What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-16 · 36 added, 35 removed, 133 unchanged (35% of the section changed)

Unless the context otherwise indicates, references herein to “Pentair,” the “Company,” and such words as “we,” “us,” and “our” include Pentair plc and its consolidated subsidiaries.

Pentair makes the most of life’s essential resources.

From our residential and business solutions that help people move, improve and enjoy their water, to our sustainable innovations and applications, we deliver smart, sustainable solutions for life.

At Pentair, we inspire people to move, improve and enjoy life’s essential resources for happier, healthier lives.

From our residential and business water solutions, to our sustainable innovations and applications, we deliver smart, sustainable solutions for life.

Pentair strategy

Our vision is to be the leading residential and commercial water treatment company.

As a pure play water company, we are:

• Focused on strategies to advance pool growth and accelerate residential and commercial water treatment;

• Accelerated by innovation and digital transformation;

• Grounded in Win Right values and utilizing the Pentair Integrated Management System (“PIMS”) consisting of lean enterprise, growth and talent management to drive sustained and consistent performance.

As a company, we:

• Focus on growth in our core businesses and strategic initiatives;

• Accelerate digital, innovation, technology and environmental, social and governance (“ESG”) investments;

• Expedite growth and drive margin expansion through our transformation program;

• Utilize Win Right values and the Pentair Integrated Management System (“PIMS”) consisting of lean enterprise, growth and talent management to drive sustained and consistent performance.

HISTORY AND DEVELOPMENT

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Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the United Kingdom (the “U.K.”) and therefore have our tax residency in the U.K.

On April 30, 2018, Pentair completed the separation of its Electrical business from the rest of Pentair (the “Separation”) by means of a dividend in specie of the Electrical business, which was effected by the transfer of the Electrical business from Pentair to nVent Electric plc (“nVent”) and the issuance by nVent of ordinary shares directly to Pentair shareholders (the “Distribution”).

On May 1, 2018, following the Separation and Distribution, nVent became an independent publicly traded company, trading on the New York Stock Exchange under the symbol “NVT.” The Company did not retain any equity interest in nVent.

nVent’s historical financial results are reflected in the Company’s consolidated financial statements as a discontinued operation.

Refer to Note 2 for further discussion.

Our registered principal office is located at Regal House, 70 London Road, Twickenham, London, TW13QS United Kingdom.

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The other 35% of sales were from the water treatment businesses, which sell residential and commercial components, residential systems and commercial systems.

Consumer Solutions brand names include Everpure, Kreepy Krauly, Pelican, Pentair Water Solutions, RainSoft and Sta-Rite.

Consumer Solutions customers include businesses engaged in wholesale and retail distribution in the residential & commercial verticals.

Consumer Solutions brand names include Everpure, Ken’s Beverage, Kreepy Krauly, Pentair Water Solutions, Pleatco, RainSoft and Sta-Rite.

Consumer Solutions customers include businesses engaged in wholesale and retail distribution in the residential and commercial verticals.

Customers also include end-users, consumers and original equipment manufacturers.

One customer of the Consumer Solutions segment, Pool Corporation, represented approximately 15% of our consolidated net sales in 2020 and 2019.

We experience seasonal demand with several end customers and end-users within Consumer Solutions.

End-user demand for pool equipment follows warm weather trends and is at seasonal highs from April to August.

The magnitude of the sales increase is mitigated by employing some advance sale “early buy” programs (generally including extended payment terms and/or additional discounts).

One customer in the Consumer Solutions’ pool business represented approximately 20% and 15% of our consolidated net sales for 2021 and 2020, respectively.

We have historically experienced seasonal demand with several end customers and end-users within Consumer Solutions.

End-user demand for pool equipment follows warm weather trends and historically has been at seasonal highs from April to August.

The magnitude of the sales spike has historically been partially mitigated by employing some advance sale “early buy” programs (generally including extended payment terms and/or additional discounts).

Consumer Solutions faces numerous domestic and international competitors, some of which have substantially greater resources directed to the verticals in which we compete.

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Industrial & Flow Technologies customers include businesses engaged with end users, and wholesale and retail distribution in the residential, commercial, food & beverage and industrial verticals.

We experience increased demand for residential water supply and irrigation pumps following weather trends, which are at seasonal highs from April to August.

We have historically experienced increased demand for residential water supply and irrigation pumps following weather trends, which historically has been at seasonal highs from April to August.

Seasonal effects may vary from year to year and are impacted by weather patterns, particularly by temperatures, heavy flooding and droughts.

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We conduct research and development activities primarily in our own facilities.

These efforts consist primarily of the development of new products, product applications and manufacturing processes.

These efforts consist mostly of the development of new products, product applications and manufacturing processes.

Raw materials

The principal materials we use in manufacturing our products are electric motors, mild steel, stainless steel, electronic components, plastics (resins, fiberglass, epoxies), copper and paint (powder and liquid).

In addition to the purchase of raw materials, we purchase some finished goods for distribution through our sales channels.

We purchase the materials we use in various manufacturing processes on the open market, and the majority are available through multiple sources which are in adequate supply.

We have not experienced any significant work stoppages to date due to shortages of materials.

We have certain long-term commitments, principally price commitments, for the purchase of various component parts and raw materials and believe that it is unlikely that any of these agreements would be terminated prematurely.

Alternate sources of supply at competitive prices are available for most materials for which long-term commitments exist, and we believe that the termination of any of these commitments would not have a material adverse effect on our financial position, results of operations or cash flows.

Certain commodities, such as metals and resin, are subject to market and duty-driven price fluctuations.

The principal materials we use in manufacturing our products are mild steel, stainless steel, electronic components (including motors), plastics (resins, fiberglass, epoxies), copper and paint (powder and liquid).

In addition to the purchase of raw materials, we purchase some finished goods for distribution for resale.

We purchase the materials we use in various manufacturing processes on the open market, and the majority are available through multiple sources.

Supplier capabilities were stressed in 2021 compared to previous years as a result of the unstable situation brought on by the novel coronavirus 2019 (“COVID-19”) pandemic, reduced labor availability and the shortage of electronic components and other raw materials.

We have certain long-term commitments, principally price commitments, for the purchase of various component parts and raw materials and continue to work with our suppliers to maintain delivery continuity.

Alternate sources of supply are available for most materials and we believe that the termination of any of these commitments would not have a material adverse effect on our financial position, results of operations or cash flows.

Certain commodities, such as metals and resins, are subject to commodity market and duty-driven price fluctuations.

We manage these fluctuations through several mechanisms, including long-term agreements with price adjustment clauses for significant commodity market movements in certain circumstances.

Prices for raw materials, such as metals and resins, may trend higher in the future.

Prices for raw materials, such as metals, resins and electronics, may trend higher in the near future due to the existing inflationary market trends.

Intellectual property

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employees are unionized, while outside the U.S., we have employees in certain countries, particularly in Europe, that are represented by an employee representative organization, such as a union, works council or employee association.

Refer to "COVID-19 Pandemic" included in ITEM 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for information on human capital management actions we have taken in response to the COVID-19 pandemic.

Employee engagement and development

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an annual global leadership meeting to help drive growth and productivity initiatives and share best practices;

employee surveys;

and a feedback feature on our employee intranet.

Training and development

To support employees in their career journey, we have developed and shared through our employee intranet a number of new tools and resources.

To support employees in their career journey, we have developed and shared through our employee intranet a number of tools and resources.

These resources include:

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and downloadable materials.

Our talent development efforts span across all levels of our organization, including our Leadership Development Program, a 36-month program in which future leaders participate in cross-functional rotations intended to develop their capabilities throughout organization-wide exposure.

Additionally, our annual talent management process allows employees to build development plans with their leaders to develop their careers.

Our talent development efforts span across all levels of our organization, including our campus Leadership Development Program, a 36-month program in which future leaders participate in rotations intended to develop their capabilities through organization-wide exposure, and our Growth Manager development programs that prepare our new and experienced managers to be more effective and inclusive leaders at Pentair.

Inclusion and diversity

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Minorities (1)

Women** 31.4% 27.6%

(1) Inclusive of the following racial minority groups:

Black/African American, Hispanic/Latino, American Indian/Alaskan Native, Asian, Native Hawaiian/Other Pacific Islander.

Black/African American, Hispanic/Latino, American Indian/Alaskan Native, Asian,

Native Hawaiian/Other Pacific Islander.

Data for U.S.

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All locations, enterprise wide, must meet and/or exceed regulatory agency standards as applicable to each plant’s location.

In light of the ongoing COVID-19 pandemic, we maintain our commitment to protect the health and safety of our employees by continuing our enhanced safety protocols for those on-site at our manufacturing facilities, for those who provide manufacturing-support activities, and for those working in office environments.

In addition, we have maintained flexibility for employees who do not need to be physically present at our facilities and sites to perform their job responsibilities remotely and essential business travel has generally remained the main travel activity.

Compensation and benefits

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legal services;

retirement provision;

retirement benefits;

stock ownership;

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As we progress, we are committed to building on our Win Right values and culture by further contributing to the development of a sustainable and responsible society that we believe will also drive our future growth.

We are focused on further integrating our environmental, social and governance (“ESG”) goals throughout our business by creating broad accountability for our social responsibility strategy and creating shared commitments and targets.

We are focused on further integrating our ESG goals throughout our business by creating broad accountability for our social responsibility strategy and creating shared commitments and targets.

In 2020, Pentair completed a formal ESG assessment to identify ESG topics of importance to our shareholders, customers, suppliers, employees and communities.

Through engagement with these stakeholders, internal business leaders and subject matter experts, we identified ESG goals designed to culminate into targets to further our commitment to social responsibility.

We have published an annual corporate responsibility that has reported on our ESG activities and accomplishments, which can be found on our corporate website, and which is not incorporated by reference into this Annual Report on Form 10-K.

Through engagement with these stakeholders, internal business leaders and subject matter experts, we identified ESG goals, which ultimately culminated into Pentair’s Social Responsibility Targets, which we announced in 2021.

Annually, we publish a corporate responsibility report on our ESG activities and accomplishments, which can be found on our corporate website, and which is not incorporated by reference into this Annual Report on Form 10-K.

In addition, we have established a formal social responsibility program to further advance our social responsibility goals.

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We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K.

In addition, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, and you may access any materials we file with the SEC through their website at www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business