Pentair Reports Fourth Quarter and Full Year 2018 Results

Fourth quarter 2018 earnings per diluted share from continuing operations("EPS") were $0.54 compared to $0.30 in the fourth quarter of 2017. Onan adjusted basis, the company reported EPS of $0.60 compared to $0.52in the fourth quarter of 2017. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.

Fourth quarter 2018 operating income was $113 million, up 32 percent compared to operating income for the fourth quarter of 2017, and return on sales ("ROS") was 15.3 percent, an increase of 350 basis points when compared to the fourth quarter of 2017. On an adjusted basis, the company reported segment income of $134 million for the fourth quarter, up 5 percent compared to segment income for the fourth quarter of 2017,and ROS was 18.1 percent, an increase of 40 basis points when compared to the fourth quarter of 2017.

Full year net cash provided by operating activities of continuing operations was $458 million and free cash flow from continuing operations was $410 million. The company delivered full year free cashflow of 98 percent of adjusted net income.

Pentair paid dividends of $0.175 per share in the fourth quarter of2018. Pentair previously announced on December 10, 2018 that its Board of Directors approved a 3 percent increase in the company s regular annual cash dividend rate for 2019 to $0.72 from $0.70, adjusted for the spin-off of nVent Electric plc. 2019 will mark the 43rd consecutive year that Pentair has increased its dividend.

"2018 was an eventful year for Pentair as we began our new journey as a pure play water company," said John L. Stauch, Pentair President and Chief Executive Officer. "We delivered on our 2018 commitments while successfully completing the separation of nVent Electric plc to shareholders. During 2018, we returned nearly $700 million to our shareholders through share buybacks and dividends. Our core sales growth accelerated during the year and we were able to expand our margins while making a number of long-term, strategic growth investments. To start2019, we announced agreements for two strategic acquisitions to further our Residential & Commercial water treatment strategy. Our balance sheet remains in excellent shape and we remain committed to executing our strategy as a focused Residential & Commercial water treatment company."

Outlook

The company introduces its 2019 GAAP EPS guidance of $2.29 to $2.39 and on an adjusted basis of $2.50 to $2.60. The company anticipates full year 2019 sales up approximately 5 to 6 percent on a reported basis and up approximately 4 to 5 percent on a core basis. The company expects to deliver full year free cash flow to approximate adjusted net income.

In addition, the company introduces first quarter 2019 GAAP EPS from continuing operations guidance of $0.47 to $0.50 and on an adjusted EPS basis of $0.52 to $0.55. The company expects first quarter sales to be up approximately 0 to 1 percent on a reported basis and up approximately4 to 5 percent on a core basis compared to first quarter 2018.