On July 23, 2019, Pentair plc (the “Company”) issued a press release announcing its earnings for the second quarter>of 2019>and a conference call in connection therewith. A copy of the release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

This press release refers to certain non-generally accepted accounting principles (“GAAP”) financial measures (core sales, segment income, return on sales, adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations and free cash flow) and a reconciliation of those non-GAAP financial measures to the corresponding financial measures contained in the Company’s financial statements prepared in accordance with GAAP.

The 2019>segment income, return on sales, adjusted net income from continuing operations and adjusted diluted earnings per share from continuing operations (“EPS”) include equity income from unconsolidated subsidiaries and eliminate intangible amortization, certain targeted restructuring and other activities, deal-related costs and expenses, impairments, inventory step-up, gain/loss on sale of business, pension settlement gain and certain tax items. The 2018>segment income, return on sales, adjusted net income from continuing operations and adjusted EPS include equity income from unconsolidated subsidiaries and eliminate intangible amortization, certain targeted restructuring and other activities, corporate allocations, impairments, deal-related costs and expenses, loss on sale of business, pension and other post-retirement mark-to-market loss, interest expense adjustments, loss on early extinguishment of debt and certain tax items.

We use the term “core sales” to refer to GAAP net sales from continuing operations excluding (1) the impact of currency translation and (2) the impact of revenue from acquired businesses recorded prior to the first anniversary of the acquisition less the amount of sales attributable to divested product lines not considered discontinued operations (“acquisition sales”). The portion of GAAP net sales attributable to currency translation is calculated as the difference between (a) the period-to-period change in net sales (excluding acquisition sales) and (b) the period-to-period change in net sales (excluding acquisition sales) after applying current period foreign exchange rates to the prior year period. We use the term “core sales growth” to refer to the measure of comparing current period core net sales with the corresponding period of the prior year.

Management utilizes these adjusted financial measures to assess the run-rate of its continuing operations against those of prior periods without the distortion of these factors. The Company believes that these non-GAAP financial measures will be useful to investors as well to assess the continuing strength of the Company’s underlying operations. In addition, adjusted EPS is used as a criterion to measure and pay long-term incentive compensation. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

The Company uses free cash flow to assess its cash flow performance. The Company believes free cash flow is an important measure of liquidity because it provides the Company and its investors a measurement of cash generated from operations that is available to pay dividends and repay debt. In addition, free cash flow is used as a criterion to measure and pay compensation-based incentives. The Company’s measure of free cash flow may not be comparable to similarly titled measures reported by other companies.

ITEM 9.01 Financial Statements and Exhibits

Not applicable.

Not applicable.

Not applicable

The exhibit listed in the following Exhibit Index is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:

EXHIBIT INDEX

PENTAIR plc Exhibit
EX-99.1 2 a2019q2pressrelease.htm EXHIBIT 99.1 Exhibit 1Exhibit 99.1News ReleasePentair Reports Second Quarter 2019 Results•Second quarter sales of $800 million.•Second quarter GAAP EPS of $0.68 and adjusted EPS of $0.69.•The company updates its 2019 GAAP EPS guidance to approximately $2.13 and on an adjusted basis to approximately $2.35. Reconciliations of GAAP to Non-GAAP measures are in the attached financial tables.LONDON,…
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