What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-28 · 199 added, 135 removed, 240 unchanged (58% of the section changed)

4 unchanged sentences

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,” “could,” “positioned,” “strategy,” or “future” or words, phrases, or terms of similar substance or the negative thereof are forward-looking statements.

All statements made about the Taco acquisition, including the anticipated time for completing the acquisition, and the anticipated benefits of the acquisition 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 our control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

These factors include the overall global economic and business conditions impacting our business, including the strength of housing and related markets and conditions relating to international hostilities;

These factors include our ability to close and fund the Taco acquisition on the expected terms and time schedule, including obtaining regulatory approvals and satisfying other closing conditions;

our ability to integrate the Taco acquisition successfully;

our ability to retain customers and employees of Taco;

the overall global economic and business conditions impacting our business, including the strength of housing and related markets and conditions relating to international hostilities;

supply, demand, logistics, competition and pricing pressures related to and in the markets we serve;

26 unchanged sentences

These changes have no impact on the Company’s historical consolidated financial performance or results of operations.

For the first three months of 2026, the Flow, Water Solutions and Pool reportable segments represented approximately 25%, 38% and 37% of total consolidated net sales, respectively.

For the first six months of 2026, the Flow, Water Solutions and Pool reportable segments represented approximately 27%, 41% and 32% of total consolidated net sales, respectively.

We classify our operations into reportable segments based primarily on types of products offered and markets served:

10 unchanged sentences

Hydra-Stop manufactures specialty insertion valves, line stop fittings and installation equipment.

On July 27, 2026, as part of our Water Solutions reportable segment, we entered into a definitive agreement to acquire the issued and outstanding equity securities of Taco Group Holdings (“Taco”), for a purchase price of $1.425 billion, subject to customary adjustments contemplated by the definitive agreement.

We expect to finance the acquisition with a combination of cash on hand and committed bridge financing, which we intend to refinance through a permanent debt issuance that we anticipate to be investment grade.

We expect to close the acquisition of Taco in the fourth quarter of 2026, subject to customary closing conditions and necessary regulatory approvals.

Key trends and uncertainties regarding our existing business

The following trends and uncertainties affected our financial performance in the first three months of 2026 and are reasonably likely to impact our results in the future:

The following trends and uncertainties affected our financial performance in the first six months of 2026 and are reasonably likely to impact our results in the future:

• We have a Transformation Program designed to accelerate growth and drive margin expansion through transformation of our business model to drive operational excellence, reduce complexity and streamline our processes.

During 2025 and the first three months of 2026, we made strategic progress on our Transformation Program initiatives with a focus on our four key themes of pricing excellence, sourcing excellence, operational excellence and organizational effectiveness.

During 2025 and the first six months of 2026, we made strategic progress on our Transformation Program initiatives with a focus on our four key themes of pricing excellence, sourcing excellence, operational excellence and organizational effectiveness.

We expect to continue to execute on our key Transformation Program initiatives to drive margin expansion and to incur transformation costs throughout the remainder of 2026 and beyond.

• During 2025 and the first three months of 2026, we implemented 80/20 guiding principles to enable our Transformation Program.

• During 2025 and the first six months of 2026, we implemented 80/20 guiding principles to enable our Transformation Program.

As we continue to focus on 80/20 guiding principles in 2026, we expect to create value by increasing focus on key customers and products through quadrant-based strategies.

We expect this approach to enable improved operating performance by driving margin growth with our highest value customers, reducing lower margin sales and removing complexity in the future.

• During 2025 and the first three months of 2026, we executed certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.

• During 2025 and the first six months of 2026, we executed certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business.

We expect these actions to continue throughout the remainder of 2026 and to drive margin expansion.

• During 2025 and the first three months of 2026, we experienced inflationary cost increases, including tariffs, for certain raw materials as well as logistics and transportation costs.

• During the second quarter of 2026, performance was negatively impacted by a decline in Pool sales largely attributed to a more pronounced inventory realignment with major channel partners than previously estimated and worsening business conditions, including higher interest rates and inflation.

Destocking of inventory in the Pool channel is expected to negatively impact net sales for the twelve months ended 2026 by approximately $250 million.

While we expect channel inventory levels to improve over time, the timing and pace of normalization remain uncertain and could negatively impact our results of operations.

• During 2025 and the first six months of 2026, we experienced inflationary cost increases, including tariffs, for certain raw materials as well as logistics and transportation costs.

Tariffs, along with potential retaliatory measures by other countries, have contributed to higher input costs and supply chain complexity.

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administration implemented tariffs under the International Emergency Economic Powers Act (“IEEPA”).

On February 20, 2026, the U.S.

Supreme Court struck down certain tariffs imposed under the IEEPA.

While the process for reimbursement became available on April 20, 2026, the timing and amount of any potential refunds for previously collected tariffs remain uncertain and may be subject to further legal and regulatory developments.

We will continue to monitor the situation and evaluate the impact of any replacement tariffs or policy changes on our business, including the potential for cost recovery and future tariff exposure.

• The Organization for Economic Co-operation and Development Pillar Two Model Rules (“Pillar Two”) for a global 15.0% minimum tax have been adopted by a number of jurisdictions in which we operate.

Pillar Two has negatively impacted our effective tax rate during the first three months of 2026 and is likely to continue to impact our effective tax rate in the future.

In February 2026, the U.S.

Supreme Court invalidated certain tariffs imposed under the IEEPA.

While we have received refunds in the second quarter of 2026 of certain previously paid IEEPA tariffs, uncertainty remains regarding the timing and ultimate amount of any additional potential refunds, as well as the scope and impact of replacement tariffs or other trade policy actions.

We will continue to monitor these developments and evaluate their potential impact on our business, results of operations, cash flows and future tariff exposure.

• The Organisation for Economic Co-operation and Development Pillar Two Model Rules (“Pillar Two”) for a global 15.0% minimum tax have been adopted by a number of jurisdictions in which we operate.

Pillar Two has negatively impacted our effective tax rate during the first six months of 2026 and is likely to continue to impact our effective tax rate in the future.

We continue to evaluate the enacted legislative changes and new guidance as it becomes available.

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CONSOLIDATED RESULTS OF OPERATIONS

The consolidated results of operations for the three months ended March 31, 2026 and 2025 were as follows:

The consolidated results of operations for the three months ended June 30, 2026 and 2025 were as follows:

Three months ended

In millions March 31,

2026 March 31,

In millions June 30,

2026 June 30,

Change % / Point

13 unchanged sentences

% of net sales 17.9 % 19.4 % (1.5) pts

Loss on sale of business

— 26.3 (26.3) N.M.

Other expense 0.2 1.0 (0.8) (80.0) %

4 unchanged sentences

Effective tax rate 12.5 % 13.9 % (1.4) pts

= Not Meaningful

The consolidated results of operations for the six months ended June 30, 2026 and 2025 were as follows:

Six months ended

In millions June 30,

2026 June 30,

Change % / Point

Net sales $ 1,969.3 $ 2,133.5 $ (164.2) (7.7) %

Cost of goods sold 1,140.9 1,273.6 (132.7) (10.4) %

Gross profit 828.4 859.9 (31.5) (3.7) %

% of net sales

42.1 % 40.3 % 1.8 pts

Selling, general and administrative

403.7 390.4 13.3 3.4 %

% of net sales

20.5 % 18.3 % 2.2 pts

Research and development

48.2 48.7 (0.5) (1.0) %

% of net sales 2.4 % 2.3 % 0.1 pts

Operating income 376.5 420.8 (44.3) (10.5) %

% of net sales 19.1 % 19.7 % (0.6) pts

Loss on sale of business

— 26.3 (26.3) N.M.

Other expense 0.7 1.5 (0.8) (53.3) %

Net interest expense 39.5 37.6 1.9 5.1 %

Income from continuing operations before income taxes 336.3 355.4 (19.1) (5.4) %

Provision for income taxes

46.9 52.0 (5.1) (9.8) %

Effective tax rate 13.9 % 14.6 % (0.7) pts

The components of the consolidated net sales change from the prior period were as follows:

Three months ended March 31, 2026

over the prior year period

Three months ended June 30, 2026 Six months ended June 30, 2026

over the prior year period over the prior year period

Volume (20.6) % (12.8) %

Price 3.3 4.2

Core growth (17.3) (8.6)

Acquisition/Divestitures (0.3) (0.4)

The 2.6 percent increase in net sales in the first quarter of 2026 from 2025 was primarily driven by:

Currency 0.6 1.3

Total (17.0) % (7.7) %

The 17.0 and 7.7 percent decreases in net sales in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• decreased sales volume primarily driven by destocking of channel inventory within our Pool segment;

• a business exit in the commercial business of our Water Solutions segment that occurred during the second quarter of 2025.

These decreases were partially offset by:

• increased selling prices across all of our segments to mitigate inflationary cost increases;

• favorable foreign currency effects compared to the same period of the prior year;

• increased sales due to the acquisition of Hydra-Stop completed in the third quarter of 2025;

This increase was partially offset by:

• decreased sales volume compared to the same period of the prior year;

• a business exit in the commercial business of our Water Solutions segment that occurred during the second quarter of 2025.

The 1.9 percentage point increase in gross profit as a percentage of net sales in the first quarter of 2026 from 2025 was primarily driven by:

• favorable foreign currency effects.

The 1.7 and 1.8 percentage point increases in gross profit as a percentage of net sales in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• increased selling prices across all our segments to mitigate inflationary cost increases;

• increased productivity across all our segments;

• no asset impairment and write-offs in the first quarter of 2026, compared to $5.2 million in the first quarter of 2025.

This increase was partially offset by:

• inflationary cost increases, including higher tariffs and certain raw material costs.

• no asset impairment and write-offs in the second quarter or first half of 2026, compared to $10.3 million and $15.5 million in the second quarter and first half, respectively, of 2025;

• the positive impact of $34.9 million in refunds during the second quarter of 2026 associated with tariffs previously collected under IEEPA which partially mitigated inflationary costs increases.

These increases were partially offset by:

• inflationary cost increases related to certain raw material costs.

Selling, general and administrative expenses (“SG&A”)

The 1.7 percentage point increase in SG&A as a percentage of net sales in the first quarter of 2026 from 2025 was primarily driven by:

• restructuring and other costs of $21.4 million in the first quarter of 2026, compared to $10.5 million in the first quarter of 2025;

• transformation costs of $11.5 million in the first quarter of 2026, compared to $9.1 million in the first quarter of 2025.

The 3.0 and 2.2 percentage point increases in SG&A as a percentage of net sales in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• restructuring costs of $34.6 million in the second quarter of 2026, compared to $14.3 million in the second quarter of 2025, and $48.3 million in the first half of 2026, compared to $23.9 million in the first half of 2025;

• transformation costs of $17.5 million in the second quarter of 2026 compared to $12.7 million in the second quarter of 2025, and $29.0 million in the first half of 2026, compared to $21.9 million in the first half of 2025.

These increases were partially offset by:

• an impairment charge of $30.9 million related to the write-off of a definite-lived customer relationship intangible asset as a result of a business exit within our Water Solutions segment during the second quarter of 2025 that did not reoccur in the second quarter of 2026.

Net interest expense

The 2.0 percent increase in net interest expense in the first quarter of 2026 from 2025 was primarily driven by:

• a reduction of interest income due to lower cash balances in the first quarter of 2026 compared to the first quarter of 2025.

The 8.4 and 5.1 percent increases in net interest expense in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• higher debt levels compared to the same periods of the prior year.

Provision for income taxes

The 0.2 percentage point decrease in the effective tax rate in the first quarter of 2026 from 2025 was primarily driven by:

The 1.4 and 0.7 percentage point decreases in the effective tax rate in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• a favorable mix of global earnings.

This decrease was partially offset by:

• the decrease in the amount of favorable discrete items in 2026 compared to 2025.

These decreases were partially offset by:

• a decrease in the amount of favorable discrete items in 2026 compared to 2025.

SEGMENT RESULTS OF OPERATIONS

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The net sales and segment income for Flow were as follows:

Three months ended

In millions March 31,

2026 March 31,

Three months ended Six months ended

In millions June 30,

2026 June 30,

2025 % / Point Change June 30,

2026 June 30,

2025 % / Point Change

2 unchanged sentences

69.8 54.8 27.4% 131.0 105.0 24.8%

% of net sales 23.7 % 21.6 % 2.1 pts

% of net sales 26.5 % 21.8 % 4.7 pts 25.1 % 21.7 % 3.4 pts

The components of the change in Flow net sales from the prior period were as follows:

Three months ended March 31, 2026

over the prior year period

Three months ended June 30, 2026 Six months ended June 30, 2026

over the prior year period over the prior year period

Volume (3.2) % (2.2) %

Price 2.4 3.0

Core growth (0.8) 0.8

Acquisition/Divestiture

The 11.0 percent increase in net sales for Flow in the first quarter of 2026 from 2025 was primarily driven by:

Currency 1.0 2.5

Total 5.1 % 7.9 %

The 5.1 and 7.9 percent increases in net sales for Flow in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• increased sales due to the acquisition of Hydra-Stop completed in the third quarter of 2025;

• favorable foreign currency effects compared to the same period of the prior year;

• increased selling prices to mitigate inflationary cost increases;

This increase was partially offset by:

• decreased sales volume compared to the same period of the prior year.

• favorable foreign currency effects.

These increases were partially offset by:

• decreased sales volume.

Segment income

The components of the change in Flow segment income as a percentage of net sales from the prior period were as follows:

Three months ended March 31, 2026

over the prior year period

Three months ended June 30, 2026 Six months ended June 30, 2026

over the prior year period over the prior year period

Volume/Price/Acquisition/Divestiture

3.8 pts 4.2 pts

Currency (0.1) (0.2)

1 unchanged sentence

Productivity 2.4 1.5

Total 2.1 pts

The 2.1 percentage point increase in segment income for Flow as a percentage of net sales in the first quarter of 2026 from 2025 was primarily driven by:

Total 4.7 pts 3.4 pts

The 4.7 and 3.4 percentage point increases in segment income for Flow as a percentage of net sales in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• increased selling prices to mitigate impacts of inflation;

• the income of the Hydra-Stop acquisition;

• increased productivity;

This increase was partially offset by:

• inflationary cost increases, including higher tariffs and certain raw material costs;

• unfavorable foreign currency effects compared to the same period of the prior year.

• the positive impact of $5.4 million in refunds during the second quarter of 2026 associated with tariffs previously collected under IEEPA which partially mitigated inflationary costs increases.

These increases were partially offset by:

• inflationary cost increases related to certain raw material costs.

Water Solutions

The net sales and segment income for Water Solutions were as follows:

Three months ended

In millions March 31,

2026 March 31,

Three months ended Six months ended

In millions June 30,

2026 June 30,

2025 % / Point Change June 30,

2026 June 30,

2025 % / Point Change

1 unchanged sentence

Segment income 126.4 108.5 16.5% 226.3 202.6 11.7%

% of net sales 25.5 % 23.9 % 1.6 pts

% of net sales 30.0 % 24.4 % 5.6 pts 27.8 % 24.2 % 3.6 pts

The components of the change in Water Solutions net sales from the prior period were as follows:

Three months ended March 31, 2026

over the prior year period

Three months ended June 30, 2026 Six months ended June 30, 2026

over the prior year period over the prior year period

Volume (5.7) % (5.2) %

Price 3.1 4.2

Core growth (2.6) (1.0)

Acquisition/Divestiture

Currency 1.0 1.7

Total (5.1) % (3.0) %

The 0.6 percent decrease in net sales for Water Solutions in the first quarter of 2026 from 2025 was primarily driven by:

• decreased sales volume compared to the same period of the prior year;

The 5.1 and 3.0 percent decreases in net sales for Water Solutions in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• decreased sales volume;

• a business exit in our commercial business that occurred in the second quarter of 2025.

This decrease was partially offset by:

These decreases were partially offset by:

• increased selling prices to mitigate inflationary cost increases;

• favorable foreign currency effects compared to the same period of the prior year.

• favorable foreign currency effects.

Segment income

The components of the change in Water Solutions segment income as a percentage of net sales from the prior period were as follows:

Three months ended March 31, 2026

over the prior year period

Three months ended June 30, 2026 Six months ended June 30, 2026

over the prior year period over the prior year period

Volume/Price/Acquisition/Divestiture

3.4 pts 3.3 pts

Currency (0.2) (0.4)

1 unchanged sentence

Productivity 0.5 1.7

Total 1.6 pts

The 1.6 percentage point increase in segment income for Water Solutions as a percentage of net sales in the first quarter of 2026 from 2025 was primarily driven by:

Total 5.6 pts 3.6 pts

The 5.6 and 3.6 percentage point increases in segment income for Water Solutions as a percentage of net sales in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• increased selling prices to mitigate impacts of inflation;

• increased productivity;

This increase was partially offset by:

• inflationary cost increases, including higher tariffs and certain raw material costs;

• unfavorable foreign currency effects compared to the same period of the prior year.

• the positive impact of $18.3 million in refunds in the second quarter of 2026 associated with tariffs previously collected under IEEPA which more than offset inflationary costs increases compared to second quarter of 2025.

These increases were partially offset by:

• inflationary cost increases related to certain raw material costs.

The net sales and segment income for Pool were as follows:

Three months ended

In millions March 31,

2026 March 31,

Three months ended Six months ended

In millions June 30,

2026 June 30,

2025 % / Point Change June 30,

2026 June 30,

2025 % / Point Change

1 unchanged sentence

Segment income 57.6 152.7 (62.3)% 185.7 278.7 (33.4)%

% of net sales 33.1 % 32.8 % 0.3 pts

% of net sales 23.4 % 35.7 % (12.3) pts 29.3 % 34.4 % (5.1) pts

The components of the change in Pool net sales from the prior period were as follows:

Three months ended March 31, 2026

over the prior year period

Three months ended June 30, 2026 Six months ended June 30, 2026

over the prior year period over the prior year period

Volume (46.3) % (27.2) %

Price 3.9 5.1

Core growth (42.4) (22.1)

The 0.8 percent increase in net sales for Pool in the first quarter of 2026 from 2025 was primarily driven by:

Currency 0.1 0.2

Total (42.3) % (21.9) %

The 42.3 and 21.9 percent decreases in net sales for Pool in the second quarter and first half, respectively, of 2026 from 2025 were primarily driven by:

• decreased sales volume primarily driven by destocking of inventory in the Pool channel.

These decreases were partially offset by:

• increased selling prices to mitigate inflationary cost increases.

This increase was partially offset by:

• decreased sales volume compared to the same period of the prior year.

Segment income

The components of the change in Pool segment income as a percentage of net sales from the prior period were as follows:

Three months ended March 31, 2026

over the prior year period

Three months ended June 30, 2026 Six months ended June 30, 2026

over the prior year period over the prior year period

Volume/Price/Acquisition/Divestiture

(11.5) pts (3.3) pts

Currency (0.3) (0.2)

1 unchanged sentence

Productivity 0.9 1.6

Total 0.3 pts

The 0.3 percentage point increase in segment income for Pool as a percentage of net sales in the first quarter of 2026 from 2025 was primarily driven by:

Total (12.3) pts (5.1) pts

The 12.3 and 5.1 percentage point decreases in segment income for Pool as a percentage of net sales in the second quarter of 2026 from 2025 were primarily driven by:

• decreased sales volume primarily driven by destocking of inventory in the Pool channel;

• inflationary cost increases related to certain raw material costs.

These decreases were partially offset by:

• increased selling prices to mitigate impacts of inflation;

• increased productivity;

This increase was partially offset by:

• inflationary cost increases, including higher tariffs and certain raw material costs.

• the positive impact of $11.2 million in refunds during the second quarter of 2026 associated with tariffs previously collected under IEEPA which partially mitigated inflationary costs increases.

LIQUIDITY AND CAPITAL RESOURCES

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Consistent with historical trends, we experienced seasonal cash usage in the first quarter of 2026 and drew on our revolving credit facility to fund our operations.

This cash usage typically reverses in the second quarter as the seasonality of our businesses peak.

We expect historical seasonal patterns to continue and the second quarter of 2026 to generate significant cash to fund our operations.

End-user demand for pool equipment in the Pool segment and water solution, residential water supply and agricultural products in the Water Solutions segment follows warm weather trends, with seasonal highs ranging from April to September.

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

Demand for residential and agricultural water systems is also impacted by weather patterns, particularly by temperature, heavy flooding and droughts.

This cash usage reversed in the second quarter of 2026 as the seasonality of our businesses peaked and generated significant cash to fund our operations.

End-user demand for pool equipment in the Pool segment and water solutions, residential water supply and agricultural products in the Water Solutions segment follows warm weather trends, with seasonal highs ranging from April to September.

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

Demand for residential and agricultural water systems is also impacted by weather patterns, particularly temperature, heavy flooding and droughts.

We expect to continue to have sufficient cash and borrowing capacity to support working capital needs and capital expenditures, to pay interest and service debt and to pay dividends to shareholders quarterly.

1 unchanged sentence

Summary of cash flows

Three months ended

In millions March 31,

2026 March 31,

Net cash (used for) provided by:

Six months ended

In millions June 30,

2026 June 30,

Net cash provided by (used for):

Operating activities

3 unchanged sentences

Operating activities

Net cash used for operating activities in the first three months of 2026 primarily reflects a cash outflow of $275.8 million as a result of changes in net working capital, primarily due to an increase in accounts receivable largely related to certain advance sale programs in anticipation of our distributors’ peak sales season in the second and third quarters.

The outflow related to net working capital was partially offset by net income from continuing operations, net of non-cash depreciation, definite-lived intangible amortization and share-based compensation, of $206.8 million.

Net cash used for operating activities in the first three months of 2025 primarily reflects a cash outflow of $255.5 million as a result of changes in net working capital, primarily due to an increase in accounts receivable largely related to certain advance sale programs in anticipation of our distributors’ peak sales season in the second and third quarters.

Net cash provided by operating activities in the first six months of 2026 primarily reflects net income from continuing operations, inclusive of $34.9 million of tariff refunds previously collected under IEEPA and net of non-cash depreciation, definite-lived intangible amortization and share-based compensation, of $369.7 million.

Additionally, we had a cash inflow of $138.0 million as a result of changes in net working capital, primarily due to decreased accounts receivable and increased inventory balances primarily driven by lower sales volume within our Pool segment attributed to higher channel inventory and lower demand as well as an increase in cash collections during the period.

Net cash provided by operating activities in the first six months of 2025 primarily reflects net income from continuing operations, net of non-cash depreciation, definite-lived intangible amortization, share-based compensation, loss on sale of business and asset impairment, of $455.8 million.

Additionally, we had a cash inflow of $83.3 million as a result of changes in net working capital, primarily due to decreased accounts receivable and increased accounts payable balances.

The decrease in accounts receivable was attributed to an increase in cash collections during the period.

The increased accounts payable balance was primarily due to an increase in purchases for our peak sales season in the second quarter of 2025.

Investing activities

Net cash used for investing activities in the first three months of 2026 primarily reflects capital expenditures of $18.5 million.

Net cash used for investing activities in the first three months of 2025 reflects capital expenditures of $16.8 million.

Net cash used for investing activities in the first six months of 2026 primarily reflects capital expenditures of $37.4 million.

Net cash used for investing activities in the first six months of 2025 primarily reflects capital expenditures of $27.7 million and the purchase of investments of $18.0 million.

Financing activities

Net cash provided by financing activities in the first three months of 2026 primarily relates to net borrowings of revolving long-term debt of $304.9 million, partially offset by share repurchases of $200.0 million and dividend payments of $44.1 million.

Net cash provided by financing activities in the first three months of 2025 primarily relates to net borrowings of revolving long-term debt of $196.2 million, partially offset by share repurchases of $50.0 million and dividend payments of $41.2 million.

Net cash used for financing activities in the first six months of 2026 primarily relates to the repayment $575.0 million of the remaining principal under the Prior Term Loan Facility, share repurchases of $348.2 million and dividend payments of $87.5 million, partially offset by proceeds received from the term loan facility under the Senior Credit Facility of $500.0 million and net borrowings of revolving long-term debt of $42.3 million.

Net cash used for financing activities in the first six months of 2025 primarily relates to the repayment of $250.0 million of the principal balance under the Prior Term Loan Facility, share repurchases of $125.0 million and dividend payments of $82.4 million.

Free cash flow

7 unchanged sentences

The following table is a reconciliation of free cash flow:

Three months ended

In millions March 31,

2026 March 31,

Net cash used for operating activities

$ (67.4) $ (38.9)

Six months ended

In millions June 30,

2026 June 30,

Net cash provided by operating activities $ 504.4 $ 567.7

Capital expenditures

6 unchanged sentences

are parties to a credit agreement (the “Senior Credit Facility”), with Pentair as guarantor and PFSA and Pentair, Inc.

as borrowers, which was amended and restated in May 2025, providing for a $900.0 million senior unsecured revolving credit facility.

The Senior Credit Facility has a maturity date of May 5, 2030.

as borrowers, which was amended and restated in May 2025 and May 2026, providing for a $900.0 million senior unsecured revolving credit facility and a $500.0 million senior unsecured term loan facility.

The revolving credit and term loan facilities have a maturity date of May 5, 2030.

The term loan facility has required quarterly installment payments of $3.1 million beginning on the last day of the second quarter of 2027 and increasing to $6.3 million beginning with the last day of the second quarter of 2028.

Borrowings under the Senior Credit Facility bear interest at a rate equal to an alternate base rate, adjusted term secured overnight financing rate, adjusted euro interbank offered rate, adjusted daily simple secured overnight financing rate or central bank rate, plus, in each case, an applicable margin.

The applicable margin is based on, at PFSA’s election, Pentair’s leverage level or PFSA’s public credit rating.

As of March 31, 2026, total availability under the Senior Credit Facility was $317.4 million.

In addition, PFSA has the option to request to increase the revolving credit facility and/or to enter into one or more additional tranches of term loans in an aggregate amount of up to $450.0 million, subject to customary conditions, including the commitment of the participating lenders.

In addition, Pentair and PFSA are parties to a senior unsecured term loan facility (the “Term Loan Facility”), with PFSA, as borrower, Pentair, as guarantor, providing for an aggregate principal amount of $1.0 billion.

The Term Loan Facility has a maturity date of July 28, 2027, with required quarterly installment payments of $6.3 million which began on the last day of the third quarter of 2023 and increased to $12.5 million on the last day of the third quarter of 2024.

During 2024, PFSA repaid the remaining $162.5 million of quarterly installments on the Term Loan Facility, such that PFSA is not required to make any further quarterly installment payments.

As of March 31, 2026, the remaining obligation of $575.0 million matures on July 28, 2027.

The Term Loan Facility bears interest at a rate equal to an alternate base rate, adjusted term secured overnight financing rate, or adjusted daily simple secured overnight financing rate, plus, in each case, an applicable margin.

The applicable margin is based on, at PFSA’s election, Pentair’s leverage level or PFSA’s public credit rating.

Our debt agreements contain various financial covenants, but the most restrictive covenants are contained in the Senior Credit Facility and the Term Loan Facility.

The Senior Credit Facility and the Term Loan Facility contain covenants requiring us not to permit (i) the ratio of our consolidated debt (net of our consolidated unrestricted cash and cash equivalents in excess of $5.0 million but not to exceed $250.0 million) to our consolidated net income (excluding, among other things, non-cash gains and losses) before interest, taxes, depreciation, amortization and non-cash share-based compensation expense (“EBITDA”) on the last day of any period of four consecutive fiscal quarters (each, a “testing period”) to exceed 3.75 to 1.00 (or, at PFSA’s election and subject to certain conditions, 4.25 to 1.00 for four testing periods in connection with certain material acquisitions) (the “Leverage Ratio”) and (ii) the ratio of our EBITDA to our consolidated interest expense, for the same period to be less than 3.00 to 1.00 as of the end of each fiscal quarter.

For purposes of the Leverage Ratio, the Senior Credit Facility and the Term

Loan Facility provide for the calculation of EBITDA giving pro forma effect to certain acquisitions, divestitures and liquidations during the period to which such calculation relates.

In addition to the Senior Credit Facility and the Term Loan Facility, we have various other credit facilities with an aggregate availability of $21.1 million, of which there were no outstanding borrowings at March 31, 2026.

As of June 30, 2026, total availability under the Senior Credit Facility was $580.0 million.

Additionally, PFSA has the option to request to increase the revolving credit facility and/or to enter into one or more additional tranches of term loans in an aggregate amount of up to $450.0 million, subject to customary conditions, including the commitment of the participating lenders.

In addition, Pentair and PFSA were parties to a senior unsecured term loan facility (the “Prior Term Loan Facility”), with PFSA as borrower and Pentair as guarantor providing for an aggregate principal amount of $1.0 billion and a maturity date of July 28, 2027.

In May 2026, PFSA repaid the remaining $575.0 million outstanding under the Prior Term Loan Facility using proceeds from borrowings under the amended Senior Credit Facility, and the Prior Term Loan Facility was terminated.

In connection with entering into the definitive agreement to acquire Taco, PFSA entered into a commitment letter, dated July 27, 2026 (the “Commitment Letter”), pursuant to which, among other things, the lender has committed to provide debt financing for the acquisition of Taco, consisting of a senior unsecured bridge facility of $1.4 billion (the “Bridge Facility”), on the terms and subject to the conditions set forth in the Commitment Letter.

The Bridge Facility will be subject to mandatory reduction and prepayment for 100% of the net cash proceeds from the issuance of any debt and other of our securities and other specified events, subject to certain exceptions.

Our debt agreements contain various financial covenants, but the most restrictive covenants are contained in the Senior Credit Facility.

The Senior Credit Facility contains covenants requiring us not to permit (i) the ratio of our consolidated debt (net of our consolidated unrestricted cash and cash equivalents in excess of $5.0 million but not to exceed $250.0 million) to our consolidated net income (excluding, among other things, non-cash gains and losses) before interest, taxes, depreciation, amortization and non-cash share-based compensation expense (“EBITDA”) on the last day of any period of four consecutive fiscal quarters (each, a “testing period”) to exceed 3.75 to 1.00 (or, at PFSA’s election and subject to certain conditions, 4.25 to 1.00 for four testing periods in connection with certain material acquisitions) (the “Leverage Ratio”) and (ii) the ratio of our EBITDA to our consolidated cash interest expense, for the same period to be less than 3.00 to 1.00 as of the end of each fiscal

For purposes of the Leverage Ratio, the Senior Credit Facility provides for the calculation of EBITDA giving pro forma effect to certain acquisitions, divestitures and liquidations during the period to which such calculation relates.

In addition to the Senior Credit Facility, we have various other credit facilities with an aggregate availability of $21.1 million, of which there were no outstanding borrowings at June 30, 2026.

Borrowings under these credit facilities bear interest at variable rates.

As of March 31, 2026, we had $31.6 million of cash held in certain countries in which the ability to repatriate is limited due to local regulations or significant potential tax consequences.

We have $3.1 million of payments due in the next twelve months under the term loan facility of the Senior Credit Facility.

We classified this debt as long-term as of June 30, 2026, as we have the intent and ability to refinance such obligation on a long-term basis utilizing the Senior Credit Facility’s revolving credit facility.

As of June 30, 2026, we had $38.5 million of cash held in certain countries in which the ability to repatriate is limited due to local regulations or significant potential tax consequences.

Share repurchases

1 unchanged sentence

This authorization expires on December 31, 2028.

During the three months ended March 31, 2026, we repurchased 2.0 million of our ordinary shares for $200.0 million.

As of March 31, 2026, we had $800.0 million available for share repurchases under this authorization.

During the six months ended June 30, 2026, we repurchased 4.0 million of our ordinary shares for $350.0 million.

As of June 30, 2026, we had $650.0 million available for share repurchases under this authorization.

Dividends payable

On February 23, 2026, the Board of Directors declared a quarterly cash dividend of $0.27 per share, payable on May 1, 2026 to shareholders of record at the close of business on April 17, 2026.

As a result, the balance of dividends payable included in Other current liabilities on our Condensed Consolidated Balance Sheets was $43.6 million at March 31, 2026, compared to $44.1 million at December 31, 2025.

We paid dividends in the first three months of 2026 of $44.1 million, or $0.27 per ordinary share compared with $41.2 million, or $0.25 per ordinary share, in the prior year period.

On May 4, 2026, the Board of Directors declared a quarterly cash dividend of $0.27 per share, payable on August 7, 2026 to shareholders of record at the close of business on July 24, 2026.

As a result, the balance of dividends payable included in Other current liabilities on our Condensed Consolidated Balance Sheets was $43.1 million at June 30, 2026, compared to $44.1 million at December 31, 2025.

We paid dividends in the first six months of 2026 of $87.5 million, or $0.54 per ordinary share compared with $82.4 million, or $0.50 per ordinary share, in the prior year period.

Under Irish law, the payment of future cash dividends and repurchases of shares may be paid only out of Pentair plc’s “distributable reserves” on its statutory balance sheet.

14 unchanged sentences

If such subsidiaries are unable to transfer funds to the Parent Company Guarantor or the Subsidiary Issuer and sufficient cash or liquidity is not otherwise available, the Parent Company Guarantor or the Subsidiary Issuer may not be able to make principal and interest payments on their outstanding debt, including the senior notes or the guarantees.

The following table presents summarized financial information as of March 31, 2026 and December 31, 2025 for the Parent Company Guarantor and Subsidiary Issuer on a combined basis after elimination of (i) intercompany transactions and balances among the guarantors and the issuer and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor or issuer.

In millions March 31,

The following table presents summarized financial information as of June 30, 2026 and December 31, 2025 for the Parent Company Guarantor and Subsidiary Issuer on a combined basis after elimination of (i) intercompany transactions and balances among the guarantors and the issuer and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor or issuer.

In millions June 30,

2026 December 31,

6 unchanged sentences

1,833.3 1,853.8

(1) No assets due from non-guarantor subsidiaries were included as of March 31, 2026 and December 31, 2025, respectively.

(2) Includes assets due from non-guarantor subsidiaries of $2,500.3 million and $2,503.6 million as of March 31, 2026 and December 31, 2025, respectively.

(3) Includes liabilities due to non-guarantor subsidiaries of $2,182.8 million and $2,235.8 million as of March 31, 2026 and December 31, 2025, respectively.

(4) Includes liabilities due to non-guarantor subsidiaries of $167.5 million and $171.4 million as of March 31, 2026 and December 31, 2025, respectively.

(1) No assets due from non-guarantor subsidiaries were included as of June 30, 2026 and December 31, 2025, respectively.

(2) Includes assets due from non-guarantor subsidiaries of $2,498.6 million and $2,503.6 million as of June 30, 2026 and December 31, 2025, respectively.

(3) Includes liabilities due to non-guarantor subsidiaries of $2,676.8 million and $2,235.8 million as of June 30, 2026 and December 31, 2025, respectively.

(4) Includes liabilities due to non-guarantor subsidiaries of $165.7 million and $171.4 million as of June 30, 2026 and December 31, 2025, respectively.

The Parent Company Guarantor and Subsidiary Issuer do not have material results of operations on a combined basis.

5 unchanged sentences

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the quarter ended March 31, 2026.

There have been no material changes in our market risk during the quarter ended June 30, 2026.

For additional information refer to Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025.

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-Q

Item 2. Management’s Discussion and Analysis