PENTAIR 2012 INVESTOR & ANALYST DAY
November 27, 2012
Pentair Investor & Analyst Day
PENTAIR 2012 INVESTOR & ANALYST DAY
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This communication contains statements that Pentair believes to be "forward-looking statements" within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including,
without limitation, statements regarding the anticipated benefits of the merger or Pentair's anticipated financial results, are
forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets",
"plans", "believes", "expects", "intends", "will", "likely", "may", "anticipates", "estimates", "projects", "should", "would",
"expect", "positioned", "strategy", "future" or words, phrases or terms of similar substance or the negative thereof, are
forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to
risks, uncertainties, assumptions and other factors, some of which are beyond Pentair's control, which could cause actual
results to differ materially from those expressed or implied by such forward-looking statements. These factors include the
ability to successfully integrate Pentair and the flow control business and achieve expected benefits from the merger;
overall global economic and business conditions; competition and pricing pressures in the markets Pentair serves; the
strength of housing and related markets; volatility in currency exchange rates and commodity prices; inability to generate
savings from excellence in operations initiatives consisting of lean enterprise, supply management and cash flow practices;
increased risks associated with operating foreign businesses; the ability to deliver backlog and win future project work;
failure of market to accept new product introductions and enhancements; the impact of changes in laws and regulations,
including those that limit U.S. tax benefits; the outcome of litigation and governmental proceedings; and the ability to
achieve Pentair's long-term strategic operating goals. Additional information concerning these and other factors is
contained in Pentair's filings with the U.S. Securities and Exchange Commission ("SEC"), including in Pentair’s Quarterly
Report on form 10-Q for the quarter ended September 29, 2012. All forward-looking statements speak only as of the date of
this communication. Pentair assumes no obligation, and disclaims any obligation, to update the information contained in
this communication.
FORWARD-LOOKING STATEMENTS
PENTAIR 2012 INVESTOR & ANALYST DAY
KEY DEFINITIONS FOR TODAY’S PRESENTATION
• All References to 2015 Represent Our Long Term Strategic Goals
• All References to 2013 Represent Our Full Year Expected Results
• All References to 2012 Represent Our Full Year Expected Results, Presented on a Pro Forma Basis to Include the Results of Flow Control for the Full Year
• All References to 2011 are Presented on a Pro Forma Basis to Include the Results of Flow Control for the Full Year
• (*) All 2013, 2012, and 2011 Amounts are Presented on an Adjusted Basis and Exclude the Impact of Severance, Asset Impairment, Deal Related, and Other Costs
Please Refer to the Appendices for Reconciliations of Non-GAAP Measures and Pro Forma Results
PENTAIR 2012 INVESTOR & ANALYST DAY
TODAY’S AGENDA
WELCOME
8:30 – 8:35 Welcome & Agenda Jim Lucas
8:35 – 9:25 Industry Depth, Worldwide Impact Randy Hogan
9:25 – 9:55 More Opportunities Todd Gleason
10:15 – 10:45 Proven Operating Disciplines Mike Schrock
9:55 – 10:15 Break
10:45 – 11:15 Setting & Meeting Expectations John Stauch
11:15 – 12:00 Q&A and Closing Remarks Randy Hogan
PENTAIR 2012 INVESTOR & ANALYST DAY
WELCOME … WHAT YOU’LL HEAR TODAY
A New Company Building Off Proven Platforms for Success
From Randy: We Have a Solid Foundation, Vision & Strategic Roadmap
Why We are Better Positioned Today
We Have a Great Culture & Tremendous Energy
From Todd: Successful Integration … 30,000 Employees Embracing Change
More Synergies and Opportunities
We are Off to a Great Start Capturing Synergies
From Mike: Pentair Integrated Management System (PIMS) Delivers Value
Lean Enterprise Already Being Deployed / Adopted
PIMS a Key Enabler to Delivering Synergies Quickly
From John: Committed to Our Targets … Roadmap to Deliver
Smart & Aggressive Deployment of Capital
PENTAIR 2012 INVESTOR & ANALYST DAY
Pentair: Industry Depth, Worldwide Impact
Randall J. HoganChairman & Chief Executive Officer
November 27, 2012
Pentair Investor & Analyst Day
PENTAIR 2012 INVESTOR & ANALYST DAY 7
CURRENT ENVIRONMENT – 2012 UPDATE
• YTD Core Sales Growth of 1% (Price Offsetting Sluggish Volume)
• YTD Margin* Expansion of 70bps to 12.7% Driven by Productivity
• Announced 37th Consecutive Annual Dividend Increase
• Closed Flow Control (FC) Merger as Scheduled on September 28th
• Market / Global Economic Comment+ US Residential Steadily Improving+ Municipal Backlog Building+ Fast Growth Regions Still Growing— Western Europe Remains Challenged— Industrial Deceleration Globally
Pentair / Flow Control (FC) Integration2012 Q3 Year-to-Date Summary
• “Day 1” Better Than Anticipated and Planned
• Minimal Major Transition Service Arrangements with Tyco
• Already Visited over 30 Flow Control Sites and Spoke to ~25% of FC Employees
• Increased Confidence in Opportunities Related to Functional Structures, Pentair Integrated Management System, Global Sourcing, and IT
• Revenue Synergy Opportunities Identified … Energy, Food & Beverage, Pumps, Filtration Systems, and Fast Growth Regions
Macro Less Certain … Internal Levers to Pull
PENTAIR 2012 INVESTOR & ANALYST DAY 88
FINANCIAL TARGETS
2012 2013 2015 2012* 2013* 2015 2012* 2013* 2015
Revenue ($B) Op Income ($M) EPS
~$7.5~$7.7
~$8.6
+3%
5%CAGR
+20%
19%CAGR
~$790 ~$950
~$1.3B
ROS 10.6% ~12% ~15%
~$2.52
$3.10 to
$3.30
~$5.00
+27%
>25%CAGR
• Revenue Growth Accelerating
– Higher Exposure to Energy … NA Residential Tailwind
• Op Income Growth & EPS Driven by Base and IST
– ~10% CAGR on Base + Benefit of Integration & Standardization Team (IST)
Now Let Us Tell You How
Guidance Goal Guidance Guidance GoalGoal
PENTAIR 2012 INVESTOR & ANALYST DAY 9
WHAT YOU’LL HEAR TODAY
A New Company Building Off Proven Platforms for Success
A Stronger Company
More Opportunities
Proven Operating Disciplines
Setting & Meeting
Expectations
1
The New Pentair
2
3
4
• More Balanced• More Global• More Diversified
• Growth• Cost• Standardization
• PIMS: Focus on Lean Enterprise
• Aggressive & Achievable
• Smart Capital Deployment
PENTAIR 2012 INVESTOR & ANALYST DAY 10
A STRONGER COMPANY TODAY
More Balanced … More Global … More Diversified
Solid Foundation Better Portfolio Great Future
• History of Change
• Well Positioned
• Global Scale
• Vision & Strategy
• In Great Vertical Markets
• More Diverse
• More Balanced
• Leading Brands
Let’s Review Why …
• Operational Cost Synergies
• Real Growth Synergies
• PIMS Adoption Starting
• Steady Financial Outlook
PENTAIR 2012 INVESTOR & ANALYST DAY 11
A Decade of Positive Transformation
BUILDING A SOLID FOUNDATION
Portfolio Reshaping
2001 - 2006
• Doubled-Down in Water• Sold Power Tools• Lean Enterprise Journey
Broadens Across Pentair
Operational Excellence
2007 - 2011
• Standardized on Pentair Integrated Management System (PIMS)
-- More Than Just Lean• Organized For Global Growth
& Operational Excellence
Executing Strategy
2012+
• Global & Well Positioned• PIMS w/ Growth• More Innovative• Controlling Our Own Destiny
PENTAIR 2012 INVESTOR & ANALYST DAY 12
A Decade of Positive Transformation
FOUNDED WITH CONSISTENT CORPORATE STRATEGY
• Control Our Destiny— Strengthened Our Portfolio— Capital Allocated to Drive Value— PIMS Evolved into Pentair “DNA”
• In Good Growth Markets— Actively Managed Our Portfolio— Penetrated Fast Growth Regions— More Innovation … Energy Efficiency, Award-Winning New Products
01/01/01 09/27/12 11/23/12
Market Valuation$10.0B
$4.3B
$1.2B
Outperforming the S&P 500 by >200% since 2001
PENTAIR 2012 INVESTOR & ANALYST DAY 13
PENTAIR 2012 INVESTOR & ANALYST DAY 14
Solid Foundation … Focused on Diversifying & Globalization
PENTAIR “PRE-MERGER” ~$3.6B (2012 Pro Forma)
Vertical Split Pre-Merger
US Residential
~23%
Commercial~11%
Industrial &Agriculture
~44%
Infrastructure~10%
Non-US Residential
~12%
~ 61% U.S.~ 21% Dev. Non-U.S.~ 18% Fast Growth
• Steady Growth & Financial Results — Record Sales … Up 10% CAGR vs. 2009— Operating Margins* Up 290 Basis Points vs. 2009— Free Cash Flow > 100% of Net Income in 8 of Last 10
Years
• Pentair Integrated Management System (PIMS) Well Established
— Lean Enterprise Driving Significant Results— Rapid Growth Process & 3D Innovation— Strong Culture Adoption
• Strategy: Global Growth & Diversification— Sales in Fast Growth Regions Up 2-Fold vs. 2005— Exposure to Residential 35% vs. 40%+ in 2007
PENTAIR 2012 INVESTOR & ANALYST DAY 15
WHY FLOW CONTROL
• Complementary Products / Solutions / Segments— Big in Oil & Gas, Power, and Mining— Very Diverse in Other Attractive Verticals— Leading Positions in Valves and Thermal Management
• Great Geographic Reach— Largely Outside of North America— Big Positions in Fast Growth Regions
• Scale / Balance Sheet Strength— Attractive Free Cash Flow Generation
FC Geographical Mix
• Strategic Fit with Water / Fluid and Equipment Protection / Thermal
Developed Non-U.S.
45%
Fast Growth 25%
North America
30%
Solid Strategic Fit
PENTAIR 2012 INVESTOR & ANALYST DAY 16
• Very Balanced
• Complementary
Extension of Product
Offerings & Solutions
Global and Diverse
• Broader Global Reach
• Fast Growth Region
Sales ~25%
• Global Service and
Sales Coverage
• Diverse Customer Base
• Increased Scale in High
Growth Applications
• Enhanced Product
Offerings and Solutions
U.S. and Canada,
~40%
Fast Growth Regions,
~25%
Western Europe,
~20%
A BALANCED PORTFOLIO
Technical Solutions,
~25%
Valves & Controls,~32%
Water & Fluid
Solutions,~43%
BY VERTICALCOMBINED 2012 pro forma PROJECTED SALES MIX
BY REPORTING SEGMENTCOMBINED 2012 pro forma PROJECTED SALES MIX
BY GEOGRAPHYCOMBINED 2012 pro forma PROJECTED SALES MIX
Industrial,35%
Industrial,~26%
Infrastructure,~13%
Food & Beverage,~9%
Resi/Comm,~24%
Energy,~28%
Developed Non-U.S.,
~15%
100% = $7.5B 100% = $7.5B 100% = $7.5B
PENTAIR 2012 INVESTOR & ANALYST DAY 17
Global and Diverse
WATER & FLUID SOLUTIONS
Flow Control,~30%
BY VERTICALCOMBINED 2012 pro forma PROJECTED SALES MIX
BY GEOGRAPHYCOMBINED 2012 pro forma PROJECTED SALES MIX
Residential/Commercial,
~46%
Infrastructure,~24%
Food & Beverage,
~17%
Industrial, ~8%
Energy, ~5%
U.S. and Canada,
~48%Developed Non-U.S.,
~32%
Fast Growth Regions,
~20%
• 2012 – 2015 Growth Drivers
— Well Positioned to Benefit from Recovery
in N.A. Residential and Commercial
Markets
— Growing Backlogs in Municipal as “Break-
and-Fix” Business Returns
— Strong Positions in Food & Beverage
— Still Many Opportunities for Further
Standardization Across the Segment
• 2012 Pro Forma Sales ~$3.2B
• 2012 Pro Forma Margins* ~11.0%
— Legacy PNR Segment with FC’s Water
Business Added
— Leading Positions in Pumps and Filtration
with Expanded Geographical Reach
PENTAIR 2012 INVESTOR & ANALYST DAY 18
Global and Diverse
TECHNICAL SOLUTIONSBY VERTICAL
COMBINED 2012 pro forma PROJECTED SALES MIX
BY GEOGRAPHYCOMBINED 2012 pro forma PROJECTED SALES MIX
Developed Non-U.S.,
~21%
U.S. and Canada,
~64%
Fast Growth Regions,
~15%
Industrial,~53%
Energy,~28%
Resi/Comm,~13%
Infrastructure,~3%
• 2012 Pro Forma Sales ~$1.8B
• 2012 Pro Forma Margins* ~16.6%
— Comprised of Equipment Protection and
Thermal Management
— High Value Products in Numerous Applications
• 2012-2015 Growth Drivers
— Standardization Well Along Within
Businesses so Focus is on Growth
— Opportunities for Cross-Selling,
Particularly Equipment Protection into
Thermal Applications
— Still North American-Centric, Long Runway
for Global Expansion
Food & Beverage, ~3%
PENTAIR 2012 INVESTOR & ANALYST DAY 19
Global and Diverse
VALVES & CONTROLSBY VERTICAL
COMBINED 2012 pro forma PROJECTED SALES MIX
BY GEOGRAPHYCOMBINED 2012 pro forma PROJECTED SALES MIX
Energy,~59%
Industrial,~30%
Food & Beverage,~4%
Developed Non-U.S.,
~43%
U.S. and Canada,
~23%
Fast Growth Regions,
~34%
• 2012 Pro Forma Sales ~$2.4B
• 2012 Pro Forma Margins* ~10.1%
— ~$1.3B Installed Base
— Near Record Backlog of ~$1.4B
• 2012-2015 Growth Drivers
— Energy is Largest Vertical – Long-Term
Secular Tailwinds in Oil & Gas, Power, and
Mining
— Opportunities to Leverage Water & Fluid
Positions in Verticals Such as Food &
Beverage and Infrastructure
— Many Opportunities to Reduce
Complexity and Drive Margin Expansion
Infrastructure,~5%
Resi/Comm,~2%
PENTAIR 2012 INVESTOR & ANALYST DAY 20
Winning Right Together
GREAT CULTURAL FIT
World Tour + Already Visited > 30 New Pentair Sites … Town Hall Meetings with ~ 25% of New Workforce
Values + ‘Win Right’ Together … Embraced+ Global Communications Translated in 11 Languages
Energized
Leadership + Strong Team of Like-Minded Leaders+ Shared View of Opportunities and Path to Achieve
Engaged
Moving / Sharing Talent
+ 127 Positions Filled with Key FC Talent+ Already Moving Senior Leaders into Critical Value-
Creating Roles Across Business Units+ Building a Solid Bench
PENTAIR 2012 INVESTOR & ANALYST DAY 21
STRATEGIC ROADMAP
Our Strategic Roadmap Doesn’t Change
• Invest in Innovative Technology& Application Expertise
• Innovate Around Scarcity, Energy Efficiency and Sustainability
• Continue to Build Scale in Fast Growth Regions
• Taking PIMS to the Next Level
and Leveraging New Rapid Growth Process
STRATEGIC PRIORITIES
PENTAIR 2012 INVESTOR & ANALYST DAY 22
More Balanced … More Global … More Diversified
Solid Foundation Better Portfolio Great Future
Executing Against Vision & Strategy with Great Portfolio
• History of Change
• Well Positioned
• Global Scale
• Vision & Strategy
• In Great Vertical Markets
• More Diverse
• More Balanced
• Great Brands
A STRONGER COMPANY TODAY
• Operational Cost Synergies
• Real Growth Synergies
• PIMS Adoption Starting
• Steady Financial Outlook
PENTAIR 2012 INVESTOR & ANALYST DAY 23
SERVING MORE INDUSTRIES
PENTAIR 2012 INVESTOR & ANALYST DAY 24
KEY GROWTH VERTICALS
Energy Industrial InfrastructureFood &
BeverageResidential & Commercial
28% of Sales 26% of Sales 13% of Sales 9% of Sales24% of Sales
• Oil & Gas
• Power
• Mining
• General Ind’l
• Automotive
• Process / Chemical
• Municipal
• Desalination
• Roads, Rail, Air Travel
• Agriculture & Aquaculture
• Food & Bev. Processing
• Food Service
• Residential Homes
• Commercial Buildings
• Recreation & Leisure
Increased Scale in Attractive Verticals
PENTAIR 2012 INVESTOR & ANALYST DAY 25
KEY GROWTH SECTORS
Stronger Together
Energy
Industrial
Infrastructure
Food & Beverage
Residential & Commercial
W&FS V&C TS
V&C and TS Strengthens Pentair Reach
Broader Reach
More Global
Real Scale
“Wind at Our Back”
PENTAIR 2012 INVESTOR & ANALYST DAY 26
More Balanced … More Global … More Diversified
Solid Foundation Better Portfolio
How We Bring it All Together
• History of Change
• Well Positioned
• Global Scale
• Vision & Strategy
• In Great Vertical Markets
• More Diverse
• More Balanced
• Great Brands
Great Future
• Operational Cost Synergies
• Real Growth Synergies
• PIMS Adoption Starting
• Steady Financial Outlook
A STRONGER COMPANY TODAY
PENTAIR 2012 INVESTOR & ANALYST DAY 27
Solid Start … Current View: $230M in Operational Synergies
Original Synergy View
MORE OPPORTUNITIESCurrent
View
$160M Cost
Synergies
Corporate $40M
Tax Rate at 25%$230M
Cost & Growth Synergies
�
�Accomplished
Lower Tax Rate
Maintain Corp.
PENTAIR 2012 INVESTOR & ANALYST DAY 28
PROVEN OPERATING DISCIPLINES
Rapid Growth ProcessThe tools and languageto drive above-average growth consistently.
3D Process for InnovationWorks in concert with Rapid Growth to bring new products to market through three key phases:• Discover• Develop • Deploy
Talent ManagementOur global talent process designed to select, develop and retain top talent.
Lean EnterpriseThe way we drive value to our customers throughout all our business processes by reducing waste and improving speedand efficiency.
Pentair Integrated Management System
PIMSMike Will Cover Todd Will Cover
PENTAIR 2012 INVESTOR & ANALYST DAY 29
PNR “Pre-Merger” Next Steps10 Years Ago
We Have Significant Experience Improving Process & Talent
TALENT: SIGNIFICANT CHANGE & UPGRADES
Organization11,700 Employees;
<10% in Fast Growth
Regions
15,000 Employees;
~25% in Fast Growth
Regions
30,000 Employees;
~35% in Fast Growth
Regions
HR
Processes
• Inconsistent
• 54 U.S. Benefit Plans ...
International?
• Standard Global
HR Processes
• 1 U.S. Benefit Plan …
Int’l benchmark
• Pentair On World
Class Web-Enabled
Processes
Talent
Development
• U.S.-centric
• Limited opportunities
across businesses
• Launched talent
management process
• Global Team
• Share Talent
• Talent management
process imbedded
• Best of Both
• Merging Talent Process
Culture
• Code of Conduct
• Local Opportunities,
Limited Development
• ‘Win Right’ Culture
• Global Development/
Career Opportunities
• ‘Win Right’ Competitive
Advantage
• Best in Class
Functional Skills
PENTAIR 2012 INVESTOR & ANALYST DAY 30
+ Completed Merger of Tyco Segment/Corporate into Pentair
Corporate Structure … Up and Running; On Track
+ Businesses Intact Coming Over; Applying Known Approaches
� Lean Enterprise Disciplines
� Standardization Playbook
+ IST Project Oversight Ongoing
+ Clear Priorities:
� Business Plans Set and Presidents Accountable
� Further Adds Gated to Standardized Businesses
Alignment Across the Organization
WHAT ARE WE DOING TO ENSURE SUCCESS
PENTAIR 2012 INVESTOR & ANALYST DAY 31
TALENT: MOVING KEY RESOURCES
Talent is the Key to Our Success
• Operations Leadership to Valves & Controls
• Lean Leaders / Rangers Deployed to Biggest Opportunities
• Supply and Sourcing Leaders in New Businesses to Drive Savings
• 127 Key Pentair Corporate Roles Filled with Flow Control Talent
• One Common Talent Management Process Adopted
PENTAIR 2012 INVESTOR & ANALYST DAY 32
VALUE CREATION
Road Map to ~$5.00 in EPS
~$2.73
~($0.21)
~$2.52
~$1.80~$0.80
~$1.00
~$0.68 ~$5.00
2012*Pre-Deal
2012* Pro Forma
Impact
2012*Pro Forma Performance
CapitalAllocation
2015Goal
IST
Base
PENTAIR 2012 INVESTOR & ANALYST DAY 33
WHAT YOU’LL HEAR TODAY
A New Company Building Off Proven Platforms of Success
A Stronger Company
More Opportunities
Proven Operating Disciplines
Setting & Meeting
Expectations
1
The New Pentair
2
3
4
• More Balanced• More Global• More Diversified
• Growth• Cost
• PIMS: Focus on Lean Enterprise
• Aggressive & Achievable
• Smart Capital Deployment
PENTAIR 2012 INVESTOR & ANALYST DAY
More Opportunities
Todd R. GleasonPresident, Integration & Standardization
November 27, 2012
Pentair Investor & Analyst Day
PENTAIR 2012 INVESTOR & ANALYST DAY 35
WELCOME … WHAT YOU’LL HEAR TODAY
More Opportunities ... Driving To Deliver Value
A Stronger Company
More Opportunities
Proven Operating Disciplines
Setting & Meeting
Expectations
1
The New Pentair
2
3
4
• More Balanced• More Global• More Diversified
• Growth• Cost
• PIMS: Focus On Lean Enterprise
• Aggressive & Achievable
• Smart Capital Deployment
PENTAIR 2012 INVESTOR & ANALYST DAY
INTEGRATION & STANDARDIZATION
Clear Goals & Objectives36
More Opportunities
Integration & Standardization Team (IST) Chartered to Ensure We Deliver:
“Day One”:
Business Continuity
1
Synergies:
“Paying for The Deal”
2
Standardization:
PIMS & Functional Excellence
3
More Opportunities
PENTAIR 2012 INVESTOR & ANALYST DAY
IST: OUR APPROACH
Clear Goals & Objectives … Let’s Review Progress37
1
2
3
“Day One”
Synergies
Standardization
• Equally Important
• Get Each Right
• Done in Parallel … Not Separate
Process & Dedicated
IST
“Day One”
Synergies
Standardization
Maximum Value
PENTAIR 2012 INVESTOR & ANALYST DAY
IST: DEDICATED TEAM
Team Continuing to Drive Results 38
Integration Management Office
Todd Gleason, President of IST
IST Core Team:HR LeaderFinance LeaderProgram Director
HR
Engineering
Finance
Legal & Compliance
Growth
Marketing & Brand
I/T
Facilities
Functional Teams
~ 30 Key Functional
& GBU Leaders
8 GBU’s
International
PENTAIR 2012 INVESTOR & ANALYST DAY
“DAY ONE”: BUSINESS CONTINUITY
Successfully Closed Transaction as Planned39
“Day One”:
Business Continuity
1 Transaction Complete:• Closed September 28th … on Schedule• Swissco Structure … Like Clockwork • Transition Service Arrangements … Minimal
• Supply Chains … Shipping on Time• Customers & Suppliers … Well Informed• Base Businesses … Tracking / Not Distracted
• Payroll, Email, Applications … Working• New Web Sites … Looking Good• Financial Systems … Consolidating• Coffee Machines … Functioning
PENTAIR 2012 INVESTOR & ANALYST DAY
“DAY ONE”: THOUSANDS OF DETAILS & ACTIONS
Great Team Effort40
400+Legal Entities
127Positions Filled with Flow Control Talent
180Site Ambassadors Set-up “Day 1” Communications
$1.5BNew 5-Year Credit Facility
4,500Letters to Customers / Suppliers
~ DozenTransition Svc. Arrangements
$900MBond Offering
140+Critical “Day 1” Projects
Brand NewWebsite & Intranet
One New HQ & Tax Structure“Day One”:
Business Continuity
1
PENTAIR 2012 INVESTOR & ANALYST DAY
“DAY ONE”: ENGAGED EMPLOYEES
30,000 Excited Employees … Winning Right41
Signs Came Down Signs Went Up
People Came Together … & We Celebrated
“Day One”:
Business Continuity
1
PENTAIR 2012 INVESTOR & ANALYST DAY
INTEGRATION & STANDARDIZATION
Clear Goals & Objectives42
More Opportunities
Integration & Standardization Team (IST) Chartered To Ensure We Deliver:
“Day One”:
Business Continuity
�Synergies:
“Paying for The Deal”
2
Standardization:
PIMS & Functional Excellence
3
PENTAIR 2012 INVESTOR & ANALYST DAY
HOW WE VIEW THE OPPORTUNITIES
We Will Focus on Growth, Cost Structure & Reduced Complexity43
• Significant Growth Opportunities
• PIMS A Key Enabler
• Fast Growth Regions Scale
• $3B of Supply Spend
• Productivity Through Lean Enterprise
Synergies & Standardization
2 3
• Over 70 ERP Systems
• ~ 200 Office Locations
• 120+ Accounting Centers
• 100+ Brands
• Thousands of Servers and Apps.
We “See The Light” We “Feel The Heat”
PENTAIR 2012 INVESTOR & ANALYST DAY
DELIVERING REAL VALUE
Delivered Significant Value on “DAY ONE”44
Original Guidance
$40M Corp
$50M Tax
$160MSynergies
$250M
�DONE … Delivered On Day One
TAX: Already at 25% Rate … — Continue to Drive Rate Lower— Provides Immediate Benefit to 2013 and Beyond
CORP: Cost “Avoided” $40M+— Will Be in 2012 “Baseline”— Continue to Maintain Streamlined Corporate
Synergies & Standardization
2 3
PENTAIR 2012 INVESTOR & ANALYST DAY
DELIVERING REAL VALUE
Tremendous Opportunity … Running to Capture45
Synergies & Standardization: Delivering $0.80 of EPS By 2015
Initial “Cost” Synergy Outlook
“Original” Synergy Target
$160M
Our View Today
Growth & Cost Synergies /
Standardization
$230M+
$0.80 EPS
+ Increased Cost Take Out+ Included Growth Synergies
Everything Tracking
PENTAIR 2012 INVESTOR & ANALYST DAY
SYNERGY TIMING
Solid Plan to Deliver in 2013 … on Through to 201546
$230M
$90M
2013 2015………..
Synergies & Standardization
2 3
-- Solid Plan
-- Fast Start
-- Momentum is Key
$75M Repositioning
$10M Lean Enterprise$5M Direct Sourcing
Growth & Cost Synergies /
Standardization
PENTAIR 2012 INVESTOR & ANALYST DAY
SEGMENTATION OF $90M
Undertaking Large Repositioning in “Year One”47
$90M
2013
Key Projects
1. Repositioning ~$75M
2. PIMS – Lean ~$10M
3. Direct Material Sourcing ~$5M
4. Sales
~$90M
Offset with investments
Synergies & Standardization
2 3
$75M Repositioning
$10M Lean Enterprise$5M Direct Sourcing
PENTAIR 2012 INVESTOR & ANALYST DAY
SEGMENTATION OF $230M
Let’s Review Key Programs Underway to Deliver $230M …48
Repositioning
Back-Office Standardization
Lean Enterprise
Sales Synergies
$230M
$35M
$45M
$55M
$75M
> ½ From “Inside” Plants< ½ From Consolidating
Too Much G&A … Too Many ERPs, Servers …
Improve Structures
2015
Direct Material $20M
Mike’s Presentation
$135M Sales Growth
$3B In Annual Spend
My Focus
Synergies & Standardization
2 3
PENTAIR 2012 INVESTOR & ANALYST DAY 49
SOME KEY PROJECTS & OPPORTUNITIES
Key Projects … Off and Running
V&C Functional Org. ERP Consolidation
49
Fast Growth Regions Functional Standardization
• ONE PENTAIR
• Vertical Market Acceleration
• Revenue Synergies by Leveraging Opportunities
• Back Office Standardization
• Accelerate PIMS and Standardization
• Functional Excellence
• Substance in Switzerland
• Deliver on Service Organization
• >70 Global ERPs to End State of <10
• Drive Reduction in Reporting and Legal Entities
• Improve Customer Service
• Reduce Complexity
• Improve Delivery, Quality, and Lead Time
• Lean Enterprise … Everywhere
$55M
by 2015
$35M of
OI + Tax
Benefits
Growth +
$10M of
Savings
PENTAIR 50
REPOSITIONING ACTIONS
Repositioning Actions Improve Structure
2012 Repositioning Actions ($40M to $50M) Enable 2013 Savings of $75M
• Headcount Reductions in Western Europe in Response to Market Softness
• Continued Implementation of Functional Excellence Model
• Reducing Redundant G&A Structure
• Sales Office Consolidation in Overlapping Markets / Geographies
• Small Factory Consolidations
• Brand Consolidation & Actions
• Asset Evaluation & IT System Acceleration
Savings by Labor Category
Valves & Controls
~26%
Technical Solutions
~20% Water & Fluid
Solutions~54%
Savings by Geography Savings by Segment
ROW ~15%
Developed Non-U.S.
~60%U.S.
~25%SG&A ~70%
Hrly Mfg~15%
Salary Mfg~15%
2012 INVESTOR & ANALYST DAY
PENTAIR
LEAN: V&C FAST START … FUNCTIONAL ORG.
Setting the Stage for a Successful Lean Journey51
V&C Leadership
GM GM GM
GMGM
Pre-MergerGM Structure
Post-MergerFunctional Organization
V&C Leadership
FinMktgSalesOps HR
Simplified Functional Leadership
Duplicate Functions in GM-Led Structures
Svc
2012 INVESTOR & ANALYST DAY
PENTAIR 52
FINANCE STANDARDIZATION
Example of One Function … Driving to Reduce Complexity
• 10 Primary Accounting Centers
• Fewer Than 20 Closing Locations
• Significant Legal Entity Reduction … Where Prudent…
• Expected Savings of $20M from Internal G&A Structure Reduction … Simplified Processes, Systems, Applications …
• Reduce Audit and Other Professional Fees … Saves $5M
• Reduced Statutory Audits and Tax Compliance Costs
Legacy Pentair Reporting Entities
• 8 Primary Accounting Centers and Over 50 Financial Closing Locations
• Over 45 Statutory Audits
• 127 Legal Entities
Pentair “End State”
Legacy Flow Control Reporting Entities
• 10 Primary Accounting Centers and Over 70 Financial Closing Locations
• Over 80 Statutory Audits
• 171 Legal Entities
2012 INVESTOR & ANALYST DAY
PENTAIR 53
ERP ROADMAP
ERP Strategy & Program Will Deliver Significant Savings
• Starting From More Than 70 ERP’s Across Eight GBU’s and 3 Reporting Segments … End State of Eight
• GBU Based Approach to Existing Platforms Drives Faster Standardization and Less Risk
Valves & Controls
Flow Technologies
Equipment Protection Thermal Management
Main ERP: SAP
29 Unique Systems to be Moved
Main ERP: SAP
4 Unique Systems to be Moved
Main ERP: JDE
5 Unique Systems to be Moved
Main ERP: SAP
1 Unique System to be Moved … Covers 9 Locations
Process Technologies
13 Unique Systems to be Moved
Water & Environmental Systems
Main ERP: SAP
3 Unique Systems to be Moved
Water Purification Aquatic Systems
Main ERP: QAD
• Each ERP Reduction = ~$500K-$1M in Savings
• IST Used to “Jump-Start” Migrations
• ERP Standardization Drives Back Office Savings in Accounting, Customer Service, SIOP, Procurement, etc.
SAP JDE
SAP JDE
Expected to be Complete by 12/31/2013
� �
2012 INVESTOR & ANALYST DAY
PENTAIR 2012 INVESTOR & ANALYST DAY 54
PROVEN OPERATING DISCIPLINES
Rapid Growth ProcessThe tools and languageto drive above-average growth consistently.
3D Process for InnovationWorks in concert with Rapid Growth to bring new products to market through three key phases:• Discover• Develop • Deploy
Talent ManagementOur global talent process designed to select, develop and retain top talent.
Lean EnterpriseThe way we drive value to our customers throughout all our business processes by reducing waste and improving speedand efficiency.
Pentair Integrated Management System
PIMS
Continue to Expand and Enrich PIMS Tool Kit
PENTAIR
GROWTH & STANDARDIZATION
55
Pentair Recently Added “Growth” Process to PIMS
3D: Innovation
Processes Work in Tandem
• 3D: Discover, Develop, Deploy
• Innovation Linked to Strategy
• Common Language
• Common Tools
• Large Funnel of Products
Common Practice Across Pentair
Rapid Growth Process
• Link Vision & Strategy
• Strategy Execution Process
• Common Language
• Common Tools
• Large Funnel & Fast Start
2012 INVESTOR & ANALYST DAY
PENTAIR 2012 INVESTOR & ANALYST DAY 56
STANDARD GROWTH PROCESSES: FAST START
• Launch 3D & Rapid Growth
• Utilize Best Practices to Enhance Each
RGP: Fast Start
• 200+ Leaders Trained in New GBUs … Early Adoption
• Implementing Best Practices
• RGP Alpha Tests Already Kicked-off in V&C and Thermal
• Multi-Day Growth Council Meetings (Presidents, Marketing VPs … )
Synergies & Standardization
2 3
3D: Fast Start
• 100+ Innovation Leaders Trained
• Implementing Best Practices
• Global Technology Mapping and Strategy Alignment Completed
• Innovation Council Meetings in Various Locations (R&D Heads,
Technology VPs, Strategy VPs … )
Fast Implementation & Adoption Across Organization
PENTAIR
GROWTH SYNERGIES: BUILDING SOLID FUNNEL
� Analyzed 1,000’s of Customers
� Pre-Day One: 100’s of Interviews
� Pre-Day One: Ideation Sessions
� October: Presidents & Marketing Leads in 2-Day Growth Session
$135M+ in Sales Synergies by 2015
57
GROWTH SYNERGIES FUNNEL
New Products / Joint
Technology Dev.
Tier 1
(Quick Wins)
Next Tier
Launched ~12 Growth Projects:
$50M
50+ Concepts
Shared Customers Paired GBUs Customer Lists
Fast Start
Synergies & Standardization
2 3
Building Funnel to Exceed … Kicking Off Projects to Deliver2012 INVESTOR & ANALYST DAY
Synergies & Standardization
2 3
PENTAIR 58
EXAMPLE #1: JOINT-SELLING
OPPORTUNITY: JOINT-SELLING INTO FOOD & BEVERAGE
• Project: Distillery Project — 6 Upgrades & 1 New Distillery— 3-Year Project
• Opportunity: Joint-Selling / Partner Across New GBU’s and Products
— Hygienic Process & Industrial Utility Valves
• Win: Created $2M Sales Synergy— Total Project: $4.5M — Südmo Hygienic Process Valves &
Keystone Industrial Valves
• Solid Brand Position Generated Synergy
Already Identified: ~ $2M Sales Synergy2012 INVESTOR & ANALYST DAY
PENTAIR 59
Ball Valves
Check Valves
Instrument Valves
EXAMPLE #2: MARKET ACCESS
120 Valves Per Skid … Add’l $200K Per Skid
Middle East Project:
System Value ~ $1M (2 Skids)
Process Technologies Energy Vertical Working to Specify & Cross-Reference V&C Systems
Already Identified: ~ $1M Sales Synergy
Pentair LNG Gas Conditioning System
2012 INVESTOR & ANALYST DAY
PENTAIR 2012 INVESTOR & ANALYST DAY 60
EXAMPLE #3: CROSS-SELLING
Opportunity: Equipment Protection & Thermal Management Utilize Channels to Cross-Sell
• Generated ~ $2M of Equipment Protection Sales with Pentair’s Tracer Project
• Validating More Opportunities Across Thermal Management Customers & Projects
• Thermal Management Working Across O&G to Specify Pentair
Already Identified: ~ $2M Sales Synergy
PENTAIR 2012 INVESTOR & ANALYST DAY 61
EXAMPLE #4: SERVICE OFFERING
Opportunity: Flow & Process Technologies Utilize V&C Service Centers to Develop a Recurring Service Business
90 Service Centers … Global Opportunity
V&C Service Location1. Cross-Sell MRO Services to V&C
Service Customers
2. Global Footprint Adds Expertise,
Consumables & Replacement Parts
Close to Customer Operations
3. Develop Rental Offering to Support
Critical Customer Operations
4. Win New Equipment SalesEmphasizing MRO Service Offering
PENTAIR
FAST GROWTH OPPORTUNITY
62
• Growth of ∼∼∼∼$600M by 2015 (~ 10%+ CAGR)
• $10M in Cost Efficiencies: 2013
Growth Standardization• ONE PENTAIR Approach
• More Scale & More Resources
• Focused Market Coverage
• Accelerate RGP and in Country 3D
• Vertical Market / Brand Collateral
• ONE PENTAIR Approach
• Consolidate Offices
• Streamline Back Offices
• Standardize Functions
• Centralized Trade Show & Marketing
Synergies & Standardization
2 3
More Aggressive Management Structure & Efficiencies2012 INVESTOR & ANALYST DAY
PENTAIR 2012 INVESTOR & ANALYST DAY 63
EXAMPLE #1: FAST GROWTH FOOTPRINT
Concept: Flow Technologies Utilizing V&C Middle East Facility to Assemble, Distribute & Service Pumps
• Local Sourcing, Assembly & Distribution of Commercial and Industrial Products:
• Pressure Booster Systems
• HVAC Pumping System
• RO Desal Pumps / High Pressure
• Pump Service Center:
• Pre-sales
• Aftersales Services
Pressure Booster System HVAC System
Regions Exploring Cross Selling Opportunities
RO Desal Pump
PENTAIR 2012 INVESTOR & ANALYST DAY 64
MARKETING & BRAND MANAGEMENT
Established and Diversified Portfolio
• Oil & Gas
• Power
• Mining
• Chemical
• Pharma
• Process
• Agriculture
• Aquaculture
• F&B Process
• Food Service
• Municipal• Telecom &
Networks• Aero &
Transport
• Commercial
• Residential
• Recreation & Leisure
$2.1B $1.9B $0.7B $1.0B $1.8B Sales^
^ 2012 Estimates
PENTAIR 2012 INVESTOR & ANALYST DAY 65
• Reducing Complexity with 100+ Brands
• Building Integrated Pentair Brand Portfolio
From a Multitude of Unrelated Brands…
Synergies & Standardization
2 3
MARKETING & BRAND MANAGEMENT
PENTAIR 2012 INVESTOR & ANALYST DAY 66
BRAND OPPORTUNITY
• Reduce Complexity with Over 200 Brands
• Build an Integrated Pentair Brand Portfolio
NUMBER OF
KEY STRATEGIC
BRANDS
AURORA
BERKELEY
EVERPURE
FAIRBANKS NIJHUIS
HAFFMANS
HOFFMAN
HYDROMATIC
HYPRO
JUNG PUMPEN
MCLEAN
SCHROFF
SHURFLO
STA-RITE
SÜDMO
X-FLOW
… to an Integrated Brand Portfolio
Synergies & Standardization
2 3
PENTAIR 2012 INVESTOR & ANALYST DAY 67
IN SUMMARY
• Integration: Solid Merger … Already Delivering Value
• Must Deliver $90M in 2013
• Must Deliver $230M by 2015
• Solid Growth Opportunities Across Businesses and in Fast Growth Markets
• Pentair Brand and Marketing Step-Forward
Positioned to Deliver Solid Results
PIMS is Key to Execution
PENTAIR 2012 INVESTOR & ANALYST DAY
PROVEN OPERATING DISCIPLINES
Pentair Investor & Analyst Day
Michael V. SchrockPresident & Chief Operating Officer
November 27, 2012
PENTAIR 2012 INVESTOR & ANALYST DAY 69
WELCOME … WHAT YOU’LL HEAR TODAY
PIMS: Our Methodology for Operating Excellence
A Stronger Company
More Opportunities
Proven Operating Disciplines
Setting & Meeting
Expectations
1
The New Pentair
2
3
4
• More Balanced• More Global• More Diversified
• Growth• Cost
• PIMS: Focus on Lean Enterprise
• Aggressive & Achievable
• Smart Capital Deployment
PENTAIR 2012 INVESTOR & ANALYST DAY 70
PROVEN OPERATING DISCIPLINES
Rapid Growth ProcessThe tools and languageto drive above-average growth consistently.
3D Process for InnovationWorks in concert with Rapid Growth to bring new products to market through three key phases:• Discover• Develop • Deploy
Talent ManagementOur global talent process designed to select, develop and retain top talent.
Lean EnterpriseThe way we drive value to our customers throughout all our business processes by reducing waste and improving speedand efficiency.
Pentair Integrated Management System
PIMSRapid Growth ProcessThe tools and languageto drive above-average growth consistently.
“Already Covered Today”
“Already Covered Today”
Lean Enterprise is the Foundation of PIMS
PENTAIR 2012 INVESTOR & ANALYST DAY 71
LEAN ENTERPRISE: WHAT YOU’LL HEAR TODAY
Lean Enterprise: Proven Experience With Years of Success
– New Organization Provides Significant Opportunities
– We are Quickly Capitalizing on Them
Committed To Financial Targets & We Will Deliver
– Combination Brings Strong Disciplines and Best Practices
– We Have Designated Playbooks that Provide Rapid Adoption
Running To Make A Fast Start
– Putting Talent Against Best Opportunities
Apply Our Proven Formula to Deliver Solid Results
PENTAIR 2012 INVESTOR & ANALYST DAY 72
Lean Is Reading Out In Employee, Customer & Shareowner MetricsDriving Productivity by Reducing Waste and Increasing Velocity
LEAN ENTERPRISE OVERVIEW
Lean Enterprise
The way we drive value to
our customers throughout
all our business processes
by reducing waste and
improving speed
and efficiency.
Early 2000’s 2014
Lea
de
rsh
ip C
om
mit
me
nt
Low
High
World-Class
Lean Enterprise
Lean as Tool Set
Lean as Events
Lean as Ops Standard
Lean as Supply Chain System
Lean Across Enterprise
2012 Shingo Silver Medallion
PENTAIR 2012 INVESTOR & ANALYST DAY 73
LEAN OPERATIONS – FOCUSED TRANSFORMATION
2. Process
• Standard Playbooks
• Lean Playbook Always Improving … Today: Version 2.0
• E-Learning Modules: 11 Lean Methods – Multiple Languages
• Rigorous Scorecards & Reviews ... Constant Improvement
1. Talent & Structure
• Over 150 People Dedicated to Lean in “Legacy” Pentair
• Thousands Trained on Lean Principles & Methodology
• Senior Leadership Engaged
• Lean has Senior Leader Positions
3. Execution
• Gross Margin Up 100 bps Each Year 2009 – 2012
• Safety • Quality• Delivery • Cost • Cash
Talent, Process, and Execution to Create Value Through Lean
• Solid Results• Constant
Improvement• More to Do
PENTAIR 2012 INVESTOR & ANALYST DAY 74
Delivering Great Operating Results
LEAN RESULTS – OPERATIONAL EXCELLENCE
2009 2010 2011 2012e
29%30% 30%
32%
Water & Fluid Solutions Gross Margins^ Technical Solutions Gross Margins^
Sales $1.85B $2.0B $2.4B $2.5B Sales $0.85B $1.0B $1.1B $1.0B
Overcame Headwinds- Materials Inflation of 3%, FX
- Emerging Market Mix
- Global Investments
Created Success+ Solid Productivity via Lean
+ Consolidation: 55 Factories to 40 (‘08 – ‘12)
+ Significant Improvement in Quality, OTD
2009 2010 2011 2012e
30%
32%
34%
36%
^ Represents expected 2012 results excluding impact of Flow Control merger.
PENTAIR 2012 INVESTOR & ANALYST DAY 75
Delivering Results by Focusing on the Right Things
Safety• “Best in Class” Incident Rate
— 40% Industry Average
• Improved 4 Years in a Row
Quality• Customer Defects Down 30%...
Higher Satisfaction• Total Cost of Quality Down 40%
Delivery• Current: 93% in Legacy PNR• Substantial Opportunity Within
Flow Control
Cost• 2009 - 2012: 100 bps+ Per Year• 2013 – 2015: Same Goals
Cash
LEAN RESULTS – OPERATIONAL EXCELLENCE
• Consistently Above Net Income• Expect Same Great Performance
FOCUS GOAL PROGRESS
Top Decile
Warranty <1%
On Time >95%
GM% Up 100 bps Yr.
FCF > Net Income
PENTAIR 2012 INVESTOR & ANALYST DAY 76
$195M OF COST SYNERGIES
We have a Path to Deliver $230M
Repositioning
Back-Office Standardization
Lean Enterprise
$195M
$45M
$55M
$75M
2015
Direct Material$20M
Lean Enterprise Synergies: $10M $45M— Inside 100+ Factories— Logistics / Enterprise
2013 2015
Direct Material Synergies: $5M $20M— $2.1B in Spend— Robust Funnel
Indirect Synergies: $40M— $0.8B in Spend— Fast Start with Rapid Renegotiation
Sales Synergies$35M
$230M
Indirect - Captured in Base Business & Back-Office
PENTAIR 2012 INVESTOR & ANALYST DAY 77
GOING FORWARD: MANUFACTURING COSTS
Reduction of ~300 bps Targeted from 2012-2015
• Drive Material Savings Programs to Deliver $60M+ in Savings
• Lean Deployed at Every Facility … Once at Standard = $2M Savings Per “New” Factory … or ~$80M Opportunity
• Streamline Logistics to Drive Savings
• Reduction in Overall Footprint Drives $20M or More of Benefit
• Revenue Per Factory of 10% CAGR 2015 vs. 2012
2012 2015
Material
ManufacturingLabor
37%
ManufacturingOverhead
16%
14%
33% 36%
36%
15%
13%
Full Year Manufacturing Costs(% of Sales)
100%
GrossMargin
PENTAIR 2012 INVESTOR & ANALYST DAY 78
LEAN MATURITY
Lean Maturity Drives Results
Technical
Solutions
Proof of Concept
Early in Journey
• 2 GBUs with Robust Lean Discipline• Lean is Reading out Across the Enterprise
• 5 GBUs at Different Levels of Maturity• All GBUs Advancing in Lean Maturity
• Early in Lean Journey• Prioritizing on Focused Sites
Maturity Level
Water &
Fluid
Solutions
Valves &
Controls
ContinuousImprovement
Yrs 4-5
Make Material Flow
Yrs 3-4
CreateContinuous Flow
Yrs 2-3
Stabilize (Turn Around)Yrs 1-2
PENTAIR 2012 INVESTOR & ANALYST DAY 79
LEAN OPERATIONS: FAST START
FIRST 100 DAY LEAN ROLL-OUT
Fast Start in All 70 Legacy Flow Control Plants
FOCUS SITES
Prioritizing 15 Flow Control Factories as “Focus Plants”
• Get Best Talent to Best Opportunities
— Pentair “Lean Ranger” to Support Training & Kaizens
— 1st Priority for Pentair Lean Talent— All Training Held at Focus Sites— 1,000s Trained
Fast Start:
• Each Site Partnering with Lean Ranger
• Each Site Doing Value Stream Maps Now
• Each Site Completing 1st Continuous Flow Kaizen by End of Year 2012
Regional Roll-outs: Top 150 Ops & Supply Leaders
Strategy Deployment & Lean Training: Level 1 & 2
All Sites: PIMS Scorecards, Strategy Deployment, Transformation Plans
Focus Sites: Kaizens for Value Stream Mapping, 5S, and Creating Continuous Flow
Detailed Lean Playbook Training
OCT NOV DEC JAN
PENTAIR 2012 INVESTOR & ANALYST DAY 80
TALENT: “FAST” DEPLOYMENT OF LEAN TALENT
Q4 2012: Key Talent Moves• Pentair VP of Ops & Supply to Valves & Controls
• Operations Leaders from Pentair GBUs Moving to Key Roles in Flow Control
• Top Supply Leaders Moving into Key Flow Control Roles
• Plant Lean Leaders and Regional “Lean Rangers” Already Deployed
— Working with “15 Focus Plants”
Flowing Talent to Biggest Opportunities … Leveraging Proven Model
Organization Structure• Functionalizing: Operations to Improve Speed
• Doubling: Lean Dedicated Talent in New GBUs
• Training & Development: Pentair Lean Playbook
• Talent Upgrades: Improve Lean Expertise
PENTAIR 2012 INVESTOR & ANALYST DAY 81
LEAN: V&C FAST START … FUNCTIONAL ORG.
Setting the Stage for a Successful Lean Journey
V&C Leadership
GM GM GM
GMGM
Pre-MergerGM Structure
Post-MergerFunctional Organization
V&C Leadership
FinMktgSalesOps HR
Simplified Functional Leadership
Duplicate Functions in GM-Led Structures
Svc
PENTAIR 2012 INVESTOR & ANALYST DAY 82
Four Wall Lean
• 100+ Facilities: Aggressive Targets
• 15 “Focus Plants”: Flowing Talent
Fast Start:
• Thermal Plant in North America:
— $2M Improvement in Yield & Continuous Flow
— Lead Time Being Cut by 2/3
• EMEA Valves Plant
— 25% OTD Improvement … Already Targeting $1M Savings
SYNERGIES: LEAN & COST TAKEOUT
Clear Projects Planned for Lean Synergies
“Four Wall” and Facility Rationalization - > $45M+
Facility Rationalization
• 5 Small Plant Closures Underway
• Evaluating Entire Footprint
Fast Start:
• Japan Valve Plant Closure:
— $9M Annual Savings (starting 2014)— One-time Charge of $12M
• Quickly Moving with Actions
• Will Only Do More Closures When
We Have Tailwinds from Other
Synergies …
$25M $20M+
PENTAIR 2012 INVESTOR & ANALYST DAY 83
LEAN: FOUR WALL … FAST START EXAMPLE
Making Progress on Lean Already
Thermal Management Example: ~ $1M / Year
• Material Scrap – Cable Line…1st Pass Yield
• Standard Work and Continuous Flow in 2 Value Streams
• Done: Value Stream Mapping, Transformation Planning, Creating Continuous Flow Kaizen
Global Lean Communications
• “7 Lean Transformational Disciplines” Posters in ALL Plants Globally, in 8 Languages on Day 1
Training
• Top 500 Operations Leaders Trained, Including Hands-on Lean Simulation
PENTAIR 2012 INVESTOR & ANALYST DAY 84
SYNERGIES: SUPPLY MANAGEMENT
$100M Funnel to Deliver the $60M Materials Synergies
Target $60M2.5% Synergies
$100M Current Funnel
Supply Synergies – Direct & Indirect
$60M Target
1. Solid Funnel = $100M� Indirect Synergies – $60M
� Direct Synergies – $40M
� 300 Global Projects Identified
� Detailed Project Plans for Each
2. Strong Start Day 1 thru Day 100� $25M Day 100 Target
� 75 projects
3. Aligning & Deploying Global Talent
� Regional Rapid Renegotiations with
100 Suppliers in First 100 Days
� Training Teams on Supply Playbook,
Scorecard, and Roles
Key Enablers to Achieve Supply Synergies
To
tal S
yne
rgie
s ($
M)
PENTAIR 2012 INVESTOR & ANALYST DAY 85
KEY INDIRECT SYNERGY OPPORTUNITIES
$5.5M of Indirect Synergy Savings in First 60 Days Since Merger
Synergy Savings Opportunities
FC55%
PNR 45%
Indirect Spend - $800M
33%
27%
13%
8%
8%
11%
Top Indirect Spend Categories
Transportation
Factory
IT
Prof Srvcs
Travel
Other
Funnel of ∼300 Projects with Expected
Synergy Opportunities of $60M+
Completed Re-negotiations:• Global Ocean - $2.5M
• U.S. Wireless - $700k
• Data Center - $440k
• MRO - $210k
• Office Supplies & Rental Car - $200k
Next Wave:• Energy Treasure Hunts - $2M
• Temp Labor - $1M
• EMEA Small Parcel - $1.1M
• N.A. LTL Freight - $900k
• Energy Invoice Audit - $570k
• Marketing Supplies Consolidation - $500k
• Global Airline RFPs - $500k
PENTAIR 2012 INVESTOR & ANALYST DAY 86
SUPPLY MANAGEMENT: FAST START
28
15
23
38
10
$2.5M
$5.5M
$0.5M
^Overlap across levers and sub-categories
75 70^Unique Resources
>$20M
3 10 $1.0M
2. Re-Negotiation
1. Choose 1 & Go
3. RFP
4. Policy Deployment
# of Projects # of Resources Synergies / Savings
Totals
5. BCC
6. Direct Buys from OEMs
22 39 $9.5M
4(Wireless, Travel, IT)
3 $2.0M
3
Great Progress in First 100 Days
PENTAIR 2012 INVESTOR & ANALYST DAY 87
Productivity
Process
Talent & Structure
• Completed 35+ Rapid Renegotiations (Houston, China, and India)• Achieved $5M in Run-rate Savings in First Few Weeks• Completed 14 of 75 First 100 Days Projects
• Supply Management Playbooks Rolled-out Globally• Trained 50 staff on Supply Scorecards & Operating Model• Training: Commodity Strategy, Sourcing Process, and Value Engineering• Implemented New Policies (Travel and U.S. Mobile Device)• “Synergy Expectations” Letter to 2,000+ Key Indirect and Direct
Suppliers
����
����
����
Fast Start, but a lot of Work Still Ahead of Us
SUPPLY MANAGEMENT: FAST START
• New GBU Leaders Trained on Playbook / Process• New Leaders Being Put in Key Businesses (From “Legacy” Pentair)• Processes Already Merging
PENTAIR 2012 INVESTOR & ANALYST DAY 88
REAL ESTATE CONSOLIDATION
EMEA
• Middle East: Consolidate
from 5 to 2 Offices
• UK: Move to Lower Cost
Space
Fast Start: $1M+
AMERICAS
• Canada: Warehouse & Office
Consolidation
• California: Consolidate
Warehouse Space thru Lean
Fast Start: $1M+
APAC
• China: Consolidate 5 offices
into One Regional HQ Office
• Asia: Consolidate 3 Offices
into 1 Showcase Office
Fast Start: $2M+
Sample Facility Consolidation Projects…. More Evaluations Underway
• Enhance “ONE PENTAIR” Culture… Faster Integration
• Accelerate Growth Through Front-end Collaboration
• Capture Synergies from Real Estate and G&A Efficiency
Consolidate Offices - $20M
Benefits
PENTAIR 2012 INVESTOR & ANALYST DAY 89
SUMMARY
• Drive $45M in Lean
• Deliver $20M in Direct Material Savings
• Accelerate PIMS Culture Throughout Enterprise
• Deliver Gross Margins >100 bps/year
Positioned to Deliver Solid Results
PENTAIR 2012 INVESTOR & ANALYST DAY
Setting & Meeting Expectations
John L. StauchChief Financial Officer
November 27, 2012
Pentair Investor & Analyst Day
PENTAIR 2012 INVESTOR & ANALYST DAY
WELCOME … WHAT YOU’LL HEAR TODAY
Aggressive & Achievable Targets9191
A Stronger Company
More Opportunities
Proven Operating Disciplines
Setting & Meeting
Expectations
1
The New Pentair
2
3
4
• More Balanced• More Global• More Diversified
• Growth• Cost
• PIMS: Focus on Lean Enterprise
• Aggressive & Achievable
• Smart Capital Deployment
PENTAIR 2012 INVESTOR & ANALYST DAY
PENTAIR 2012 TO 2015 EXPECTATIONS
Strong Foundation with a Significantly Strengthened Portfolio
Better Positioned to Deliver Richer, More Consistent Results
– More Balanced with Greater Access in Energy Vertical, Particularly Oil & Gas
… Less Dependent on Residential (Still Important)
– Base Business has Good Growth Prospects in Core Markets
– Increased Diversification in Both Long and Short Cycle Businesses
– Significant Increase in Fast Growth Region Presence
Expect Economic Slowdown, Accelerating Standardization & Cost Out
– Focus on Specific Price, Volume, Cost Out, and Productivity Actions
– Standardization & Cost Out Opportunities Identified and Being Accelerated
Revenue Goal of ~$8.6B by 2015
Targeting ROS of ~15% by 2015
EPS Goal of ~$5.00 and ROIC of ~12% by 2015
92
PENTAIR 2012 INVESTOR & ANALYST DAY
CREATING SHAREOWNER VALUE
Growth + Standardization + Capital Allocation = ~12% ROIC by '15
• Volume Growth
– Our Markets Should
Grow Faster than GDP
• Accelerate PIMS
– Lean Enterprise
– Talent Management
– 3D Process for Innovation
– Rapid Growth Process
• Price / Productivity vs.
Inflation
Base Business Performance
• Reduce Complexity – Driving
Standardization Faster
• Abundant Functional Opportunities
– Information Technology
– Finance
– G&A, etc.
• Transitioning Fast Growth
Regions to ONE PENTAIR Face to Customer
• $135M of Sales Synergies
Accelerating Standardization
• Maintain Investment Grade
• Dividend Increase(37 Straight Years)
• Organic Growth
• Self-Funded,
Bolt-on Acquisitions
• Debt Reduction / Buybacks
Capital Allocation
‘12-15: ~80 bpsMargin Expansion
‘12-15: ~80 bpsMargin Expansion
Disciplined Capital Allocation
93
PENTAIR 2012 INVESTOR & ANALYST DAY
2012 TO 2015 OPERATING INCOME DRIVERS
Shareholder Value Remains Our Top Priority
~$790M ~$860M
~$1.1B
~$90M
~$230M~$1.3B
~$950M
Deliver on Base Drive Standardization Create Value
~9%YOY
~11%CAGR
~11%YOY
~8%CAGR ~20%
YOY
~19%CAGR
• Innovation and Rapid
Growth Process To Protect
Core & Enter Adjacencies
• Continue Into
Fast Growth Regions
• Accelerate PIMS
• Deliver Synergies Quickly
• Focus on Reducing
Complexity
• Drive Revenue Synergies
• Utilize IST to
Track and Manage
2015 ~$5.00 EPS
94
* * *
PENTAIR 2012 INVESTOR & ANALYST DAY
FULL YEAR 2012 PRO FORMA OUTLOOK
Early Start on Standardization in 2012 … Well Positioned for 2013
2012 Forecasted Performance
Sales
Operating Income
~4% Growth
Financial Summary
Revenue up 4%
• Valves & Controls up 6%
• Water & Fluid Solutions up 7%
• Technical Solutions down 2%
Operating Income* up ~13%
• Productivity and Price
Offsetting Inflation
• Gross Margin
Expansion > 50 bps
• Op Expenses 30 bps Reduction
• ROS ~11%
Expected EPS* ~$2.52 (Pro Forma)
Free Cash Flow >100% Net Income Conversion
~$7.2B
~$7.5B
2011 2012
2011* 2012*
~$700M~$790M
10%ROS
~11%ROS
~13%Growth
95
Note: 2011 and 2012 includes $91M of incremental amortization
PENTAIR 2012 INVESTOR & ANALYST DAY
2011 TO 2012 PRO FORMA OP INCOME WALK
13% YOY Op Income Growth on 4% YOY Sales Growth96
~$700M ~$40M~$40M
~($140M)
~$790M
2011 Op Income*
Corporate Synergies
Growth Inflation 2012 Op Income*
PNR
Flow Control
~$404M
~$296M
Price / Productivity
~$150M
~10%ROS
~11%ROS
~13%YOY
PENTAIR 2012 INVESTOR & ANALYST DAY
Residential / Commercial ~7%
Food & Beverage ~7%
Energy ~6%
Industrial ~3%
Infrastructure ~1%
2011* 2012* 2013* 2015
Base IST
2011 2012 2013 2015
Base IST
VALVES & CONTROLS SEGMENT
Strong Position in Energy … Reducing Complexity in 2013 - 2015
Sales
‘12 – ‘15 Sales Growth Rates
~5%CAGR^
~18%CAGR^ ~$2.3B
~$2.4B~$2.5B
~$2.8B
~$225M~$245M
~$290M
~$400M
Energy, ~59%
Industrial,~30%
2012 Sales % Estimate
Operating Income
97^ 2012-2015 CAGR
~6%vs. ‘11 ~9%
vs. ‘11
CAGR
Resi/Comm, ~2%
Infrastructure, ~5%Food & Beverage, ~4%
PENTAIR 2012 INVESTOR & ANALYST DAY
2011* 2012* 2013* 2015
Base IST
2011 2012 2013 2015
Base IST
WATER & FLUID SOLUTIONS SEGMENT
Solid Growth + Large Standardization Opportunity
Energy ~10%
Food & Beverage ~7%
Residential / Commercial ~7%
Industrial ~2%
Infrastructure ~1%
~$3.0B~$3.2B
~$3.4B
~$3.8B
~$305M~$355M
~$430M
~$620M
~19%CAGR^
~5%CAGR^
Resi/Comm,~46%
Energy, ~5%
Infrastructure, ~24%
Food & Beverage,
~17%
Industrial, ~8%
2012 Sales % Estimate
Sales
‘12 – ‘15 Sales Growth Rates
Operating Income
98
~7%vs. ‘11
~16%vs. ‘11
CAGR
^ 2012-2015 CAGR
PENTAIR 2012 INVESTOR & ANALYST DAY
2011* 2012* 2013* 2015
Base IST
2011 2012 2013 2015
Base IST
TECHNICAL SOLUTIONS SEGMENT
Significant Segment Opportunities
Residential / Commercial ~7%
Food & Beverage ~7%
Energy ~6%
Industrial ~3%
Infrastructure ~1%
~$1.9B~$1.8B
~$1.9B
~$2.1B
~$280M~$305M
~$340M
~$440M
~13%CAGR^
~5%CAGR^
Resi/Comm, ~13%
Energy, ~28%
Infrastructure, ~3%
Industrial,~53%
2012 Sales % Estimate
Sales
‘12 – ‘15 Sales Growth Rates
Operating Income
99
(2%)vs. ‘11
~10%vs. ‘11
CAGR
Food & Beverage, ~3%
^ 2012-2015 CAGR
PENTAIR 2012 INVESTOR & ANALYST DAY
GLOBAL PENTAIR PORTFOLIO – 2012 SALES
Pentair has a Balanced Portfolio
By Reporting Segment By Vertical
•Long & Short Cycle
Balanced Portfolio
•8 Vertical Market
Facing GBUs
•Significant Opportunity to
Leverage Offerings
Across Businesses
•Balanced Geographic
Exposure with 25% in Fast
Growth Regions
•Reducing Complexity in
Fast Growth Regions
Expected in 2013
•Significant Lift in Energy
Vertical from Valves &
Controls Segment and
Thermal Management GBU
•Residential & Commercial
Vertical Limited Primarily to
Legacy Pentair Businesses
Resi/Comm,~24%
Energy,~28%
Infrastructure,~13%
Industrial,~26%
Food & Beverage,~9%
100
Water & Fluid
Solutions,~43%
Technical Solutions,
~25%
Valves & Controls,
~32%
By Geography
U.S. and Canada,
~40%Western Europe,
~20%Fast
Growth,~25%
Developed Non-U.S.,
~15%
100% = $7.5B
PENTAIR 2012 INVESTOR & ANALYST DAY
GLOBAL PENTAIR PORTFOLIO – 2015 SALES
Making Fast Growth Regions Work … Growing “New Opportunities”
By Vertical
•29% of Portfolio in Fast
Growth Regions
•Reduced Exposure to Western
Europe
•Positioned for Gains in U.S.
Residential & Commercial
Vertical and Growth in Canada
•Balanced Portfolio with
Minimal Dependence on
One Vertical Market
•Realizing Additional Gains
in Food & Beverage from
Growing Aquaculture
Business
Resi/Comm,~25%
Energy,~29%
Infrastructure,~12%
Industrial,~24%
Food & Beverage,~10%
•Limiting Exposure by
Maintaining Long & Short
Cycle Portfolio Mix
•Expect Pentair Brand
Strategy to Strengthen
Position in All Businesses
101
Water & Fluid
Solutions,~43%
Technical Solutions,
~25%
Valves & Controls,
~32%
By Geography
U.S. and Canada,
~40%
Western Europe,
~17%
Fast Growth,
~29%
By Reporting Segment100% = $8.6B
Developed Non-U.S.,
~14%
PENTAIR 2012 INVESTOR & ANALYST DAY
2012 TO 2015 GROWTH ACCELERATORS
ONE PENTAIR Focus to Accelerate Growth
• Cross-Selling Across the Global Enterprise
– A “Real Opportunity” for Each of Our Businesses
• Greater Fast Growth Region Presence
– “New” Product Offerings Add Even More Scale in Fast Growth Regions
• Technology Innovation with Greater Customer Reach
– Customer Channel Opportunities Between Filtration/Flow Technologies and
Valves & Controls/Thermal Management
• Expand Service Footprint to Grow Aftermarket Revenue
– Extend Valves & Controls >90 Service Centers and >1,100 Service Technicians
Globally to Other Pentair Products, Systems, and Solutions
• Innovate Around New Systems
– Exploring Opportunities to Use “Best in Class” Products
102
PENTAIR 2012 INVESTOR & ANALYST DAY
2012 TO 2015 SALES GROWTH OPPORTUNITY
Balanced Growth Expectations … Driving Upside Synergies
~$7.5B~$670M
~$300M ~$135M ~$8.6B
2012Forecast
BaseGrowth
NetPricing
Synergies2015Goal
U.S. / Canada
DevelopedNon-U.S.
Fast Growth
~40%
~20%
~25%
~ 40%
~ 17%
~ 29%
• Channel Expansion
• Fast Growth Regions
• Systems/Innovation
• New Platforms
Growth Initiatives:
~5%CAGR
~3 Points~1.5 Points
103
~0.5 Points
CAGR
• Food & Beverage ~7%
• Residential / Commercial ~7%
• Energy ~6%
• Industrial ~2%
• Infrastructure ~1%
• Fast Growth
• Oil & Gas
• Mining
• Food & Beverage
• Residential/Commercial
~15%
Western Europe
~ 14%
PENTAIR 2012 INVESTOR & ANALYST DAY
EXPECTED SALES GROWTH BY VERTICAL
Top Line 4-5% CAGR in Less Certain Economic Climate
Energy
Residential / Commercial
Industrial
Infrastructure
Food & Beverage
% of PNR (2012)
2012-2015 CAGR^
Contribution
^Includes Volume, Price, FX
~28%
~26%
~24%
~13%
~9%
5-6%
2-3%
6-7%
0-2%
6-7%
~2%
~1%
~2%
<1%
<1%
~$2.5B Vertical by 2015
~$100M in Aquaculture
by 2015
104
~$2B Vertical by 2015
PENTAIR 2012 INVESTOR & ANALYST DAY
2012 TO 2015 PRODUCTIVITY ACCELERATORS
Employee Base Energized … Fast Start on Standardization
Culture
– Successful “Day One”
– New Company Website and Intranet
– Leadership World Tour Underway (>30% of New Employees Visited)
– Regular Updates via Intranet and Other Distribution Channels
Standardization/Simplification
– Synergy Teams – Fast Start with Standardization Plans Identified and
Accelerating Actions in Q4 2012; $75M of Repositioning Benefit Expected for ‘13
– Fast Growth Region Alignment Plans Established
– Core Processes Training Underway – Rapid Growth Process,
3D, Talent Management
PIMS Acceleration
– Lean Enterprise Training Rolling Out Globally – Cascading to Next Level
– Regional Rollouts with Top Ops & Supply Leaders Completed
– Completed GBU Strategy Deployment with Presidents & Staff
105
PENTAIR 2012 INVESTOR & ANALYST DAY
P&L EXPECTED TRAJECTORY
Growth + Productivity = ROIC
EPS: ~$2.52 ~$5.00
Key Manufacturing Strategies
• Reduce Variable Cost
(~$190M of Expected Savings by 2015)
• Reduce Manufacturing Labor
(~$75M of Expected Savings by 2015)
Operating Expense Priorities
• R&D, Currently ~2% of Sales vs. Goal
of ~3% of Sales by 2015 …
Fund with G&A Reductions (1-2 points)
• Selling/Marketing, Currently ~11% of
Sales … Long-term Goal ~10%
• Prioritizing R&D and Selling/Marketing
to Fast Growth Regions
Gross Margin of ~36% by 2015
ROS of ~15% by 2015
2011* 2012* 2015~$8.6B~$7.2B ~$7.5B
Material
Cost
Mfg.
Cost
Op.
Expenses
Op. Margin
100%
106
~10%
~31%
~37% ~37%
~11%
~30%
~22% ~22%
~36%
~15%
~28%
~21%
Sales
PENTAIR 2012 INVESTOR & ANALYST DAY
MANUFACTURING COST GOALS
Reduction of ~300 bps Targeted from 2012-2015
• $260M+ of Expected Net Benefit by 2015
• Material/Sales Improvement90 bps to ~36% of Sales
• ~1% Reduction in Mfg Wages; ~$75M (~1/3 from Localized Fast Growth and ~2/3 from Volume/Efficiency)
• ~$115M of Variable Mfg. & Fixed Overhead Reductions from Overhead Leverage and Variable Mfg. Reductions, Predominantly in Logistics and Quality
2012 2015
Material
ManufacturingLabor
~37%
ManufacturingOverhead
~16%
~14%
~33% ~36%
~36%
~15%
~13%
Full Year Manufacturing Costs(% of Sales)
100%
GrossMargin
$260M+
107
PENTAIR 2012 INVESTOR & ANALYST DAY
OPERATING EXPENSE GOALS
Improving Op Expenses … Shifting More Towards Growth
• Improve Operating Expenses by 170 bps as % of Sales
• R&D ~3% of Sales by 2015
• Selling & Marketing ~10% of Sales by 2015
• G&A of ~6% (140 bps reduction) Funds Growth Related Resources
• Amortization/Other Improves with Volume
2012* 2015
Amortization/Other
G&A Non-Amortization
Selling/Marketing
6%
~2%
7%
R&D
~7%
~11%
~2%
~2%
Full Year Operating Costs(% of Sales)
~6%
~10%
~3%
~22%
~21%
108
PENTAIR 2012 INVESTOR & ANALYST DAY
MIX OF EXPECTED REVENUE GROWTH (2012 – 2015)
All Growth is Not Equal … but, Global Growth Becoming More Profitable
RecoveringMarket Growth
• N.A. Equipment
Protection
• N.A. Residential
• Commercial
• Municipal
• Western Europe
New Productsor New Channels
• Greater Fast Growth
Region Presence
• Increased Strength in
Verticals (i.e., Energy)
• New Channels (i.e.,
Aquaculture)
• U.S. Retail
• New Technologies
New Platforms and Systems
• Standard &
Customized Systems
• Large, Integrated
Projects
• Extended Service
Footprint to Grow
Aftermarket
AverageConversion
of 35%+
AverageConversion
of 25%+
AverageConversion
of 10%+
Cross Selling Across Global Enterprise
109
PENTAIR 2012 INVESTOR & ANALYST DAY
2012 TO 2015 OPERATING INCOME GOALS
Productivity/Price Offset Inflation … Base Growth & IST Drive Expansion
~$790M
~$520M
~($440M)
~$1.3B
2012*Estimate
Growth + Price Base Inflation
BaseProductivity
Base Performance
2015Goal
• Sales Synergies = ~$35M
• PIMS / Sourcing = ~$65M
• 2013 Cost Out = ~$75M
• Standardization = ~$55M
~19%CAGR
~$220M
IST
~$1.1B
~$230M
~11%ROS
~15%ROS
~170 pts per year
110
~13%ROS
11% CAGR
~(190) pts per year
~100 pts per year
~80 pts per year
PENTAIR 2012 INVESTOR & ANALYST DAY
IST OPPORTUNITIES
Achievable Standardization Expectations111
1. Cost – Out (Non-Fast Growth) ~$65M ~$65M
2. Cost – Out (Fast Growth) ~$10M ~$10M
3. Sales Synergies (Net of Investments) $0M ~$35M
4. Direct Material Sourcing ~$5M ~$20M
5. PIMS ~$10M ~$45M
6. Back Office Standardization $0M ~$55M
Total Benefits ~$90M ~$230M
2013 2015
PENTAIR 2012 INVESTOR & ANALYST DAY
END STATE IST SCORECARD (MAJOR INITIATIVES)
Doing the Major Things Well112
1. # of ERPs >70 ~20
2. Revenue per Factory ~$75M ~$100M
3. Lean Savings Base > $45M
4. On Time Delivery ~85% ~95%
5. Fast Growth Region Revenue ~$1.9B > $2.5B
6. Tax Rate ~25% < 23%
7. Cumulative Free Cash Flow (2013-2015) Base >$2.4B
2012 2015
PENTAIR 2012 INVESTOR & ANALYST DAY
2012 TO 2015 EPS OPPORTUNITY
2012 to 2015 Adjusted EPS Goal of >25% CAGR
~$2.52
~$1.80
~$5.00
2012* Estimate
Growth &Price
ProductivityNet of Invest
2015
>25%CAGR
~($1.55)
IST, Shares, Interest, Taxes
~$3.52
>$540Mof FCF
>$960of FCF
Inflation
113
~$0.75
Base(Before IST)
~$1.48
•Base = ~$1.00
•IST (Operational) = ~$0.80
•Shares, Interest, Taxes = ~$0.68
10% CAGR
PENTAIR 2012 INVESTOR & ANALYST DAY
CAPITAL ALLOCATION
Targeting $2.4B of Free Cash Flow and $1.5B Return to Shareowners114
~$2.5B ~$2.4B^
~($0.6B)
YE, 2012 Expected
Total Debt
Expected2013-2015
Generated Cash (FCF)
Expected Dividend
Share Buyback
YE, 2015 Debt Level at 2.2x Leverage
~($0.9B)
YE, 2015 Net Debt
~2.2x EBITDA
~$1.6B
~$3.6B
~1.0x EBITDA
^Includes ~$600M of capital expenditures
~$2B in Incremental Opportunity
Assumes FCF = 100% NI
Expected $900M of
$1.2B Remaining as
of 12/31/12
PENTAIR 2012 INVESTOR & ANALYST DAY
CAPITAL ALLOCATION PHILOSOPHY
Disciplined Allocation Philosophy … Prioritized Towards ROIC
Capital Allocation Uses (Assuming ~$2.4B Cumulative FCF from ’12-’15):
1. Debt Management: Maintain Investment Grade Rating
2. Dividend: 37 Straight Years of Increases … Allows for Disciplined Cash Management and Return of Cash to Shareowners
3. Organic Growth: Highest ROIC Comes From Funding Organic Opportunities (Cash through Distribution Channel, R&D, Sales/Marketing, and Capital)
4. Acquisitions or Share Repurchase: We Play in Attractive Spaces Where Opportunities are Plentiful … Bolt-on’s Focused on Channel Expansion, Technology, and Geographies
115
PENTAIR 2012 INVESTOR & ANALYST DAY
OTHER ASSUMPTIONS IN MODEL
Key Assumptions in Guidance
• Interest: ~$75M ~$70M
•Tax Rate: (<20% End State) ~25% ~23%
•JV Income: ~$2M ~$4M
•Minority Interest: ~($7M) ~($9M)
•Share Count: ~203M ~191M
116
2013 2015
PENTAIR 2012 INVESTOR & ANALYST DAY
2013 EXPECTATIONS
Solid Plan to Achieve 2013 EPS Targets117
• Drive the Base Business for 2013 – Drive 3-4% Volume Growth
– Deliver 1-2% Net Pricing Impact to Protect P&L
– Deliver Base Productivity to Offset Inflation/Investments
• Overdrive Standardization Targets – $65M of Cost Out in Non-Fast Growth Regions
– $10M of Cost Out in Fast Growth Regions
– $15M of PIMS and Direct Material Sourcing
• Make Fast Growth Regions Work – ONE PENTAIR: Customer Based Structures and Solutions +
Collaboration
PENTAIR 2012 INVESTOR & ANALYST DAY
FY’13 FINANCIAL OUTLOOK
KEY HIGHLIGHTS
• Continue Momentum from 2012 Fast Start to IST Target Identification and Execution
• Reduce Complexity Through Standardization in Fast Growth Regions
• Accelerate Results Through Focused Deployment of PIMS
• Expect to Generate FCF > Net Income, with Disciplined Allocation
FY’13 FY’12
Sales ~$7.7B $7.5B
Op Income* ~$950M ~$790MROS ~12.3% ~10.6%
EPS* $3.10 - $3.30 $2.50 - $2.55Op Income* up ~20%ROS* up ~170 bps
• Growth ~80 pts.
• Price/Productivity ~160 pts.
• Inflation ~(170 pts.)
• IST ~100 pts.
FY EPS* up ~27%
• Tax Rate ~25.0%
• Net Interest ~$75M; Shares ~203M
Sales up ~3%
• Valves & Control up ~4%
• Water & Fluid Solutions up ~3%
• Technical Solutions up ~3%
FY’12 Free Cash Flow >100% Net Income Conversion
FULL YEAR 2013 PENTAIR OUTLOOK
Company-wide Alignment on Goals … Confident of Synergies118
PENTAIR 2012 INVESTOR & ANALYST DAY
Operating Margins / Productivity Highlights
Sales up 3%, Organic up ~5% ex-FX
• Valves & Controls Segment up ~6% ex-FX- Growth in Energy, Industrial Process Verticals
• Water & Fluid Solutions Segment up ~5% ex-FX- Growth in Residential / Commercial and Food & Bev
• Technical Solutions Segment up ~4% ex-FX- Growth in Energy Vertical
Sales Highlights (by Segment)
Operating Margins* 12.3%
Solid Pricing and Productivity Execution, Along with Detailed Standardization Plan
• $40M Corporate Synergies Assumed in
2012 Pro Forma
• Productivity/Price vs. Inflation ~Flat
SALES OPERATING INCOME
YoY
~$7.5B~$7.7B
~($110M)
2012 PriceVolume FX 2013
~$25M~$75M
+3%YoY
SALES
1.0pt (1.4pts) 0.3pt 3pts
~$240M
SynergiesProd, Price,
MixInfl.Growth Synergies
~$70M~$90M
~$130M~$790M
~($130M)
2013*
+20%YoY
ROS(170bps) 160bps 12.3%10.6%
ROS
~$950M
80bps 100bps
OPERATING INCOME
2012*
2013 EXPECTATIONS
Good Positions Lead to Growth in Less Certain Economic Environment119
3.2pts
PENTAIR 2012 INVESTOR & ANALYST DAY
2013 SUMMARY
Delivering Standardization Benefits Key to 2013
• Targets ~27% EPS* Expansion on ~3% Revenue Growth
• Driving $75M of Cost-Out to Ensure Year-over-Year Performance
• Tailwinds Exist in Energyand North America Residential
• Overdriving Standardization Through IST
120
PENTAIR 2012 INVESTOR & ANALYST DAY
SUMMARY
Significant Expansion Targeted in Sales, EPS & ROIC from 2012-2015
•Growth: Market Growth, Differentiated Growth, and Sales Synergies to be ~5% CAGR from 2012 to 2015 … Drives a 2015 Goal of ~$8.6B in Revenue
•Productivity & IST: Still a lot of Opportunity for Improvement Within our Global Footprint and Operating Model … Great Start on IST Expectations and Savings
•EPS: Driving for 25%+ CAGR from 2012* to 2015
•Cash Flow: Significant Cash Generation Opportunity … Ability to Add More Revenue and Earnings Potential Over Horizon
•ROIC: Driving to Expand ROIC to ~12% in 2015 Through Organic Growth, Base Productivity, and Accelerated Standardization
121
PENTAIR 2012 INVESTOR & ANALYST DAY
Pentair: Industry Depth, Worldwide Impact
Randall J. HoganChairman & Chief Executive Officer
November 27, 2012
Pentair Investor & Analyst Day
PENTAIR 2012 INVESTOR & ANALYST DAY 123
VALUE CREATION
Road Map to ~$5.00 in EPS
~$2.73
~($0.21)
~$2.52
~$1.80~$0.80
~$1.00
~$0.68 ~$5.00
2012*Pre-Deal
2012*Pro Forma
Impact
2012*Pro Forma Performance
CapitalAllocation
2015Goal
IST
Base
PENTAIR 2012 INVESTOR & ANALYST DAY 124
WHAT YOU HEARD TODAY
A New Company Building Off Proven Platforms of Success
A Stronger Company
More Opportunities
Proven Operating Disciplines
Setting & Meeting
Expectations
1
The New Pentair
2
3
4
• More Balanced• More Global• More Diversified
• Growth• Cost
• PIMS: Focus on Lean Enterprise
• Aggressive & Achievable
• Smart Capital Deployment
PENTAIR 2012 INVESTOR & ANALYST DAY 125
+ Completed Merger of Tyco Segment/Corporate into Pentair
Corporate Structure … Up and Running; On Track
+ Businesses Intact Coming Over; Applying Known Approaches
� Lean Enterprise Disciplines
� Standardization Playbook
+ IST Project Oversight Ongoing
+ Clear Priorities:
� Business Plans Set and Presidents Accountable
� Further Adds Gated to Standardized Businesses
Alignment Across the Organization
WHAT ARE WE DOING TO ENSURE SUCCESS
PENTAIR 2012 INVESTOR & ANALYST DAY 126
APPENDIXGAAP to Non-GAAP & Pro Forma Reconciliations
PENTAIR 2012 INVESTOR & ANALYST DAY 127
REPORTED TO ADJUSTED RECONCILIATIONPentair Ltd. and Subsidiaries
Reconciliation of the GAAP "As Reported" year ending December 31, 2011, 2012 and 2013 to the "Adjusted" non-GAAP
excluding the effects of adjustments (Unaudited)
Year Forecast Forecast
In millions, except per-share data 2011 2012 2013
Net sales 3,456.7$ approx. $4,400 approx. $7,600 - $7,800
Operating income - as reported 168.5 approx. 286 - 292 approx. 799 - 819
% of net sales 4.9% approx. 6.5% approx. 10.5%
Adjustments:
Deal related costs 8.3 76 —
Restructuring 12.9 47 —
Inventory step-up and customer backlog 13.5 80 141
Goodwill impairment 200.5 — —
Operating income - as adjusted 403.7 approx. 489 - 495 approx. 940 - 960
% of net sales 11.7% approx. 11.0% approx. 12.3%
Net income attributable to Pentair Ltd. - as reported 34.2 approx. 116 - 126 approx. 536 - 556
Bond redemption and interest expense — 53 —
Other adjustments net of tax 206.5 132 106
Net income from continuing operations attributable
to Pentair Ltd. - as adjusted 240.7 approx. 301 - 311 approx. 642 - 662
Continuing earnings per common share attributable to Pentair Ltd. - diluted
Diluted earnings per common share - as reported 0.34$ $0.92 - $0.97 $2.58 - $2.78
Adjustments 2.07 1.38 0.52
Diluted earnings per common share - as adjusted 2.41$ $2.30 - $2.35 $3.10 - $3.30
PENTAIR 2012 INVESTOR & ANALYST DAY
PENTAIR PRO FORMA
~$7.5B~$7.2B
Sales
128
2011 2012
Op Income
~$700M~$790M
Q12011 2012
Q22011 2012
Q32011 2012
Q42011 2012
% of Revenue
% of Op Income
~23% ~24%
~21% ~22%
~26% ~27%
~31% ~31%
~26% ~24%
~25% ~24%
~25% ~25%
~23% ~23%
Legacy FC
Legacy PNR
^ Includes ~$91M of New Deal Amortization
~$3.7B ~$4.0B~$350M^
~$300M^
PENTAIR 2012 INVESTOR & ANALYST DAY
2011 2012
WATER & FLUID SOLUTIONS PRO FORMA
~$3.2B~$3.0B
Sales
129
2011 2012
Op Income
~$305M
~$355M
Q12011 2012
Q22011 2012
Q32011 2012
Q42011 2012
% of Revenue
% of Op Income
~22% ~23%
~19% ~20%
~26% ~27%
~32% ~33%
~27% ~25%
~24% ~23%
~25% ~25%
~25% ~24%
Legacy PNR
Legacy FC
^ Includes ~$14M of New Deal Amortization and ~$5M of Corporate Allocation
~$660M~$715M
~$25M^
~$45M^
PENTAIR 2012 INVESTOR & ANALYST DAY
VALVES & CONTROLS PRO FORMA
~$2.4B~$2.3B
Sales
130
Op Income
~$225M~$245M
Q12011 2012
Q22011 2012
Q32011 2012
Q42011 2012
% of Revenue
% of Op Income
~22% ~26%
~16% ~27%
~25% ~25%
~25% ~31%
~29% ~26%
~32% ~24%
~24% ~23%
~27% ~18%
Legacy FC
^^
^ Includes ~$54M of New Deal Amortization and ~$23M of Corporate Allocation
PENTAIR 2012 INVESTOR & ANALYST DAY
TECHNICAL SOLUTIONS PRO FORMA
~$1.8B~$1.9B
Sales
131
2011 2012
Op Income
~$280M~$305M
Q12011 2012
Q22011 2012
Q32011 2012
Q42011 2012
% of Revenue
% of Op Income
~24% ~26%
~23% ~24%
~25% ~24%
~20% ~22%
~26% ~24%
~25% ~27%
~25% ~26%
~32% ~27%
Legacy FC
Legacy PNR
^ Includes ~$23M of New Deal Amortization and ~$7M of Corporate Allocation
~$0.8B ~$0.8B
~$90M^~$105M^