test for Actuators, Pressure
Relief, Butterfly, Knife Gate,
and Control Valves
China
•Localized Assembly and
Test for Actuators,
Butterfly, Ball, Pressure
Relief, and Knife Gate
Valves
India
• Localized Assembly and
Test for Actuators,
Butterfly, and Slurry
Valves
Middle East
•KEF Acquisition in UAE
•Localized Assembly
and Test for Gate,
Globe, Check, and Ball
Valves
• Local Design & Development to Meet Regional Needs
• Local Assembly & Test to Reduce Lead Times
Using Our Global Footprint to Better Serve Our Customers
2013 Houston Investor & Analyst Event
32. PENTAIR
WINNING WITH PROJECT AND AFTERMARKET
Valve Growth Driven by Infrastructure Expansion and Operation
96
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 for
Greenfield Site
• ~$5M in Annual
Aftermarket
Opportunity
Power Plant (600MW Coal Fired)
• ~$6M in Valves for
Greenfield Site
• ~$1M in Annual
Aftermarket
Opportunity
2013 Houston Investor & Analyst Event
33. PENTAIR
KEY MESSAGES
97
Valves & Controls Positioned to Deliver Superior Value
• Pentair Valves & Controls is a Leading Solution Provider in a Growing,
High Demand, Fragmented Segment
• We Believe We are Well Positioned to Win Through:
— Breadth of Offering
— Superior Application Expertise
— Strong Global Presence
— Project and Aftermarket Opportunities
• We Expect to Deliver Shareholder Value Through:
— Organic Revenue Growth
— Operation Improvements (PIMS)
— Simplification and Standardization (Lean Enterprise)
2013 Houston Investor & Analyst Event
34. PENTAIR
2011 2012 2013F 2015T
2011 2012 2013F 2015T
PNR V&C EXPECTATIONS
Higher Quality of Revenue and Stronger Operating Performance
Top 2014 / 2015 Priorities
1. Drive Organic Revenue Growth
Through New Product
Developments
2. Capture Growth Through
Improved Customer Service
and Operations Improvements
3. Simplify Our Business
2013 Houston Investor & Analyst Event
Sales ($B)
Operating Income ($M)
2.4
>4%
2.4
2.3
2.7
232 244
295
400+
ROS 10.2% 10.3% 12.5% >15%
98
35. PENTAIR
RENEWED PRODUCT INNOVATION
PIMS Tools Driving Standardized Approach to Product Development
99
New Product Sales Have Grown from
$0 in 2010 to an Estimated $40M+ in
2013 with a Strong Funnel for 2014+
1990's 2000's 2010's
Patent Filings
Patent Filings are Back to 1990s
Levels Showing Reinvestment in
Product Technology
~60 / Year
~28 / Year
~60 / YearDiscover
23 Projects
~ $50M+
Develop
Deploy
25 Projects
~ $80M+
17 Projects
~ $50M+
New Product Development Funnel
3 Year Run Rate Revenue Estimate
2013 Houston Investor & Analyst Event
36. PENTAIR
RENEWED PRODUCT INNOVATION
Pentair Valves are Innovative
100
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
37. PENTAIR
RENEWED PRODUCT INNOVATION
Pentair Valves are Innovative
101
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
38. PENTAIR
RENEWED PRODUCT INNOVATION
Pentair Valves are Innovative
102
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
39. 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 Productivity
Quotes/Person/Hour
Lean Kaizen Event
40. 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 Network
2013 Houston Investor & Analyst Event
41. PENTAIR
GROWTH THROUGH SERVICE CENTER EXPANSION
October 2013
Macae, Brazil
New February 2011:
Port Arthur, TX
New March 2012:
Coatzacoalcos, Mexico
New August 2013:
Tampico, Mexico
Extension 2012
Baton Rouge, LA
Extension 2012
Pasadena, TX Latin America
April 2013
Buenos Aires
Argentina
Vizag
Dec 2013
Hazira
Dec 2013
Asia
Rayong, Thailand
March 2011
Songkla, Thailand
October 2010
Pacific
September 2011
Karratha, AUS
Extension 2012
Gladstone, AUS … and Others in
Europe, US,
Canada
Following Our Customers to Support Them Locally
1052013 Houston Investor & Analyst Event
42. 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 Local
Innovative Services Offerings
• Service Centers were Brought Under Single Global
Management in 2013 to Drive Standardization
and Best Practices Across the Network
Innovating to Improve Customers Total Cost of Ownership
Basic
Services
Higher Value
Services
2013 Houston Investor & Analyst Event
43. PENTAIR
Key Account Program Creates Organic Growth
107
• Domain Expertise within Supply Base to
Solve Difficult Application Requirements
• Supplier Rationalization to Simplify
Supply Chain Operations
• Standardization to Improve Operations
and Reduce Maintenance Costs
• Peace of Mind that Products Will
Perform Efficiently, Reliably, and Safely
V&C Customer Buying Trends
ORGANIC GROWTH—GLOBAL KEY ACCOUNTS
Value of V&C Key Account Management
• Leading Engineering Capabilities
Enables Breakthrough Solutions
• Single Point of Contact Aligns with
Customer Supply Chain Strategy
• Portfolio of World Class Products
Covers Wide Range of Needs
• Global Service Footprint Supports
Customer 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
BP
Chevron
ConocoPhillips
ExxonMobil
Shell
Total
BASF
Bayer
Dow
Sabic
BHP
Freeport-
McMoRan
Newmont
RioTinto
Air Products
Praxair
Siemens
Veolia
Alstom
2013 Houston Investor & Analyst Event
44. PENTAIR
IMPROVE CUSTOMER EXPERIENCE
PIMS Toolkit Supports Growth for V&C
108
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 Our
Products, Support, and
Services
• Key Priority is Improving
Customer Experience Via:
Lean Factory
Improvements
Global Sourcing
Office Based Lean
2013 Houston Investor & Analyst Event
45. PENTAIR 109
FAST LEAN EXECUTION
Valves & Controls Adopted LEAN Successfully within 12 Months
Expansion
of “4 Wall”
Lean to
Enterprise
Services
and Sales
Offices
LEAN
Begins
Legacy
OpEx
Lean
Assessment
12 LEAN
Focus Sites
42 Sites
Lean Plans
CCF / MMF
/ PFEP
Events
Mar 12 Jun 12 Sep 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14
LEAN in
Our DNA!
PNR / TYC
Announcement
1st PIMS
Meetings
PNR / Flow
Control
Merger
*Lean Transformation Plan
12 Focus Sites Cover
$1B Sales
2013 Houston Investor & Analyst Event
46. PENTAIR
IMPROVE CUSTOMER EXPERIENCE—LEAN FACTORY
Improved 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 12
Weeks to 7 Weeks for OMNIs and 80s (Stafford, TX)
15+ Product Lines Have Seen Lead Time Reductions in Last 9 months
110
Example: Breda, Netherlands After: Productivity Increased by 200%,
WIP Reduced by 99%, and Space by 75%
2013 Houston Investor & Analyst Event
47. PENTAIR
IMPROVE CUSTOMER EXPERIENCE—LEAN FACTORY
Improved 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 Costs
111
Example: Armentieres, France After: Building All Small Valves in “One
Piece Flow” Reduced Rejects Significantly
Improved First
Pass Yields and
Less Rework
2013 Houston Investor & Analyst Event
48. PENTAIR
IMPROVE CUSTOMER EXPERIENCE—LEAN FACTORY
Increase 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
49. PENTAIR
IMPROVE CUSTOMER EXPERIENCE—OFFICE LEAN
• V&C Multi-Million $ Projects are Complex
– Custom Engineered Products
– Multiple Plants
– Multiple Constituents: Suppliers, Inspection
Agencies, Freight Companies, End Users, and
EPC Firms
– Detailed Testing and Certification
Paperwork Required
• Applying Lean Principles to Managing Projects:
– Variable Staffing to Match Project Phase
– Co-Located Office Teams for Hyper
Communication
– Standard Work for Project Control
– Daily Gemba Walks to Identify Issues and
Resolve Quickly
– Daily Objectives to Drive Results
Customers Praise the Dedicated Focus
113
Daily Gemba Walk for Project Team
Early Results Show Improved Delivery,
Improved Quality, Reduced Costs, and
Happier Customers
2013 Houston Investor & Analyst Event
50. PENTAIR
SIMPLIFICATION—LEAN ENTERPRISE
Key Metrics 2010 2013F 2017T
Plants 48 ~40 < 40
ERP 39 29 TBD
% Production in Destination
Region
61% 66% > 75%
Product Groups 30+ 12 5
MILESTONES
• 2010-2011: Dissolved Regional
Organizations and Created Global Vertical
Industry Focus
• 2012: Creation of Global Functional Group
Increased Speed and Efficiency of Decision
Making and Execution
• 2013: Consolidating Product Management
Under 4 Core Global Product Platforms
• 2014: Begin Rollout of Global ERP Template
and System Consolidation
Aggressively Reducing Complexity
114
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
51. 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
53. PENTAIR
VALVES 101—WHAT IS A VALVE
Valve: A Valve is a Mechanical Device Whose Function is
to Control the Flow of Fluids in a Piping System
– Control Applied to These Fluids can Take Multiple
Forms
• 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 can
also be Liquids Carrying Suspended Solid Particles
(Slurries)
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
A “Globe” Valve, Used to
Start and Stop Flow
A “Pressure Relief” Valve,
Used to Regulate Pressure
2013 Houston Investor & Analyst Event 117
54. PENTAIR
VALVES 101—QUARTER TURN VALVES
Quarter-Turn Valves: Category of Valves (Such as Ball or Butterfly) Which Require 90
Degree Turn of the Stem to Move from the Fully Open to the Fully Closed Position.
Typically Used for Isolation and Throttling Applications.
Ball Valve
A Quarter-Turn Valve with a Ball
Shaped Closing Element held Between
Two Seats. Ball Valves are Widely Used
as On/Off Valves, but Some Special
Designs are Available for Throttling
Applications.
Butterfly Valve
A Quarter-Turn Valve Which has a Circular Disk as its
Closing Element. The Standard Design has the Valve
Stem Running Through the Disk, Giving a
Symmetrical Appearance. Later Designs Off-Set the
Stem, 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
55. PENTAIR
VALVES 101—GATE AND GLOBE VALVES
Gate Valve
A Multi-Turn Valve Used for Isolation Applications
Which has a Gate as its Closing Element. The Gate
Moves Linearly, Perpendicular to the Direction of Flow.
Gate Valves Provide Robust Sealing and are used
Extensively in the Petrochemicals Industries. This Class
of Valves also Includes Knife Gate Valves, which have
much Thinner Gates with a Knife-like Edge, Making
them Suited to use with Floating Solids.
Globe Valve
A Multi-Turn Valve with a Closing Element
that Moves Perpendicularly to the Valve
Body Seat and Generally Seals in a Plane
Parallel to the Direction of Flow. This Type
of Valve is Suited both to Throttling and
General Flow Control.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
119
56. PENTAIR
VALVES 101—CHECK AND CONTROL VALVES
Check Valve
A Valve that is Designed to Allow the Fluid
to Flow in a Given Direction but Closes to
Prevent Backflow. Check Valves (also
called Non-Return Valves) are Usually Self-
Acting.
Control Valve
A Valve which Regulates the Flow or Pressure of a
Fluid. Control Valves Normally Respond to Signals
Generated by Independent Devices such as Flow
Meters, Temperature Gauges, etc. Control Valves
are Normally Fitted with Actuators and
Positioners.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
120
57. PENTAIR
VALVES 101—PRESSURE MANAGEMENT VALVES
Pressure Management Valves: Category of Valves used to Reduce Excess Pressure in
Pressurized Systems, for Example a Steam Boiler. Pressure Management Valves
Automatically Open to Relieve Overpressure which Prevents Potentially Violent
Equipment Failure.
Direct Spring Relief Valves
Typically use a Spring to Hold the disc
or Piston on the Seat.
Pilot Operated Relief Valves
The Difference Between PORV and Spring Loaded
PRV is that Pilot Valves use System Pressure to Seal
the Valve.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
121
58. PENTAIR
VALVES 101—ACTUATORS AND CONTROLS
Actuator
Actuators are Mechanical Devices
that use Hydraulic, Pneumatic, or
Electric Power to Provide the
Muscle (Torque or Thrust) Needed
to Move a Valve to Open, Closed,
or Stop Positions.
Actuators & Controls: Valves can be Operated with a Variety of Mechanisms from Simple
Lever Handles and Hand-Wheels to Very Complex Valve Automation Systems.
Gears
Gears are Mechanical Devices
Used with Valves and / or
Actuators to Provide the Muscle
(Torque or Thrust) Needed to
Move a Valve to Open, Closed, or
Stop Positions.
Controls
Controls are the Brains which
Command the Actuators’ Power.
They are Instruments and / or
Systems Necessary to Provide Local
or Remote Monitoring, Control,
and Diagnostics of Valves.
2013 Houston Investor & Analyst Event
Source: The Valve Primer, Brent T. Stojkov, Industrial Press Inc.
122