Pentair Reports First Quarter 2018 Results

First quarter 2018 earnings per diluted share from continuing operations ("EPS") were $0.58 compared to $0.44 in the first quarter of 2017. On an adjusted basis, the company reported EPS of $0.88 compared to $0.65 in the first quarter of 2017. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.

First quarter 2018 operating income was $152 million, up 8 % compared to operating income for the first quarter of 2017, and return on sales ("ROS") was 12.0 %, an increase of 10 basis points when compared to the first quarter of 2017. On an adjusted basis, the company reported segment income of $211 million for the first quarter, up 13 % compared to segment income for the first quarter of 2017, and ROS was 16.6 %, an increase of 90 basis points when compared to the first quarter of 2017.

Net cash used for operating activities of continuing operations was $167 million and free cash flow usage from continuing operations was $181 million for the quarter. The company is targeting to deliver full year free cash flow of approximately 100 % of adjusted net income.

Pentair paid dividends of $0.35 per share in the first quarter of 2018. Pentair previously announced on December 5, 2017 that its Board of Directors approved a 1 % increase in the company s regular cash dividend rate for the first quarter of 2018 to $0.35 from $0.345. 2018 marks the 42nd consecutive year that Pentair has increased its dividend.

"Pentair started 2018 building additional momentum on core sales growth in both the Water and Electrical segments," said Randall J. Hogan, Pentair Chairman and Chief Executive Officer. "In addition to improved core sales growth, both businesses delivered strong income growth and margin expansion. We believe the imminent separation into two industry-leading pure-play Water and Electrical companies will enhance shareholder value and allow both companies to focus on their independent strategies and better control their own destinies."

Outlook

The company updates its estimated 2018 GAAP EPS from continuing operations to a range of $1.75 to $1.80 and on an adjusted EPS basis to a range of $2.25 to $2.30. The company updates its full year 2018 sales guidance to $2.96 billion, up 3 to 4 % on a reported and core basis over 2017. The company is targeting to deliver full year free cash flow of approximately 100 % of adjusted net income.

In addition, the company introduces second quarter 2018 GAAP EPS from continuing operations guidance of $0.44 to $0.46 and, on an adjusted EPS basis, of $0.67 to $0.69. The company expects second quarter sales to be approximately $0.79 billion, up 4 to 5 % on a reported basis and up 3 to 4 % on a core basis compared to second quarter 2017. This full year and second quarter 2018 outlook reflects the anticipated separation of the Electrical business on April 30, 2018 and the reporting of Electrical s results as discontinued operations.

The company also announced that nVent Electric plc ("nVent"), the Electrical business that is expected to be spun off on April 30, 2018, provided 2018 guidance. nVent provides 2018 GAAP EPS guidance at a range of $1.38 to $1.48 and, on an adjusted basis, at a range of $1.70 to $1.80. For full year 2018, nVent anticipates sales of approximately $2.2 billion, up 3 to 5 % on a reported basis and up 2 to 4 % on a core basis compared to 2017. nVent is targeting to deliver full year free cash flow of approximately 100 % of adjusted net income.

In addition, nVent introduces second quarter 2018 GAAP EPS guidance of $0.33 to $0.36 and, on an adjusted EPS basis, of $0.41 to $0.44. nVent expects second quarter sales to be approximately $0.54 billion, up 3 to 5 % on a reported basis and up 2 to 4 % on a core basis compared to second quarter 2017. This full year and second quarter 2018 outlook reflects the anticipated separation of the Electrical business on April 30, 2018.