What changed in this filing

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Item 1. Business

2023-02-21 compared with 2022-02-22 · 58 added, 37 removed, 132 unchanged (42% 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.

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.

At Pentair, we help the world sustainably move, improve and enjoy water, life’s most essential resource.

From our residential and commercial water solutions to industrial water management and everything in between, Pentair is focused on creating a better world for people and our planet through smart, sustainable water solutions.

Pentair strategy

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

Our vision is to be the world’s most valued sustainable water solutions company for our employees, customers and shareholders.

As a company, we:

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• 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.

• Build a high performance growth culture and deliver on our commitments while living our Win Right values.

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 July 28, 2022, as part of our Consumer Solutions reporting segment, we acquired the issued and outstanding equity securities of certain subsidiaries of Welbilt, Inc.

(“Welbilt”) and certain other assets, rights, and properties, and assumed certain liabilities, comprising Welbilt’s Manitowoc Ice business (“Manitowoc Ice”), for approximately $1.6 billion in cash.

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

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BUSINESS AND PRODUCTS

Pentair is comprised of two reportable business segments:

Consumer Solutions and Industrial & Flow Technologies.

The following is a brief description of each of the Company’s 2022 reportable segments and business activities.

Effective January 1, 2023, we reorganized our segments, going from two segments to three with the three segments being Pool, Water Solutions and Industrial & Flow Technologies.

The discussions below that speak to historical periods refer to the prior segments, while statements about present and future periods refer to the businesses underlying those segments and carry forward with those businesses (including our customers, seasonality and competition) in their re-segmented form.

Additional information regarding this re-segmentation is found below under the section titled “New Segmentation.”

Consumer Solutions

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Residential and commercial pool equipment and accessories include pumps, filters, heaters, lights, automatic controls, automatic cleaners, maintenance equipment and pool accessories.

Water treatment products and systems include pressure tanks, control valves, activated carbon products, conventional filtration products, and point-of-entry and point-of-use systems.

Water treatment products and systems include pressure tanks, control valves, activated carbon products, commercial ice machines, conventional filtration products, and point-of-entry and point-of-use systems.

Applications for our pool business’s products include residential and commercial pool maintenance, repair, renovation, service and construction.

Our water treatment products and systems are used in residential whole home water filtration, drinking water filtration and water softening solutions in addition to commercial total water management and filtration in food service operations.

In addition, our water solutions business also provides installation and preventative services for water management solutions for commercial operators.

The primary focus of this segment is business-to-consumer.

For the fiscal year ended December 31, 2021, our pool business comprised 65% of the Consumer Solutions sales.

The pool business is a leader in North American pool equipment, serving a market that is primarily replacement.

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

For the fiscal year ended December 31, 2022, our pool business comprised approximately 60% of the Consumer Solutions sales.

The pool business is a leader in North American pool equipment, serving an end market that is primarily replacement.

The other approximately 40% of sales were from the water treatment and water solutions businesses, which sell residential and commercial components, residential systems, commercial systems and commercial ice machines.

Consumer Solutions brand names include Everpure, KBI, Kreepy Krauly, Manitowoc Ice, Pleatco, RainSoft and Sta-Rite.

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

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

One customer in the Consumer Solutions’ pool business represented approximately 20% of our consolidated net sales in 2022 and 2021.

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

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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.

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

Competition focuses on brand names, product performance (including energy-efficient offerings and required specifications), quality, service and price.

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The Industrial & Flow Technologies segment manufactures and sells a variety of fluid treatment products (advanced membrane filtration, separation systems, membrane bioreactors), pumps (water supply pumps, water disposal pumps, solid handling pumps, fluid transfer pumps, turbine pumps), valves, and spray nozzles as well as systems combining these products (process filtration systems, gas recovery solutions).

These products and systems serve the global residential, commercial, industrial, agricultural and infrastructure verticals.

These products and systems serve the global residential, commercial, industrial, agricultural and infrastructure vertical markets.

They are used in a range of applications, food and beverage, fluid separation technologies (oil and gas and other industries), water and wastewater treatment, water wells, pressure boosting, fire suppression, flood control, agricultural irrigation, crop spray and fluid circulation and transfer.

The primary focus of this segment is business-to-business.

For the fiscal year ended December 31, 2021, our residential and irrigation flow businesses comprised 45% of the Industrial & Flow Technologies sales.

For the fiscal year ended December 31, 2022, our residential and irrigation flow businesses comprised approximately 45% of the Industrial & Flow Technologies sales.

The residential and irrigation flow businesses sell pumps focused on residential and agriculture.

Another 25% of sales were from the commercial & infrastructure flow businesses, which sell larger pumps focused on fire suppression, waste water and flood control.

The remaining 30% of sales were from the industrial filtration business, comprised of applications focused on industrial process filtration and sustainable gas.

Another approximately 25% of sales were from the commercial & infrastructure flow businesses, which sell larger pumps focused on fire suppression, waste water and flood control.

The remaining approximately 30% of sales were from the industrial solutions business, comprised of applications focused on industrial process filtration and sustainable gas.

Industrial & Flow Technologies brand names include Pentair, Aurora, Berkeley, Codeline, Fairbanks-Nijhuis, Haffmans, Hydromatic, Hypro, Jung Pumpen, Myers, Sta-Rite, Shurflo, Südmo and X-Flow.

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

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

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.

Industrial & Flow Technologies faces numerous domestic and international competitors, some of which have substantially greater resources directed to the verticals in which we compete.

Industrial & Flow Technologies faces numerous domestic and international competitors, some of which have substantially greater resources directed to the vertical markets in which we compete.

Competition focuses on brand names, product performance (including energy-efficient offerings and required specifications), quality, service and price.

We compete by offering a wide variety of innovative and high-quality products, which are competitively priced.

NEW SEGMENTATION

Effective January 1, 2023, we reorganized our reporting segments to reflect how we are managing our business beginning in 2023.

We believe the new alignment into three segments, Pool, Water Solutions and Industrial & Flow Technologies, will help us accelerate our efforts to improve customer experiences, differentiate our products and drive profitability for our shareholders.

As part of this reorganization, the legacy Consumer Solutions segment was divided into a Pool segment and a Water Solutions segment.

The Industrial & Flow Technologies segment remains the same.

All segment information presented throughout this Annual Report on Form 10-K, with the exception of the table below, was prepared based on the reporting segments in place during 2022.

The below table presents net sales and segment income under the revised reporting segments (Pool, Water Solutions, and Industrial & Flow Technologies) for the years ended December 31, 2022, 2021 and 2020.

In millions 2022 2021 2020

Pool $ 1,632.7 $ 1,572.0 $ 1,123.5

Water Solutions 986.8 769.9 619.4

Industrial & Flow Technologies 1,500.8 1,421.4 1,273.6

Other 1.5 1.5 1.3

Consolidated $ 4,121.8 $ 3,764.8 $ 3,017.8

Segment income (loss)

Pool $ 462.1 $ 452.7 $ 321.4

Water Solutions 149.0 101.7 97.7

Industrial & Flow Technologies 242.3 213.3 164.6

Other (85.7) (81.8) (66.1)

Consolidated $ 767.7 $ 685.9 $ 517.6

INFORMATION REGARDING ALL REPORTABLE SEGMENTS

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Raw materials

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).

The principal materials we use in manufacturing our products are mild steel, stainless steel, electronic components (including drives and 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.

Supplier capabilities were stressed in 2022 and 2021 compared to previous years as a result of various degrees of supply chain challenges, including reduced labor availability and increased lead times for electronic components and other raw materials due to availability constraints and high demand.

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.

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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.

In addition, we periodically conduct employee engagement and culture surveys to gauge the level of engagement and actions needed on culture, engagement and retention.

Training and development

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and downloadable materials.

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

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

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Race, gender, ethnicity, country of origin, age, personal style, sexual orientation, physical ability, religion, life experiences and many more factors contribute to this diversity.

Our Business Resource Groups have been put into place to help promote a culture of inclusion through employees providing feedback and sponsoring awareness, education and engagement.

Our statistics are a measure of our performance, and we are committed to advancing a diverse workplace.

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(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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Pentair’s Code of Business Conduct and Ethics;

and an Inclusion and Diversity Hub on our employee intranet.

and an Inclusion and Diversity Hub on our company’s intranet.

Health, safety and wellness

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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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Union employee benefits vary by contract.

ESG Activities

As a leading provider of water treatment and sustainable solutions and with a foundation of Win Right values, we recognize that the work we do and the products and services we provide improve lives and the environment around the world.

ESG (Environmental, Social and Governance) Activities

As a leading provider of water treatment and sustainable solutions and with a foundation of Win Right values, we recognize that the work we do and the products and services we provide help to improve lives and the environment around the world.

Pentair strives to be a positive influence on the social and environmental issues of today.

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 ESG goals throughout our business by creating broad accountability for our social responsibility strategy and creating shared commitments and targets.

As we progress, we are focused on 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 also 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.

We have established a formal social responsibility program to further advance our social responsibility goals.

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, 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.

Annually, we publish a corporate responsibility report on our ESG and social responsibility 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.

Environmental Matters

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Available information

We make available free of charge (other than an investor’s own Internet access charges) through our Internet website ( http://www.pentair.com ) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).

We make available free of charge (other than an investor’s own Internet access charges) through our Internet website ( https://www.pentair.com ) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (the “SEC”).

Reports of beneficial ownership filed by our directors and executive officers pursuant to Section 16(a) of the Exchange Act are also available on our website.

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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