Pentair Reports Fourth Quarter and Full Year 2021 Results

Fourth quarter 2021 earnings per diluted share from continuing operations (“EPS”) were $0.89 compared to $0.60 in the fourth quarter of 2020. On an adjusted basis, the Company reported EPS of $0.87 compared to $0.70 in the fourth quarter of 2020. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.

Fourth quarter 2021 operating income was $151 million, up 24 percent compared to operating income for the fourth quarter of 2020, and return on sales (“ROS”) was 15.2 percent, a decrease of 10 basis points when compared to the fourth quarter of 2020. On an adjusted basis, the Company reported segment income of $167 million, up 18 percent for the fourth quarter, compared to segment income for the fourth quarter of 2020, and ROS was 16.9 percent, a decrease of 80 basis points when compared to the fourth quarter of 2020.

“We exit 2021 feeling very grateful for the tireless efforts of all of our employees to help Pentair deliver for our customers and create value for shareholders despite significant inflation and global supply chain challenges,” said John L. Stauch, Pentair’s President and Chief Executive Officer. “I am humbled and proud of how our employees remained agile and accountable throughout all of 2021.”

Full year 2021 sales were $3.76 billion. Sales were up 25 percent compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 21 percent in 2021. Full year 2021 EPS from continuing operations was $3.32 compared to $2.13 in 2020. On an adjusted basis, the Company reported EPS of $3.40 compared to $2.50 in 2020.

Full year 2021 operating income was $637 million, up 38 percent compared to operating income in 2020, and return on sales (“ROS”) was 16.9 percent, an increase of 160 basis points when compared to 2020. On an adjusted basis, the Company reported segment income of $686 million, up 33 percent in 2021, compared to segment income in 2020, and ROS was 18.2 percent, an increase of 100 basis points when compared to 2020.

Mr. Stauch continued, “Our residential businesses remained strong and we saw continued recovery in both our commercial and industrial businesses throughout the year. Even though we exited 2021 with near record backlog, we were extremely proud to deliver robust growth in sales, income, and EPS while also expanding margins. Our balance sheet ended the year well positioned as we delivered another strong year of free cash flow. In 2021, we returned half of our free cash flow to shareholders through dividends and share repurchases in addition to funding two strategic acquisitions that help build out our water treatment and pool capabilities. We recently announced a dividend increase that will mark the 46th consecutive year of Pentair raising its dividend, an important component of our long-term capital allocation strategy.”

Consumer Solutions sales were up 31 percent in the fourth quarter of 2021 compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 23 percent in the fourth quarter. Segment income of $136 million was up 10 percent compared to the fourth quarter of 2020, and ROS was 21.6 percent, a decrease of 410 basis points when compared to the fourth quarter of 2020. Fourth quarter ROS was negatively impacted by the lower margin contribution from recent acquisitions, increased inflation, and ongoing supply chain inefficiencies.

Consumer Solutions sales were up 34 percent for the full year of 2021 compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 30 percent in 2021. Segment income of $554 million was up 32 percent compared to 2020, and ROS was 23.7 percent, a decrease of 30 basis points when compared to 2020.

Industrial & Flow Technologies sales were up 14 percent in the fourth quarter of 2021 compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 13 percent in the fourth quarter. Segment income of $54 million was up 63 percent compared to the fourth quarter of 2020, and ROS was 15.0 percent, an increase of 440 basis points when compared to the fourth quarter of 2020.

Industrial & Flow Technologies sales were up 12 percent for the full year of 2021 compared to sales for the same period last year. Excluding currency translation, acquisitions and divestitures, core sales grew 9 percent in 2021. Segment income of $213 million was up 30 percent compared to 2020, and ROS was 15.0 percent, an increase of 210 basis points when compared to 2020.

Full year net cash provided by operating activities of continuing operations was $614 million and free cash flow from continuing operations was $557 million.

Pentair paid a regular cash dividend of $0.20 per share in the fourth quarter of 2021. Pentair previously announced on December 7, 2021 that it will pay a regular quarterly cash dividend of $0.21 per share on February 4, 2022 to shareholders of record at the close of business on January 21, 2022. This dividend reflects a 5 percent increase in the Company’s regular cash dividend rate; 2022 marks the 46th consecutive year that Pentair has increased its dividend.

Outlook
Mr. Stauch concluded, “While we enter 2022 with continued uncertainty around COVID-19 impacts and global supply chain stability, we remain confident of the long-term growth trends in all of our businesses. Our Residential businesses primarily benefit from our installed base and many of our customers are signaling strong order trends, which we believe bodes well for our Pool, Water Treatment, and Residential Flow businesses. Commercial demand continues to improve and is another positive indicator for our Water Treatment business. Finally, our Industrial facing businesses saw orders and backlog improve as the year progressed, which builds confidence in further growth in the new year. We believe we are well positioned for 2022 and our efforts in 2021 highlight our ability to be agile and navigate the continued challenging environment we are all facing to start the new year.”

The Company introduces 2022 GAAP EPS guidance of approximately $3.54 to $3.64 and on an adjusted basis of approximately $3.70 to $3.80. The Company anticipates full year 2022 sales to be up approximately 6 to 9 percent on a reported basis. The Company expects to deliver full year free cash flow approximately equal to 100 percent of net income.

In addition, the Company introduces first quarter 2022 GAAP EPS of approximately $0.76 and on an adjusted EPS basis of approximately $0.80. The Company expects first quarter sales to be up approximately 7 to 11 percent on a reported basis compared to first quarter 2021.