UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM~~ ~~10-Q~~

FORM 10-Q



☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			For the Quarterly Period Ended March 31, ~~2020~~2021



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-11625

~~Pentair plc~~



Pentair plc

(Exact name of Registrant as specified in its charter)

Ireland

98-1141328

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

Regal House, 70 London Road,

Twickenham,

London,

TW13QS

United Kingdom

(Address of principal executive offices)

Registrant’s telephone number, including area code: 44-74-~~9421-6154~~44-74-9421-6154

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, nominal value $0.01 per share	PNR	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§223.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting

company

☐

Emerging growth
company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On March 31, ~~2020, 165,725,188~~2021, 166,201,692 shares of Registrant’s common stock were outstanding.

Table of Contents

Pentair plc and Subsidiaries


			Page

PART I FINANCIAL INFORMATION

		~~Page~~

~~PART I FINANCIAL INFORMATION~~

ITEM 1.	Financial Statements (unaudited)

		Condensed Consolidated Statements of Operations and Comprehensive Income	3

		Condensed Consolidated Balance Sheets	4

		Condensed Consolidated Statements of Cash Flows	5

		Condensed Consolidated Statements of Changes in Equity	6

		Notes to Condensed Consolidated Financial Statements	7

ITEM 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2120

ITEM 3.		Quantitative and Qualitative Disclosures about Market Risk	3330

ITEM 4.		Controls and Procedures	3431

PART II OTHER INFORMATION

ITEM 1.		Legal Proceedings	3531

ITEM 1A.		Risk Factors	3631

ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds	3731

ITEM 6.		Exhibits	3833

		Signatures	3934

Table of Contents

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Pentair plc and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)


	Three months ended							Three months ended
In millions, except per-share data	March 31, 2020			March 31, 2019			In millions, except per-share data		March 31, 2021		March 31, 2020
Net sales	$	710.0		$	688.9		Net sales		$	865.9	$	710.0
Cost of goods sold	458.4			453.3			Cost of goods sold		550.7		458.4
Gross profit	251.6			235.6			Gross profit		315.2		251.6
Selling, general and administrative expenses	131.9			147.3			Selling, general and administrative expenses		136.6		131.9
Research and development expenses	19.0			20.7			Research and development expenses		21.5		19.0

Operating income	100.7			67.6			Operating income		157.1		100.7
Other (income) expense:
Gain on sale of businesses	—			(3.5		)
Other expense:							Other expense:

Net interest expense	6.9			7.3			Net interest expense		5.1		6.9
Other expense	1.2			0.6			Other expense		0.4		1.2
Income from continuing operations before income taxes	92.6			63.2			Income from continuing operations before income taxes		151.6		92.6
Provision for income taxes	19.9			10.8			Provision for income taxes		20.5		19.9
Net income from continuing operations	72.7			52.4			Net income from continuing operations		131.1		72.7
Loss from discontinued operations, net of tax	—			(1.1		)	Loss from discontinued operations, net of tax		(2.5)		0

Net income	$	72.7		$	51.3		Net income		$	128.6	$	72.7

Comprehensive income, net of tax							Comprehensive income, net of tax
Net income	$	72.7		$	51.3		Net income		$	128.6	$	72.7
Changes in cumulative translation adjustment	(37.8		)	(1.6		)	Changes in cumulative translation adjustment		(20.7)		(37.8)

Changes in market value of derivative financial instruments, net of tax	39.1			4.3			Changes in market value of derivative financial instruments, net of tax		17.0		39.1
Comprehensive income	$	74.0		$	54.0		Comprehensive income		$	124.9	$	74.0
Earnings (loss) per ordinary share							Earnings (loss) per ordinary share
Basic							Basic
Continuing operations	$	0.43		$	0.31		Continuing operations		$	0.79	$	0.43
Discontinued operations	—			(0.01		)	Discontinued operations		(0.02)		0
Basic earnings per ordinary share	$	0.43		$	0.30		Basic earnings per ordinary share		$	0.77	$	0.43
Diluted							Diluted
Continuing operations	$	0.43		$	0.30		Continuing operations		$	0.78	$	0.43
Discontinued operations	—			—			Discontinued operations		(0.01)		0
Diluted earnings per ordinary share	$	0.43		$	0.30		Diluted earnings per ordinary share		$	0.77	$	0.43
Weighted average ordinary shares outstanding							Weighted average ordinary shares outstanding
Basic	167.8			171.6			Basic		166.2		167.8
Diluted	168.7			172.5			Diluted		167.7		168.7

See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows (Unaudited)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

1. Basis of Presentation and Responsibility for Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of Pentair plc and its subsidiaries (“we,” “us,” “our,” “Pentair,” or the “Company”) have been prepared following the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“GAAP”) can be condensed or omitted.

We are responsible for the unaudited condensed consolidated financial statements included in this document. The financial statements include all normal recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. As these are condensed financial statements, one should also read our consolidated financial statements and notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~.2020.

Revenues, expenses, cash flows, assets and liabilities can and do vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be indicative of those for a full year.

In March 2020, the World Health Organization declared the novel coronavirus 2019 (“COVID-19”) a global pandemic. The COVID-19 pandemic has had and may continue to have an unfavorable impact on certain parts of our business. The broader implications of the COVID-19 pandemic on our business, financial condition and results of operations remain uncertain and will depend on certain developments, including the duration and severity of the COVID-19 pandemic, ~~its~~the impact of virus variants, the rate of vaccinations, the COVID-19 pandemic’s impact on our customers and suppliers and the range of governmental and community reactions to the pandemic. We may continue to experience reduced customer demand in certain parts of our business or constrained supply that could materially adversely impact our business, financial condition, results of operations, liquidity and cash flows in future periods.

Our fiscal year ends on December 31. We report our interim quarterly periods on a calendar quarter basis.

~~Adoption of new accounting standards~~

On January 1, 2020, we adopted Accounting Standards Update No. 2016-13 “Financial Instruments-Credit Losses” and the related amendments (the “new standard”). The new standard changes the methodology used to measure credit losses for certain financial instruments and financial assets, including trade receivables. The approach utilizes an expected credit loss model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of an asset, which may result in earlier recognition of credit losses than under the previous accounting standards.

Under the new standard, we record an allowance for credit losses, reducing our trade receivables balance to an amount we estimate is collectible from our customers. The estimates used in determining the allowance for credit losses are based on historical collection experience, including write-offs and recoveries, periodic credit evaluations of our customers’ financial situation, and current circumstances as well as reasonable and supportable forecasts of future economic conditions. The adoption of this new standard did not have a material impact on our consolidated financial statements.

~~The following table summarizes the activity in the allowance for credit losses:~~

In millions March 31,
2020
Beginning balance $ 10.3
Bad debt expense (1.1 )
Write-offs, net of recoveries (0.3 )
Other ⁽¹⁾
(0.3 )
Ending balance $ 8.6
⁽¹⁾ Other amounts are primarily the effects of changes in currency translations and the impact of allowance for credits.

On March 2, 2020, we early adopted the SEC’s rule titled “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities,” which simplifies the disclosure requirements related to our guaranteed registered securities under Rule 3-10 of Regulation S-X.

~~Table of Contents~~

~~Pentair plc and Subsidiaries~~

~~Notes to condensed consolidated financial statements (unaudited)~~

2. Revenue

We disaggregate our revenue from contracts with customers by segment, geographic location and vertical, as we believe these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Refer to Note 1415 for revenue disaggregated by segment.

Geographic net sales information, based on geographic destination of the sale, was as follows:

Three months ended
In millions March 31,
2020 March 31,
2019
U.S. $ 464.0
$ 426.0
Western Europe 103.8
104.3
Developing ⁽¹⁾
94.5
108.9
Other Developed ⁽²⁾
47.7
49.7
Consolidated net sales $ 710.0
$ 688.9
⁽¹⁾Developing includes China, Eastern Europe, Latin America, the Middle East and Southeast Asia.
⁽²⁾Other Developed includes Australia, Canada and Japan.


	Three months ended
In millions		March 31, 2021		March 31, 2020
U.S.		$	586.6	$	464.0
Western Europe		115.3		103.8
Developing (1)		105.4		94.5
Other Developed (2)		58.6		47.7
Consolidated net sales		$	865.9	$	710.0


(1) Developing includes China, Eastern Europe, Latin America, the Middle East and Southeast Asia.
(2) Other Developed includes Australia, Canada and Japan.

Vertical net sales information was as follows:


	Three months ended
In millions		March 31, 2021		March 31, 2020
Residential		$	571.7	$	415.8
Commercial		137.6		141.4
Industrial		156.6		152.8
Consolidated net sales		$	865.9	$	710.0

Three months ended
In millions March 31,
2020 March 31,
2019
Residential $ 415.8
$ 383.6
Commercial 141.4
150.7
Industrial 152.8
154.6
Consolidated net sales $ 710.0
$ 688.9

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

Performance obligations

On March 31, ~~2020,~~2021, we had ~~$50.4~~$78.4 million of remaining performance obligations on contracts with an original expected duration of one year or more. We expect to recognize the majority of our remaining performance obligations on these contracts within the next 12 to 18 months.

Contract assets and liabilities

Contract assets and liabilities consisted of the following:


In millions	March 31, 2021		December 31, 2020		$ Change		% Change
Contract assets	$	53.7	$	50.1	$	3.6	7.2	%
Contract liabilities	29.9		27.5		2.4		8.7	%
Net contract assets	$	23.8	$	22.6	$	1.2	5.3	%

In millions March 31,
2020 December 31,
2019 $ Change % Change
Contract assets $ 45.5
$ 41.0
$ 4.5
11.0 %
Contract liabilities 30.4
32.6
(2.2 ) (6.7 )%
Net contract assets $ 15.1
$ 8.4
$ 6.7
79.8 %

~~Table of Contents~~

~~Pentair plc and Subsidiaries~~

~~Notes to condensed consolidated financial statements (unaudited)~~

For Aquion, the excess of purchase price over tangible net assets and identified intangible assets acquired has been allocated to goodwill in the amount of $101.9 million, $4.6 million of which is expected to be deductible for income tax purposes. Identifiable intangible assets acquired as part of the Aquion acquisition include $15.7 million of indefinite-lived trade name intangible assets and $78.8 million of definite-lived customer relationships with an estimated useful life of 15 years.

For Pelican, the excess purchase price over tangible net assets acquired has been allocated to goodwill in the amount of $118.0 million, $7.6 million of which is expected to be deductible for income tax purposes.

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)



	~~2020~~ 2021 Annual Grant
Risk-free interest rate	~~1.61~~0.37	%
Expected dividend yield	~~1.80~~1.56	%
Expected share price volatility	~~24.1~~29.60	%
Expected term (years)	~~6.8~~		6.5

These estimates require us to make assumptions based on historical results, observance of trends in our share price, changes in option exercise behavior, future expectations and other relevant factors. If other assumptions had been used, share-based compensation expense, as calculated and recorded under the accounting guidance, could have been affected. We based the expected life assumption on historical experience as well as the terms and vesting periods of the options granted. For purposes of determining expected share price volatility, we considered a rolling average of historical volatility measured over a period approximately equal to the expected option term. The risk-free interest rate for periods that coincide with the expected life of the options is based on the United States (“U.S.”) Treasury Department yield curve in effect at the time of grant.

~~Pentair plc and Subsidiaries~~

~~Notes to condensed consolidated financial statements (unaudited)~~

Restructuring-related costs within Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income included the following:


	Three months ended
In millions		March 31, 2021		March 31, 2020
Severance and related costs		$	0.9	$	2.7
Other		0.2		0
Total restructuring costs		$	1.1	$	2.7

Three months ended
In millions March 31,
2020 March 31,
2019
Severance and related costs $ 2.7
$ 1.1
Total restructuring costs $ 2.7
$ 1.1

Activity related to accrued severance and related costs recorded in Other current liabilities in the Condensed Consolidated Balance Sheets is summarized as follows for the three months ended March 31, ~~2020~~:2021:

In millions March 31,
2020
Beginning balance $ 16.2
Costs incurred 2.7
Cash payments and other (4.7 )
Ending balance $ 14.2


In millions	March 31, 2021
Beginning balance	$	15.2

Costs incurred	0.9
Cash payments and other	(3.3)
Ending balance	$	12.8

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

6.Earnings Per Share


6.	~~Earnings Per Share~~

Basic and diluted earnings per share were calculated as follows:


	Three months ended
In millions, except per-share data		March 31, 2021		March 31, 2020
Net income		$	128.6	$	72.7
Net income from continuing operations		$	131.1	$	72.7
Weighted average ordinary shares outstanding
Basic		166.2		167.8
Dilutive impact of stock options, restricted stock units and performance share units		1.5		0.9
Diluted		167.7		168.7
Earnings (loss) per ordinary share
Basic
Continuing operations		$	0.79	$	0.43
Discontinued operations		(0.02)		0
Basic earnings per ordinary share		$	0.77	$	0.43
Diluted
Continuing operations		$	0.78	$	0.43
Discontinued operations		(0.01)		0
Diluted earnings per ordinary share		$	0.77	$	0.43
Anti-dilutive stock options excluded from the calculation of diluted earnings per share		0.3		2.0

Three months ended
In millions, except per-share data March 31,
2020 March 31,
2019
Net income $ 72.7
$ 51.3
Net income from continuing operations $ 72.7
$ 52.4
Weighted average ordinary shares outstanding
Basic 167.8
171.6
Dilutive impact of stock options, restricted stock units and performance share units 0.9
0.9
Diluted 168.7
172.5
Earnings (loss) per ordinary share
Basic
Continuing operations $ 0.43
$ 0.31
Discontinued operations —
(0.01 )
Basic earnings per ordinary share $ 0.43
$ 0.30
Diluted
Continuing operations $ 0.43
$ 0.30
Discontinued operations —
—
Diluted earnings per ordinary share $ 0.43
$ 0.30
Anti-dilutive stock options excluded from the calculation of diluted earnings per share 2.0
1.7

7.Accounts Receivable

All trade receivables are reported on our Condensed Consolidated Balance Sheets at the outstanding principal amount adjusted for any allowance for credit losses and write-offs, net of recoveries. We record an allowance for credit losses, reducing our receivables balance to an amount we estimate is collectible from our customers. Estimates used in determining the allowance for credit losses are based on current trends, aging of accounts receivable, periodic credit evaluations of our customers’ financial condition, and historical collection experience as well as reasonable and supportable forecasts of future economic conditions. Write-offs are recorded at the time all collection efforts have been exhausted. We generally do not require collateral. We review our allowance for credit losses on a quarterly basis.


In millions	March 31, 2021		December 31, 2020
Beginning balance	$	8.4	$	10.3
Bad debt expense (benefit) (1)	0.1		(0.4)
Write-offs, net of recoveries	(0.3)		(1.6)
Other (2)	(0.2)		0.1
Ending balance	$	8.0	$	8.4
(1) The bad debt benefit for the year-ended December 31, 2020 includes the positive impact related to the adoption of ASU No. 2016-13 “Financial Instruments-Credit Losses.”
(2) Other amounts are primarily the effects of changes in currency translation and the impact of allowance for credits.

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

7.8. Supplemental Balance Sheet Information

In millions March 31,
2020 December 31,
2019
Inventories
Raw materials and supplies $ 201.0
$ 196.2
Work-in-process 66.3
65.2
Finished goods 125.1
116.0
Total inventories $ 392.4
$ 377.4
Other current assets
Cost in excess of billings $ 45.5
$ 41.0
Prepaid expenses 55.8
48.3
Prepaid income taxes 7.8
5.2
Other current assets 3.8
4.6
Total other current assets $ 112.9
$ 99.1
Property, plant and equipment, net
Land and land improvements $ 32.7
$ 33.7
Buildings and leasehold improvements 184.3
188.1
Machinery and equipment 537.9
537.2
Capitalized software 73.1
73.5
Construction in progress 53.4
48.1
Total property, plant and equipment 881.4
880.6
Accumulated depreciation and amortization 600.7
597.4
Total property, plant and equipment, net $ 280.7
$ 283.2
Other non-current assets
Right-of-use lease assets $ 81.1
$ 77.2
Deferred income taxes 28.5
29.6
Deferred compensation plan assets 15.7
21.3
Foreign currency contract assets 32.8
0.1
Other non-current assets 65.0
68.7
Total other non-current assets $ 223.1
$ 196.9
Other current liabilities
Dividends payable $ 31.5
$ 32.0
Accrued warranty 36.5
32.1
Accrued rebates and incentives 76.5
83.5
Billings in excess of cost 19.5
22.5
Current lease liability 18.8
19.0
Income taxes payable 4.3
11.1
Accrued restructuring 14.2
16.2
Other current liabilities 145.3
136.5
Total other current liabilities $ 346.6
$ 352.9
Other non-current liabilities
Long-term lease liability $ 64.2
$ 61.1
Income taxes payable 45.5
45.4
Self-insurance liabilities 39.7
41.6
Deferred compensation plan liabilities 15.7
21.3
Foreign currency contract liabilities —
11.6
Other non-current liabilities 25.6
25.7
Total other non-current liabilities $ 190.7
$ 206.7


In millions	March 31, 2021		December 31, 2020
Inventories
Raw materials and supplies	$	225.5	$	218.7
Work-in-process	66.9		67.2
Finished goods	136.7		134.1
Total inventories	$	429.1	$	420.0
Other current assets
Cost in excess of billings	$	53.7	$	50.1
Prepaid expenses	59.6		48.5
Prepaid income taxes	1.7		3.8
Other current assets	3.0		3.1
Total other current assets	$	118.0	$	105.5
Property, plant and equipment, net
Land and land improvements	$	35.4	$	35.9
Buildings and leasehold improvements	189.4		195.4
Machinery and equipment	587.1		589.7
Capitalized software	81.9		79.9
Construction in progress	52.2		47.8
Total property, plant and equipment	946.0		948.7
Accumulated depreciation and amortization	652.6		647.5
Total property, plant and equipment, net	$	293.4	$	301.2
Other non-current assets
Right-of-use lease assets	$	81.2	$	83.6

Deferred income taxes	27.5		27.4
Deferred compensation plan assets	22.5		22.6

Other non-current assets	68.3		69.2
Total other non-current assets	$	199.5	$	202.8
Other current liabilities

Dividends payable	$	33.2	$	33.2
Accrued warranty	41.4		37.0
Accrued rebates and incentives	122.3		122.0
Billings in excess of cost	23.6		22.5
Current lease liability	22.4		22.1
Income taxes payable	29.1		14.6
Accrued restructuring	12.8		15.2
Other current liabilities	141.0		143.8
Total other current liabilities	$	425.8	$	410.4
Other non-current liabilities
Long-term lease liability	$	61.3	$	65.1
Income taxes payable	44.9		44.8
Self-insurance liabilities	42.7		42.0
Deferred compensation plan liabilities	22.5		22.6
Foreign currency contract liabilities	32.4		69.6
Other non-current liabilities	27.6		25.3
Total other non-current liabilities	$	231.4	$	269.4

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

9.Goodwill and Other Identifiable Intangible Assets


8.	~~Goodwill and Other Identifiable Intangible Assets~~

The changes in the carrying amount of goodwill by reportable segment were as follows:

In millions December 31,
2019 Purchase Accounting Adjustments Acquisitions
Foreign currency
translation/other
March 31,
2020
Consumer Solutions $ 1,501.4
$ 14.4
$ 6.3
$ (2.9 ) $ 1,519.2
Industrial & Flow Technologies 756.9
—
—
(19.3 ) 737.6
Total goodwill $ 2,258.3
$ 14.4
$ 6.3
$ (22.2 ) $ 2,256.8


In millions	December 31, 2020		Purchase Accounting Adjustments		Foreign currency translation/other		March 31, 2021
Consumer Solutions	$	1,580.5	$	1.5	$	(5.1)	$	1,576.9
Industrial & Flow Technologies	811.7		0		(21.4)		790.3
Total goodwill	$	2,392.2	$	1.5	$	(26.5)	$	2,367.2

Identifiable intangible assets consisted of the following:

March 31,
2020 December 31,
2019
In millions Cost
Accumulated
amortization
Net Cost
Accumulated
amortization
Net
Definite-life intangibles
Customer relationships $ 410.3
$ (271.4 ) $ 138.9
$ 418.1
$ (269.1 ) $ 149.0
Proprietary technology and patents 41.7
(25.7 ) 16.0
42.3
(25.5 ) 16.8
Total definite-life intangibles 452.0
(297.1 ) 154.9
460.4
(294.6 ) 165.8
Indefinite-life intangibles
Trade names 171.6
—
171.6
173.4
—
173.4
Total intangibles $ 623.6
$ (297.1 ) $ 326.5
$ 633.8
$ (294.6 ) $ 339.2


	March 31, 2021						December 31, 2020
In millions	Cost		Accumulated amortization		Net		Cost		Accumulated amortization		Net
Definite-life intangibles
Customer relationships	$	430.3	$	(309.4)	$	120.9	$	435.9	$	(308.1)	$	127.8

Proprietary technology and patents	46.8		(30.0)		16.8		46.9		(29.4)		17.5

Total definite-life intangibles	477.1		(339.4)		137.7		482.8		(337.5)		145.3
Indefinite-life intangibles
Trade names	177.8		—		177.8		180.6		—		180.6
Total intangibles	$	654.9	$	(339.4)	$	315.5	$	663.4	$	(337.5)	$	325.9

Identifiable intangible asset amortization expense was ~~$7.6~~$7.1 million and ~~$8.2~~$7.6 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Estimated future amortization expense for identifiable intangible assets during the remainder of ~~2020~~2021 and the next five years is as follows:

Q2-Q4
In millions 2020 2021 2022 2023 2024 2025
Estimated amortization expense $ 19.6
$ 22.0
$ 15.4
$ 12.8
$ 12.3
$ 12.3


	Q2 - Q4
In millions	2021		2022		2023		2024		2025		2026
Estimated amortization expense	$	16.7	$	16.0	$	13.7	$	13.2	$	13.2	$	11.9

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

10.Debt


9.	~~Debt~~

Debt and the average interest rates on debt outstanding were as follows:

In millions Average interest rate as of March 31, 2020
Maturity
Year
March 31,
2020 December 31,
2019
Commercial paper 2.097% 2023 $ —
$ 117.8
Revolving credit facilities 2.069% 2023 574.5
35.8
Term loans⁽¹⁾
2.696% 2023 200.0
200.0
Senior notes - fixed rate⁽¹⁾
3.625% 2020 74.0
74.0
Senior notes - fixed rate⁽¹⁾
5.000% 2021 103.8
103.8
Senior notes - fixed rate⁽¹⁾
3.150% 2022 88.3
88.3
Senior notes - fixed rate⁽¹⁾
4.650% 2025 19.3
19.3
Senior notes - fixed rate⁽¹⁾
4.500% 2029 400.0
400.0
Unamortized debt issuance costs and discounts N/A N/A (9.4 ) (9.9 )
Total debt $ 1,450.5
$ 1,029.1
⁽¹⁾Senior notes (“the Notes”) and the term loans are guaranteed as to payment by Pentair plc and PISG


In millions	Average interest rate as of March 31, 2021	Maturity Year	March 31, 2021		December 31, 2020

Revolving credit facilities	1.207%	2023	$	128.5	$	36.1
Term loans	1.182%	2023	200.0		200.0
Senior notes - fixed rate (1)	5.000%	2021	103.8		103.8
Senior notes - fixed rate (1)	3.150%	2022	88.3		88.3
Senior notes - fixed rate (1)	4.650%	2025	19.3		19.3
Senior notes - fixed rate (1)	4.500%	2029	400.0		400.0

Unamortized debt issuance costs and discounts	N/A	N/A	(7.5)		(7.9)
Total debt			$	932.4	$	839.6


(1) Senior notes are guaranteed as to payment by Pentair plc.

~~In April 2018,~~ Pentair, ~~Pentair Investments Switzerland GmbH (“PISG”),~~ Pentair Finance S.à r.l (“PFSA“) and Pentair, Inc. ~~entered into~~are parties to a credit agreement ~~providing for an $800.0 million senior unsecured revolving credit facility with a term of five years~~ (the “Senior Credit Facility”), with Pentair ~~and PISG~~ as ~~guarantors~~guarantor and PFSA and Pentair, Inc. as ~~borrowers.~~borrowers, providing for a $900.0 million senior unsecured revolving credit facility. The Senior Credit Facility has a maturity date of April 25, 2023. Borrowings under the Senior Credit Facility bear interest at a rate equal to an adjusted base rate or the London Interbank Offered 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. ~~In May 2019, PFSA executed an increase of the~~

The Senior Credit Facility ~~by $100.0 million for a total commitment up to $900.0 million in the aggregate.~~

~~In December 2019, the Senior Credit Facility was amended to provide~~provides for the extension of term loans in an aggregate amount of $200.0 million (the “Term Loans”). The Term Loans are in addition to the ~~Senior Credit Facility~~revolving credit facility commitment. In addition, PFSA has the option to further increase the Senior Credit Facility in an aggregate amount of up to $300.0 million, through a combination of increases to the total commitment amount of the ~~Senior Credit Facility~~revolving credit facility and/or one or more tranches of term loans in addition to the Term Loans, subject to customary conditions, including the commitment of the participating lenders.

PFSA is authorized to sell short-term commercial paper notes to the extent availability exists under the Senior Credit Facility. PFSA uses the Senior Credit Facility as back-up liquidity to support 100% of commercial paper outstanding. PFSA had 0 commercial paper outstanding as of March 31, ~~2020~~2021 and ~~$117.8 million as of~~ December 31, ~~2019, all of which was classified as long-term debt as we have the intent and the ability to refinance such obligations on a long-term basis under the Senior Credit Facility.~~2020.

In ~~March~~ 2020, the commercial paper market began to experience high levels of volatility due to uncertainty related to the COVID-19 ~~related uncertainty.~~pandemic. The volatility impacted both market access to and pricing of commercial paper. As a ~~result,~~cost mitigation action, we ~~borrowed under~~withdrew our credit ratings to access the ~~Senior Credit Facility and used the proceeds to pay off the remaining~~ commercial paper market and continued to use the revolving credit facility, along with cash generated from operations, to fund our general ~~operational needs.~~operations. As of March 31, ~~2020,~~2021, total availability under the Senior Credit Facility was ~~$325.5~~$771.5 million.

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 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 to exceed 3.75 to 1.00 (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 provides for the calculation of EBITDA giving pro forma effect to certain acquisitions, divestitures and liquidations during the period to which such calculation relates.

~~Table of Contents~~

~~Pentair plc and Subsidiaries~~

~~Notes to condensed consolidated financial statements (unaudited)~~

In addition to the Senior Credit Facility, we have various other credit facilities with an aggregate availability of ~~$20.9~~$21.4 million, of which there were 0 outstanding borrowings at March 31, ~~2020~~.2021. Borrowings under these credit facilities bear interest at variable rates.

We have ~~$74.0~~$103.8 million aggregate principal amount of fixed rate senior notes maturing in the next twelve months. We classified this debt as long-term as of March 31, ~~2020~~2021 as we have the intent and ability to refinance such obligation on a long-term basis under the Senior Credit Facility.

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

Debt outstanding, excluding unamortized issuance costs and discounts, at March 31, ~~2020~~2021 matures on a calendar year basis as follows:


	Q2 - Q4
In millions	2021		2022		2023		2024		2025		2026		Thereafter		Total
Contractual debt obligation maturities	$	103.8	$	88.3	$	328.5	$	0	$	19.3	$	0	$	400.0	$	939.9

Q2-Q4
In millions 2020 2021 2022 2023 2024 2025 Thereafter Total
Contractual debt obligation maturities $ 74.0
$ 103.8
$ 88.3
$ 774.5
$ —
$ 19.3
$ 400.0
$ 1,459.9

11.Derivatives and Financial Instruments


~~10.~~	~~Derivatives and Financial Instruments~~

Derivative financial instruments

We are exposed to market risk related to changes in foreign currency exchange rates. To manage the volatility related to this exposure, we periodically enter into a variety of derivative financial instruments. Our objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates. The derivative contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. The amount of such credit risk is generally limited to the unrealized gains, if any, in such contracts. Such risk is minimized by limiting those counterparties to major financial institutions of high credit quality.

Foreign currency contracts

We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies in relation to our reporting currency, the U.S. dollar. We manage our economic and transaction exposure to certain market-based risks through the use of foreign currency derivative financial instruments. Our objective in holding these derivatives is to reduce the volatility of net earnings and cash flows associated with changes in foreign currency exchange rates. The majority of our foreign currency contracts have an original maturity date of less than one year.

At March 31, ~~2020~~2021 and December 31, ~~2019~~,2020, we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of ~~$5.8~~$11.7 million and ~~$17.0~~$12.4 million, respectively. The impact of these contracts on the Condensed Consolidated Statements of Operations and Comprehensive Income was not material for any period presented.

Cross Currency Swaps

At March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, we had outstanding cross currency swap agreements with a combined notional amount of ~~$761.7~~$823.6 million and ~~$770.0~~$855.1 million, respectively. The agreements are accounted for as either cash flow hedges, to hedge foreign currency fluctuations on certain intercompany debt, or as net investment hedges to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. We had deferred foreign currency ~~gains~~losses of ~~$37.0~~$16.0 million and ~~deferred currency losses of $1.8~~$32.8 million at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, in Accumulated other comprehensive loss associated with our cross currency swap activity. The periodic interest settlements related to our cross currency swap agreements are classified as operating activities. The cash flows that relate to principal balances are classified as financing activities for the cash flow hedges on intercompany debt and investing activities for the net investment hedges.

In January 2021, one of our cross currency swap agreements which was accounted for as a cash flow hedge matured, resulting in a net cash payment of $14.7 million. The net cash payment is included within financing activities on the Condensed Consolidated Statements of Cash Flows.

Fair value measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:



Level 1:						Valuation is based on observable inputs such as quoted market prices (unadjusted) for identical assets or liabilities in active markets.

Level 2:						Valuation is based on inputs such as quoted market prices for similar assets or liabilities in active markets or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3:						Valuation is based upon other unobservable inputs that are significant to the fair value measurement.

~~Table of Contents~~

~~Pentair plc and Subsidiaries~~

~~Notes to condensed consolidated financial statements (unaudited)~~

In making fair value measurements, observable market data must be used when available. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

Fair value of financial instruments

The following methods were used to estimate the fair values of each class of financial instruments:


•	~~short-term financial instruments (cash and cash equivalents, accounts and notes receivable, accounts and notes payable and variable-rate debt)~~ ~~— recorded amount approximates fair value because of the short maturity period;~~


•	~~long-term fixed-rate debt, including current maturities~~ — fair value is based on market quotes available for issuance of debt with similar terms, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance;


•	~~foreign currency contract agreements~~ — fair values are determined through the use of models that consider various assumptions, including time value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance; and

•

~~deferred compensation plan assets (mutual funds, common/collective trusts and cash equivalents for payment of certain non-qualified benefits for retired, terminated and active employees)~~ — fair value of mutual funds and cash equivalents are based on quoted market prices in active markets that are classified as Level 1 in the valuation hierarchy defined by the accounting guidance; fair value of common/collective trusts are valued at net asset value (“NAV”), which is based on the fair value of the underlying securities owned by the fund and divided by the number of shares outstanding.

•short-term financial instruments (cash and cash equivalents, accounts and notes receivable, accounts and notes payable and variable-rate debt) — recorded amount approximates fair value because of the short maturity period;

•long-term fixed-rate debt, including current maturities — fair value is based on market quotes available for issuance of debt with similar terms, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance;

•foreign currency contract agreements — fair values are determined through the use of models that consider various assumptions, including time value, yield curves, as well as other relevant economic measures, which are inputs that are classified as Level 2 in the valuation hierarchy defined by the accounting guidance; and

•deferred compensation plan assets (mutual funds, common/collective trusts and cash equivalents for payment of certain non-qualified benefits for retired, terminated and active employees) — fair value of mutual funds and cash equivalents are based on quoted market prices in active markets that are classified as Level 1 in the valuation hierarchy defined by the accounting guidance; fair value of common/collective trusts are valued at net asset value (“NAV”), which is based on the fair value of the underlying securities owned by the fund and divided by the number of shares outstanding.

The recorded amounts and estimated fair values of total debt, excluding unamortized issuance costs and discounts, were as follows:

March 31,
2020 December 31,
2019
In millions
Recorded
Amount
Fair
Value

Recorded
Amount
Fair
Value
Variable rate debt $ 774.5
$ 774.5
$ 353.6
$ 353.6
Fixed rate debt 685.4
714.0
685.4
732.2
Total debt $ 1,459.9
$ 1,488.5
$ 1,039.0
$ 1,085.8


	March 31, 2021				December 31, 2020
In millions	Recorded Amount		Fair Value		Recorded Amount		Fair Value
Variable rate debt	$	328.5	$	328.5	$	236.1	$	236.1
Fixed rate debt	611.4		673.8		611.4		695.4
Total debt	$	939.9	$	1,002.3	$	847.5	$	931.5

Financial assets and liabilities measured at fair value on a recurring and nonrecurring basis were as follows:


	March 31, 2021
In millions	Level 1		Level 2		Level 3		NAV		Total
Recurring fair value measurements

Foreign currency contract liabilities	$	0	$	(32.4)	$	0	$	0	$	(32.4)
Deferred compensation plan assets	12.0		0		0		10.5		22.5
Total recurring fair value measurements	$	12.0	$	(32.4)	$	0	$	10.5	$	(9.9)


	December 31, 2020
In millions	Level 1		Level 2		Level 3		NAV		Total
Recurring fair value measurements

Foreign currency contract liabilities	$	0	$	(69.6)	$	0	$	0	$	(69.6)
Deferred compensation plan assets	12.2		0		0		10.4		22.6
Total recurring fair value measurements	$	12.2	$	(69.6)	$	0	$	10.4	$	(47.0)

March 31, 2020
In millions Level 1 Level 2 Level 3 NAV Total
Recurring fair value measurements
Foreign currency contract assets $ —
$ 32.8
$ —
$ —
$ 32.8
Deferred compensation plan assets 8.7
—
—
7.0
15.7
Total recurring fair value measurements $ 8.7
$ 32.8
$ —
$ 7.0
$ 48.5

~~Table of Contents~~

~~Pentair plc and Subsidiaries~~

~~Notes to condensed consolidated financial statements (unaudited)~~

December 31, 2019
In millions Level 1 Level 2 Level 3 NAV Total
Recurring fair value measurements
Foreign currency contract assets $ —
$ 0.1
$ —
$ —
$ 0.1
Foreign currency contract liabilities —
(11.6 ) —
—
(11.6 )
Deferred compensation plan assets 12.5
—
—
8.8
21.3
Total recurring fair value measurements $ 12.5
$ (11.5 ) $ —
$ 8.8
$ 9.8
Nonrecurring fair value measurements ⁽¹⁾


⁽¹⁾	During the year ended December 31, 2019, we recorded impairment charges for cost method investments in the amount of $21.2 million, of which $15.3 million was recorded in the first quarter of 2019. A valuation method using unobservable inputs was utilized to determine the fair value. We wrote the balance of the cost method investments to zero.


~~11.~~	12.Income Taxes

We manage our affairs so that we are centrally managed and controlled in the United Kingdom (“U.K.”) and therefore have our tax residency in the U.K. The provision for income taxes consists of provisions for the U.K. and international income taxes. We operate in an international environment with operations in various locations outside the U.K. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates.

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

The effective income tax rate for the three months ended March 31, ~~2020~~2021 was ~~21.5%~~13.5%, compared to ~~17.1%~~21.5% for the three months ended March 31, ~~2019.~~2020. We continue to actively pursue initiatives to reduce our effective tax rate. The tax rate in any quarter can be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the ability to carryback net operating losses arising in taxable years from 2018 through 2020. The CARES Act provisions provided a positive cash benefit of $16.2 million, offset by base erosion and anti-abuse tax of $6.8 million related to 2019 that was recorded as a discrete tax item in the first quarter of 2020.

The liability for uncertain tax positions was ~~$47.5~~$46.7 million and ~~$47.4~~$46.3 million at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. We record penalties and interest related to unrecognized tax benefits in Provision for income taxes and Net interest expense, respectively, on the Condensed Consolidated Statements of Operations and Comprehensive Income, which is consistent with our past practices.

In April 2020, the Internal Revenue Service released final regulations as part of the Tax Cuts and Jobs Act of 2017 that place limitations on the deductibility of certain interest expense for U.S. tax purposes. These regulations are expected to create a discrete tax expense of approximately $14.1 million in the second quarter of 2020, as well as an increase to our 2020 annual effective tax rate of approximately 1%.

13.Benefit Plans


~~12.~~	~~Benefit Plans~~

Components of net periodic benefit ~~cost~~expense for our pension plans for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 were as follows:


	Three months ended
In millions		March 31, 2021		March 31, 2020
Service cost		$	0.7	$	0.8
Interest cost		0.5		0.7
Expected return on plan assets		(0.1)		(0.2)

Net periodic benefit expense		$	1.1	$	1.3

Three months ended
In millions March 31,
2020 March 31,
2019
Service cost $ 0.8
$ 0.7
Interest cost 0.7
2.7
Expected return on plan assets (0.2 ) (1.7 )
Net periodic benefit cost $ 1.3
$ 1.7

Components of net periodic benefit ~~cost~~expense for our other post-retirement plans for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 were not material.

~~Table of Contents~~14.Shareholders’ Equity

~~Pentair plc and Subsidiaries~~

~~Notes to condensed consolidated financial statements (unaudited)~~


~~13.~~	~~Shareholders’ Equity~~

Share repurchases

In May 2018, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 ~~million.~~million (the “2018 Authorization”). The 2018 authorization expires on May 31, ~~2021~~2021. In December 2020, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 million (the “2020 Authorization”). The 2020 Authorization expires on December 31, 2025. The 2020 Authorization supplements the 2018 Authorization.

During the three months ended March 31, ~~2020,~~2021, we repurchased ~~3.0~~0.2 million of our ordinary shares for ~~$115.2 million.~~$9.6 million under the 2018 Authorization. As of March 31, ~~2020,~~2021, we had ~~$134.7~~$90.1 million and $750.0 million available for share repurchases under ~~this authorization.~~the 2018 Authorization and 2020 Authorization, respectively.

In March 2020, to enhance our liquidity position in response to the COVID-19 pandemic, we elected to temporarily suspend share repurchases under our existing share repurchase program. The existing program remains authorized by the Board of Directors, and we may resume share repurchases in the future at any time, depending upon market conditions, our capital needs and other factors.

Dividends payable

On February ~~25, 2020,~~16, 2021, the Board of Directors declared a quarterly cash dividend of ~~$0.19,~~$0.20, payable on May ~~1, 2020~~7, 2021 to shareholders of record at the close of business on April ~~17, 2020.~~23, 2021. As a result, the balance of dividends payable included in Other current liabilities on our Condensed Consolidated Balance Sheets was ~~$31.5~~$33.2 million at both March 31, ~~2020, compared to $32.0 million at~~2021 and December 31, ~~2019.~~2020.


~~14.~~	15.Segment Information

Effective January 1, 2020, we reorganized our business segments to better support our organization with our strategies and to better align with our customer base, resulting in a change to our reporting segments. All prior period amounts related to the segment change have been retrospectively reclassified to conform to the new presentation. As part of this reorganization, the legacy Aquatic Systems, Flow Technologies, and Filtration Solutions segments were realigned into two reportable business segments:

•

~~Consumer Solutions~~ — This segment designs, manufactures and sells energy-efficient residential and commercial pool equipment and accessories, and commercial and residential water treatment products and systems. 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. Applications for our pool business 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. The primary focus of this segment is business-to-consumer.

•

~~Industrial & Flow Technologies~~ — This segment manufactures and sells a variety of fluid treatment and pump products and systems, including pressure vessels, gas recovery solutions, membrane bioreactors, wastewater reuse systems and advanced membrane filtration, separation systems, water disposal pumps, water supply pumps, fluid transfer pumps, turbine pumps, solid handling pumps, and agricultural spray nozzles, while serving the global residential, commercial and industrial markets. These products and systems are used in a range of applications, fluid delivery, ion exchange, desalination, food and beverage, separation technologies for the oil and gas industry, residential and municipal wells, water treatment, wastewater solids handling, pressure boosting, circulation and transfer, fire suppression, flood control, agricultural irrigation and crop spray. The primary focus of this segment is business-to-business.

We evaluate performance based on net sales and segment income (loss) and use a variety of ratios to measure performance of our reporting segments. These results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Segment income (loss) represents equity income of unconsolidated subsidiaries and operating income exclusive of intangible amortization, certain acquisition related expenses, costs of restructuring activities, impairments and other unusual non-operating items.

1816

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

Financial information by reportable segment is as follows:

Three months ended
In millions March 31,
2020 March 31,
2019
Net sales
Consumer Solutions $ 388.8
$ 358.2
Industrial & Flow Technologies 320.9
330.3
Other 0.3
0.4
Consolidated $ 710.0
$ 688.9
Segment income (loss)
Consumer Solutions $ 84.8
$ 75.2
Industrial & Flow Technologies 44.7
41.0
Other (18.0 ) (17.5 )
Consolidated $ 111.5
$ 98.7


	Three months ended
In millions		March 31, 2021		March 31, 2020
Net sales
Consumer Solutions		$	521.4	$	388.8
Industrial & Flow Technologies		344.1		320.9
Other		0.4		0.3
Consolidated		$	865.9	$	710.0
Segment income (loss)
Consumer Solutions		$	131.0	$	84.8
Industrial & Flow Technologies		50.0		44.7
Other		(16.6)		(18.0)
Consolidated		$	164.4	$	111.5

The following table presents a reconciliation of consolidated segment income to consolidated income from continuing operations before income taxes:


	Three months ended
In millions		March 31, 2021		March 31, 2020
Segment income		$	164.4	$	111.5
Deal-related costs and expenses		(0.7)		(0.4)

Restructuring and other		(1.5)		(2.4)
Intangible amortization		(7.1)		(7.6)




COVID-19 related costs and expenses		(0.2)		(0.9)


Legal accrual adjustments		2.4		—
Net interest expense		(5.1)		(6.9)
Other expense		(0.6)		(0.7)
Income from continuing operations before income taxes		$	151.6	$	92.6

Three months ended
In millions March 31,
2020 March 31,
2019
Segment income $ 111.5
$ 98.7
Deal-related costs and expenses (0.4 ) (4.2 )
Inventory step-up —
(1.7 )
Restructuring and other (2.4 ) (1.1 )
Intangible amortization (7.6 ) (8.2 )
Asset impairment —
(15.3 )
Gain on sale of businesses —
3.5
COVID-19 related costs and expenses (0.9 ) —
Net interest expense (6.9 ) (7.3 )
Other expense (0.7 ) (1.2 )
Income from continuing operations before income taxes $ 92.6
$ 63.2

Table of Contents

Pentair plc and Subsidiaries


~~15.~~	~~Commitments and Contingencies~~

Notes to condensed consolidated financial statements (unaudited)

16.Commitments and Contingencies

Legal proceedings

We have been, and in the future may be, made parties to a number of actions filed or have been, and in the future may be, given notice of potential claims relating to the conduct of our business, including those relating to commercial, regulatory or contractual disputes with suppliers, authorities, customers or parties to acquisitions and divestitures, intellectual property matters, environmental, asbestos, safety and health matters, product liability, the use or installation of our products, consumer matters, and employment and labor matters.

While we believe that a material impact on our consolidated financial position, results of operations or cash flows from any such future claims or potential claims is unlikely, given the inherent uncertainty of litigation, a remote possibility exists that a future adverse ruling or unfavorable development could result in future charges that could have a material adverse impact. We do and will continue to periodically reexamine our estimates of probable liabilities and any associated expenses and receivables and make appropriate adjustments to such estimates based on experience and developments in litigation. As a result, the current estimates of the potential impact on our consolidated financial position, results of operations and cash flows for the proceedings and claims described in the notes to our consolidated financial statements could change in the future.

Environmental matters

We have been named as defendant, target or a potentially responsible party in a number of environmental clean-ups relating to our current or former business units. Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. It can be difficult to estimate reliably the final costs of investigation and remediation due to various factors. In our opinion, the amounts accrued are appropriate based on facts and circumstances as currently known. As of March 31, 2021 and December 31, 2020, our recorded reserves for environmental matters were not material.

Product liability claims

We are subject to various product liability lawsuits and personal injury claims. A substantial number of these lawsuits and claims are insured and accrued for by Penwald, our captive insurance subsidiary. Penwald records a liability for these claims based on actuarial projections of ultimate losses. For all other claims, accruals covering the claims are recorded, on an undiscounted basis, when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing information. The accruals are adjusted periodically as additional information becomes available. We have not experienced significant unfavorable trends in either the severity or frequency of product liability lawsuits or personal injury claims.

Warranties and guarantees

In connection with our disposition of businesses or product lines, ~~and assets,~~ we ~~often provide representations, warranties and indemnities~~may agree to ~~cover~~indemnify purchasers for various potential liabilities relating to the sold ~~businesses, product lines and assets,~~business, such as ~~unknown damages or liabilities relating to the assets and~~ pre-closing tax, product liability, warranty, environmental, or other obligations. The subject matter, amounts and duration of any such indemnification obligations vary for each type of liability indemnified and may vary widely from transaction to transaction.

Generally, the maximum obligations under such indemnifications are not explicitly stated and as a result, the overall amount of these obligations cannot be reasonably ~~estimated due to their inchoate and unknown nature.~~estimated. Historically, we have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any of these matters, the loss would not have a material adverse effect on our financial position, results of operations or cash flows.

We recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. In connection with the disposition of the Valves & Controls business, we agreed to indemnify Emerson Electric Co. for certain pre-closing tax liabilities. We have recorded a liability representing the fair value of our expected future obligation for this matter.

We provide service and warranty policies on our products. Liability under service and warranty policies is based upon a review of historical warranty and service claim experience. Adjustments are made to accruals as claim data and historical experience warrant.

1918

Table of Contents

Pentair plc and Subsidiaries

Notes to condensed consolidated financial statements (unaudited)

The changes in the carrying amount of service and product warranties of continuing operations for the three months ended March 31, ~~2020~~2021 were as follows:

In millions March 31,
2020
Beginning balance $ 32.1
Service and product warranty provision 16.3
Payments (11.5 )
Foreign currency translation (0.4 )
Ending balance $ 36.5


In millions	March 31, 2021
Beginning balance	$	37.0
Service and product warranty provision	15.9
Payments	(11.4)

Foreign currency translation	(0.1)
Ending balance	$	41.4

Stand-by letters of credit, bank guarantees and bonds

In the ordinary course of business, we are required to commit to bonds, letters of credit and bank guarantees that require payments to our customers for any non-performance. The outstanding face value of these instruments fluctuates with the value of our projects in process and in our backlog. In addition, we issue financial stand-by letters of credit primarily to secure our performance to third parties under self-insurance programs.

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the outstanding value of bonds, letters of credit and bank guarantees totaled ~~$89.3~~$99.0 million and ~~$91.3~~$99.1 million, respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

The terms “us,” “we,” “our” or “Pentair” refer to Pentair plc and its consolidated subsidiaries. At Pentair, we believe the health of our world depends on reliable access to clean water. We deliver a comprehensive range of smart, sustainable water solutions to homes, business and industry around the world. Our industry leading and proven portfolio of solutions enables our customers to access clean, safe water, reduce water consumption, and recover and reuse it. Whether it’s improving, moving or helping people enjoy water, we help manage the world’s most precious resource. We are comprised of two reporting segments: Consumer Solutions and Industrial & Flow Technologies. For the first three months of ~~2020,~~2021, the Consumer Solutions and Industrial & Flow Technologies segments represented approximately ~~55%~~60% and ~~45%~~40% of total revenues, respectively. We classify our operations into business segments based primarily on types of products offered and markets served:

•Consumer Solutions — This segment designs, manufactures and sells energy-efficient residential and commercial pool equipment and accessories, and commercial and residential water treatment products and systems. 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. 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 foodservice operations. The primary focus of this segment is business-to-consumer.

•Industrial & Flow Technologies — This segment manufactures and sells a variety of fluid treatment and pump products and systems, including pressure vessels, gas recovery solutions, membrane bioreactors, wastewater reuse systems and advanced membrane filtration, separation systems, water disposal pumps, water supply pumps, fluid transfer pumps, turbine pumps, solid handling pumps, and agricultural spray nozzles, while serving the global residential, commercial and industrial markets. These products and systems are used in a range of applications, fluid delivery, ion exchange, desalination, food and beverage, separation technologies for the oil and gas industry, residential and municipal wells, water treatment, wastewater solids handling, pressure boosting, circulation and sells energy-efficient residential and commercial pool equipment and accessories, and commercial and residential water treatment products and systems. 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. Applications for our pool business 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. The primary focus of this segment is business-to-consumer.

transfer, fire suppression, flood control, agricultural irrigation and crop spray. The primary focus of this segment is business-to-business.

In February 2019, as part of Consumer Solutions, we completed the acquisitions of Aquion and Pelican for $163.4 million and $121.1 million, respectively, in cash, net of cash acquired and final working capital true-ups. Aquion offers a diverse line of water conditioners, water filters, drinking-water purifiers, ozone and ultraviolet disinfection systems, reverse osmosis systems and acid neutralizers for the residential and commercial water treatment industry. Pelican provides residential whole home water treatment systems.

COVID-19 Pandemic Update

~~The COVID-19 pandemic has significantly increased economic and demand uncertainty.~~
~~We have experienced and expect to continue to experience reductions in customer demand in several of our end-markets.~~ ~~Within our~~

~~our commercial filtration products, residential filtration systems demand may decrease~~Europe due to ~~less retail traffic. Further, commercial food service demand may be impacted by temporary shut downs in the hospitality and restaurant industries.~~government restrictions.

~~Cost mitigation actions~~

Key Trends and Uncertainties Regarding Our Existing Business

There are many uncertainties regarding the COVID-19 pandemic, including the anticipated duration and severity of the pandemic and the extent of worldwide social, political and economic disruption it may cause. The impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows cannot be determined at this time, and ultimately will be affected by a number of evolving factors including the length of time that the pandemic continues, its effect on the demand for our products and services

•There are many uncertainties regarding the COVID-19 pandemic, including the anticipated duration and severity of the pandemic, the spread of increasing numbers of virus variants, the extent of worldwide social, political and economic disruption it may continue to cause and the development and distribution of vaccines to address the COVID-19 virus. The broader implications of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows cannot be determined at this time, and ultimately will be affected by a number of evolving factors including the length of time that the pandemic continues and the impact of vaccines on it, the impact of virus variants, the rate of vaccinations, the pandemic’s effect on the demand for our products and services, our supply chain, and our manufacturing capacity, as well as the impact of governmental regulations imposed in response to the pandemic. See further discussion above under “COVID-19 Pandemic Update” for key trends and uncertainties with regard to the COVID-19 pandemic.

•~~COVID-19 Pandemic”~~ ~~for key trends and uncertainties with regard to the COVID-19 pandemic.~~

•In the first quarter of 2021, we created a transformation office in an effort to accelerate growth ~~in 2020.~~and drive margin expansion by leveraging our internal capabilities and reducing complexity. We expect transformation initiatives to occur throughout the remainder of 2021 and beyond and to drive future margin growth.

•We have identified specific product and geographic market opportunities that we find attractive and continue to pursue, both within and outside the U.S. We are reinforcing that our businesses to more effectively address these opportunities through research and development and additional sales and marketing resources. Unless we successfully penetrate these markets, our core sales growth will likely be limited or may decline.

We•During the first quarter of 2021, we experienced inflationary increases due to high demand and tight supply of raw materials such as metals, resins and electronics, along with increased logistics costs. While we have ~~experienced material~~taken pricing actions and ~~other cost inflation. We~~we strive for productivity improvements that could help offset these increases, supply chain pressures and ~~we implement~~inflationary increases in selling prices to help mitigate this inflation. We expect the current economic environment will result in continuing price volatility for many of our raw materials, and we are uncertain as to the timing and impact of these market changes.

In ~~2020,~~2021, our operating objectives ~~include~~remain to focus on delivering our core while continuing to build out our future. We expect to execute these objectives by:

•Delivering revenue growth in our core businesses;

•Delivering income and cash by managing price/cost inflation, prioritization of growth investments and addressing the ~~following:~~cost structures as necessary;

~~Managing our business through the COVID-19 pandemic, with a focus on:~~

~~Delivering~~◦Commitment to maintain our investment grade rating;

◦Return cash to shareholders through dividends and buybacks; and

◦Supplement our business with strategically-aligned mergers and acquisitions.

•Focused growth ~~priorities through new products~~initiatives that accelerate our investments in digital, technology and ~~global~~services expansion; and ~~market expansion, specifically in the areas of pool and residential and commercial filtration solutions;~~

~~Optimizing our technological capabilities to increasingly generate innovative new products and advance digital transformation; and~~


	Three months ended
In millions	March 31, 2021			March 31, 2020			$ Change		% / Point Change
Net sales	$	865.9		$	710.0		$	155.9	22.0	%
Cost of goods sold	550.7			458.4			92.3		20.1	%
Gross profit	315.2			251.6			63.6		25.3	%
% of net sales	36.4		%	35.4		%			1.0	pts

Selling, general and administrative expenses	136.6			131.9			4.7		3.6	%
% of net sales	15.8		%	18.6		%			(2.8)	pts
Research and development expenses	21.5			19.0			2.5		13.2	%
% of net sales	2.5		%	2.7		%			(0.2)	pts



Operating income	157.1			100.7			56.4		56.0	%
% of net sales	18.1		%	14.2		%			3.9	pts



Other expense	0.4			1.2			(0.8)		(66.7)	%
Net interest expense	5.1			6.9			(1.8)		(26.1)	%

Income from continuing operations before income taxes	151.6			92.6			59.0		63.7	%
Provision for income taxes	20.5			19.9			0.6		3.0	%
Effective tax rate	13.5		%	21.5		%			(8.0)	pts

Three months ended
In millions March 31,
2020 March 31,
2019
$
Change
% / Point
Change
Net sales $ 710.0
$ 688.9
$ 21.1
3.1 %
Cost of goods sold 458.4
453.3
5.1
1.1 %
Gross profit 251.6
235.6
16.0
6.8 %
      % of net sales
35.4 % 34.2 % 1.2 pts

Selling, general and administrative expenses 131.9
147.3
(15.4 ) (10.5 )%
      % of net sales
18.6 % 21.4 % (2.8 ) pts
Research and development expenses 19.0
20.7
(1.7 ) (8.2 )%
      % of net sales 2.7 % 3.0 % (0.3 ) pts

Operating income 100.7
67.6
33.1
49.0 %
      % of net sales 14.2 % 9.8 % 4.4 pts

Gain on sale of businesses —
(3.5 ) 3.5
N.M.
Other expense 1.2
0.6
0.6
N.M.
Net interest expense 6.9
7.3
(0.4 ) (5.5 )%

Income from continuing operations before income taxes 92.6
63.2
29.4
46.5 %
Provision for income taxes 19.9
10.8
9.1
84.3 %
      Effective tax rate 21.5 % 17.1 % 4.4   pts

~~N.M. Not Meaningful~~



	Three months ended March 31, ~~2020~~2021
			over the prior year period
Volume		~~1.1~~	17.5	%
Price		~~1.6~~	1.0
Core growth		~~2.7~~	18.5
Acquisition ~~(divestiture)~~		~~1.4~~	0.9
Currency		~~(1.0~~	)2.6
Total		~~3.1~~	22.0	%

The ~~3.1 percentage point~~22.0 percent increase in net sales in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

~~increased sales~~ •volume increase in our Consumer Solutions segment mainly driven by continued robust demand in our pool and residential filtration businesses;

•volume increase in our residential and irrigation flow businesses in our Industrial & Flow Technologies segment due to ~~more normal weather patterns and reduced inventory levels in the channel compared to 2019;~~strong demand across all product lines;

•selective increases in selling prices to mitigate inflationary cost increases; and

~~increased sales due~~•favorable foreign currency effects compared to the ~~Aquion and Pelican acquisitions in February 2019 and other small acquisitions in Consumer Solutions in the fourth quarter of 2019 and~~ first quarter of ~~2020.~~

This increase was partially offset by:

•sales volume declines ~~as a result of reduced orders over the past twelve months and shipping delays driven by~~in certain ~~COVID-19 constraints and site closures in~~businesses within our Industrial & Flow Technologies ~~segment; and~~

The ~~1.2~~1.0 percentage point increase in gross profit as a percentage of net sales in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

~~increased sales~~ •volume expansion in our pool, residential filtration and ~~favorable sales mix in the higher margin Consumer Solutions segment;~~residential and irrigation flow businesses;

•selective increases in selling prices to mitigate impacts of ~~inflation.~~inflation; and

•increased productivity in both the Consumer Solutions and Industrial & Flow Technologies segments.

This increase was partially offset by:

•inflationary increases related to certain raw materials; and

•higher transportation and labor costs ~~and certain raw materials.~~due to increased demand in our pool business.

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

The 2.8 percentage point decrease in SG&A as a percentage of net sales in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

~~asset impairment of $15.3 million in the first quarter of 2019 that did not occur in 2020; and~~

~~This decrease was partially offset by:~~•legal accrual reductions of $2.4 million in the first three months of 2021; and

~~restructuring and other costs of~~ ~~$2.4 million~~ ~~in the first quarter of 2020, compared to $1.1 million in the first quarter of 2019.~~

•restructuring and other costs of $1.5 million in the first three months of 2021, compared to $2.4 million in the first three months of 2020.

Net interest expense

The ~~5.5~~26.1 percent decrease in net interest expense in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

~~the impact of~~ •strong cash flows in 2021 leading to lower overall debt levels; and

•lower interest rates ~~during the first three months of 2020, compared to the same period in 2019.~~on outstanding variable debt.

Provision for income taxes

The ~~4.4~~8.0 percentage point ~~increase~~decrease in the effective tax rate in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven ~~by:~~by:

•the unfavorable impact of discrete items ~~including items~~ related to the ~~CARES~~Coronavirus Aid, Relief, and Economic Security Act that occurred during the first quarter of ~~2020, offset by~~ 2020; and

•the favorable mix of global earnings.

SEGMENT RESULTS OF OPERATIONS

We evaluate performance based on net sales and segment income and use a variety of ratios to measure performance of our reporting segments. Segment income represents equity income of unconsolidated subsidiaries and operating income exclusive of intangible amortization, certain acquisition related expenses, costs of restructuring activities, impairments and other unusual non-operating items.

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


	Three months ended
In millions		March 31, 2021			March 31, 2020			% / Point Change
Net sales		$	521.4		$	388.8		34.1	%
Segment income		131.0			84.8			54.5	%
% of net sales		25.1		%	21.8		%	3.3	pts

Three months ended
In millions March 31,
2020 March 31,
2019 % / Point Change
Net sales $ 388.8
$ 358.2
8.5 %
Segment income 84.8
75.2
12.8 %
% of net sales 21.8 % 21.0 % 0.8 pts

Table of Contents

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



	Three months ended March 31, ~~2020~~2021
			over the prior year period
Volume		~~4.8~~	29.4	%
Price		~~1.8~~	1.7
Core growth		~~6.6~~	31.1
Acquisition		~~2.6~~	1.7
Currency		~~(0.7~~	)1.3
Total		~~8.5~~	34.1	%

The ~~8.5~~34.1 percent increase in net sales for Consumer Solutions in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

•increased sales volume ~~across all product lines~~ in our pool business due to ~~more normal weather patterns~~consumers increasing their pool use while continuing to invest in their homes and ~~reduced inventory levels~~backyards as a result of the COVID-19 pandemic;

•increased sales volume in our water treatment business as residential demand remained robust in the ~~channel compared~~first quarter of 2021;

•increased sales due to ~~2019;~~acquisitions that occurred in 2020; and

•selective increases in selling prices to mitigate impacts of ~~inflation; and~~

This increase was partially offset by:

~~unfavorable foreign currency effects compared~~•sales volume decrease due to ~~the same period of the prior year; and~~

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

The ~~0.8~~3.3 percentage point increase in segment income for Consumer Solutions as a percentage of net sales in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

•increase in sales volume in our pool business resulting in cost leverage and favorable ~~sales mix;~~income drop through;

•reduction in travel and entertainment, trade show and advertising expenses due to the COVID-19 pandemic;

•impact of ~~Aquion and Pelican acquisitions; and~~acquisitions that occurred in 2020;

•increased productivity.

This increase was partially offset by:

•inflationary increases related to raw materials such as metals, resins and electronics;

•lower sales volume in the higher margin commercial filtration business;

•higher sales rebates and employee incentive compensation expense in line with increased sales in our pool business; and

•higher transportation and labor costs ~~and certain raw materials; and~~

Industrial & Flow Technologies

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

The components of the change inIndustrial & Flow Technologiesnet sales from the prior period were as follows:

The ~~2.8~~7.2 percent ~~decrease~~increase in net sales for Industrial & Flow Technologies in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

~~decreased~~•increased sales volume in our ~~commercial water supply~~residential flow business ~~as a result~~in the first quarter of ~~reduced orders over the past twelve months;~~2021 due to strong demand across all product lines;

~~delays in shipments driven by certain COVID-19 related constraints and site closures; and~~

~~This decrease was partially offset by:~~

~~increased~~•favorable foreign currency effects in the first three months compared to the same period of the prior year.

This increase was partially offset by:

•decreased sales volume in our industrial filtration and food &and beverage ~~business.~~

businesses due to less project sales as a result of customers deferring their capital spending due to the COVID-19 pandemic.

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

The ~~1.5~~0.6 percentage point increase in segment income for Industrial & Flow Technologies as a percentage of net sales in the first quarter of ~~2020~~2021 from ~~2019~~2020 was primarily driven by:

•increased sales volumes in our residential flow business which resulted in increased leverage on fixed operating expenses;

•selective increases in selling prices to mitigate inflationary cost increases; ~~and~~

•increased productivity due to cost actions driving manufacturing ~~efficiencies~~efficiencies; and

•lower operating ~~expenses.~~expenses due to a reduction in travel and entertainment, trade show and advertising expenses due to the COVID-19 pandemic.

This increase was partially offset by:

•inflationary increases ~~related~~due to ~~raw material~~high demand and ~~labor costs;~~tight supply of metals and resins along with increased logistics costs.

~~decreased sales volumes in our commercial water supply and industrial businesses, which resulted in decreased leverage on operating expenses.~~

We generally fund cash requirements for working capital, capital expenditures, equity investments, acquisitions, debt repayments, dividend payments and share repurchases from cash generated from operations, availability under existing committed revolving credit facilities and in certain instances, public and private debt and equity offerings. Our primary revolving credit facilities have generally been adequate for these purposes, although we have negotiated additional credit facilities or completed debt and equity offerings as needed to allow us to complete acquisitions. While we historically have issued commercial paper to fund our financing needs on a short-term basis, due to disruptions in the short-term financial markets in the first quarter of 2020, we no longer had access to commercial paper and instead drew on our revolving credit facility as a back-up liquidity measure.

We experience seasonal cash flows primarily due to seasonal demand in a number of markets. Consistent with historical trends, we experienced seasonal cash usage in the first quarter of ~~2020~~2021 and drew on our revolving credit facility ~~to repay commercial paper and~~ to fund our operations. This cash usage reverses in the second quarter as the seasonality of our businesses ~~peaks.~~peak. We expect historical seasonal patterns to continue and the second quarter of ~~2020~~2021 to generate significant cash to fund our operations.

End-user demand for pool and certain pumping equipment follows warm weather trends and is at seasonal highs from April to August. The magnitude of the sales spike is partially mitigated by employing some 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 heavy flooding and droughts.

We expect to continue to have sufficient cash ~~requirements~~and borrowing capacity to support working capital needs and capital expenditures, to pay interest and service debt and to pay dividends to shareholders quarterly. We believe our existing liquidity position, coupled with our currently anticipated operating cash flows, will be sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months. Although ~~there is uncertainty of~~ the impact of the COVID-19 pandemic on our future results is uncertain, we believe we are well-positioned to manage our business and have the ability and sufficient capacity to meet these cash requirements by using available cash, internally generated funds and borrowing under our committed and uncommitted credit facilities. We are committed to maintaining investment grade credit ratings and a solid liquidity position.

Summary of Cash Flows


	Three months ended
In millions	March 31, 2021		March 31, 2020
Net cash provided by (used for):
Operating activities of continuing operations	$	(18.8)	$	(162.4)
Investing activities	(9.8)		(25.8)
Financing activities	34.6		278.8

Operating activities

~~Cash~~The $18.8 million in net cash used for operating activities of continuing operations ~~was $162.4 million~~ in the first three months of ~~2020, compared~~2021 primarily reflects $150.9 million of net income from continuing operations, net of non-cash depreciation and amortization. Additionally, the Company had a cash outflow of $173.8 million as a result of changes in net working capital, primarily the result of increased accounts receivables due to ~~$257.1 million~~strong demand in the ~~same period~~pool business and early buy programs in anticipation of ~~2019.~~our distributors’ peak sales season in the second and third quarters.

~~The $257.1 million in net~~Investing activities

Net cash used for ~~operating~~investing activities ~~of continuing operations~~ in the first three months of ~~2019 primarily~~2021 reflects ~~a negative impact~~capital expenditures of ~~$344.1~~$13.2 million ~~as a result~~and proceeds from the sale of ~~changes in net working capital, offset by $87.9 million~~property and equipment of ~~net income from continuing operations, net of non-cash depreciation, amortization and asset impairments.~~$3.4 million.

~~Cash used for investing activities was $25.8 million in the first three months of 2020, compared to $304.5 million in the same period of 2019.~~ Net cash used for investing activities in the first three months of 2020 primarily reflects capital expenditures of $18.7 ~~million.~~

~~Net cash used for investing activities in the first three months of 2019 primarily reflects capital expenditures of $16.8~~ million and cash paid for ~~the Aquion and Pelican~~ acquisitions of ~~$287.2~~$7.2 million in our Consumer Solutions reporting segment, net of cash acquired.

Financing activities

The following table is a reconciliation of ~~dividends of $31.0 million.~~free cash flow:

~~In April 2018,~~


	Three months ended
In millions		March 31, 2021		March 31, 2020
Net cash used for operating activities of continuing operations		$	(18.8)	$	(162.4)
Capital expenditures of continuing operations		(13.2)		(18.7)
Proceeds from sale of property and equipment of continuing operations		3.4		0.1
Free cash flow from continuing operations		$	(28.6)	$	(181.0)
Net cash used for operating activities of discontinued operations		(0.2)		—


Free cash flow		$	(28.8)	$	(181.0)

The Senior Credit Facility ~~by $100.0 million for a total commitment up to $900.0 million in the aggregate.~~

PFSA is authorized to sell short-term commercial paper notes to the extent availability exists under the Senior Credit Facility. PFSA uses the Senior Credit Facility as back-up liquidity to support 100% of commercial paper outstanding. PFSA had no commercial paper outstanding as of March 31, ~~2020~~2021 and ~~$117.8 million as of~~ December 31, ~~2019, all of which was classified as long-term debt as we have the intent and the ability to refinance such obligations on a long-term basis under the Senior Credit Facility.~~2020.

cash generated from operations, to fund our general ~~operational needs.~~operations. As of March 31, ~~2020,~~2021, total availability under the Senior Credit Facility was ~~$325.5~~$771.5 million.

share-based compensation expense (“EBITDA”) on the last day of any period of four consecutive fiscal quarters to exceed 3.75 to 1.00 (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 provides for the calculation of EBITDA giving pro forma effect to certain acquisitions, divestitures and liquidations during the period to which such calculation relates. As of March 31, ~~2020,~~2021, we were in compliance with all financial covenants in our debt agreements, and there was no material uncertainty about our ongoing ability to meet these covenants.

In addition to the Senior Credit Facility, we have various other credit facilities with an aggregate availability of ~~$20.9~~$21.4 million, of which there were no outstanding borrowings at March 31, ~~2020.~~2021. Borrowings under these credit facilities bear interest at variable rates.

As of March 31, ~~2020,~~2021, we have ~~$60.3~~$21.7 million of cash held in certain countries in which the ability to repatriate is limited due to local regulations or significant potential tax consequences.

~~Supplemental guarantor information~~

⁽¹⁾Includes assets due from non-guarantor subsidiaries of $7.2 million and $2.4 million as of March 31, 2020 and December 31, 2019, respectively.

In May 2018, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 ~~million.~~million (the “2018 Authorization”). The 2018 authorization expires on May 31, 2021. In December 2020, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 million (the “2020 Authorization”). The 2020 Authorization expires on December 31, 2025. The 2020 Authorization supplements the 2018 Authorization.

~~In March~~the 2018 Authorization and 2020 to enhance our liquidity position in response to the COVID-19 pandemic, we elected to temporarily suspend share repurchases under our existing share repurchase program. The existing program remains authorized by the Board of Directors, and we may resume share repurchases in the future at any time, depending upon market conditions, our capital needs and other factors.Authorization, respectively.

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. Pentair plc is not permitted to pay dividends out of share capital, which includes share premiums. Distributable reserves may be created through the earnings of the Irish parent company and through a reduction in share capital approved by the Irish High Court. Distributable reserves are not linked to a U.S. generally accepted accounting principles (“GAAP”) reported amount (e.g., retained earnings). Our distributable reserve balance was ~~$6.6~~$8.8 billion as of December 31, ~~2019.~~2020.

Supplemental guarantor information

Noncurrent assets (2)

Current liabilities (3)

Noncurrent liabilities (4)

(1) Includes assets due from non-guarantor subsidiaries of $5.7 million and $2.8 million as of March 31, 2021 and December 31, 2020, respectively.

(2) Includes assets due from non-guarantor subsidiaries of $1,010.2 million and $1,028.5 million as of March 31, 2021 and December 31, 2020, respectively.

(3) Includes liabilities due to non-guarantor subsidiaries of $208.2 million and $556.6 million as of March 31, 2021 and December 31, 2020, respectively.

(4) Includes liabilities due to non-guarantor subsidiaries of $476.9 million and $495.2 million as of March 31, 2021 and December 31, 2020, respectively.

~~NEW ACCOUNTING STANDARDS~~

~~See Note 1 of the Notes to Condensed Consolidated Financial Statements for information pertaining to recently adopted accounting standards.~~

We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. In our ~~2019~~2020 Annual Report on Form 10-K, we identified the critical accounting policies that affect our more significant estimates and assumptions used in preparing our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in our ~~2019~~2020 Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

~~Except for the broad effects of COVID-19 as a result of its negative impact on the global economy and major financial markets, there~~There have been no material changes in our market risk during the quarter ended March 31, ~~2020.~~2021. For additional information refer to Item 7A of our ~~2019~~2020 Annual Report on Form 10-K.

(a) Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures designed to provide reasonable assurance as to the reliability of our published financial statements and other disclosures included in this report. Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter ended March 31, ~~2020~~2021 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon their evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of the end of the quarter ended March 31, ~~2020~~2021 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures.

(b) Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 1. LEGAL PROCEEDINGS

We have been, and in the future may be, made parties to a number of actions filed or have been, and in the future may be, given notice of potential claims relating to the conduct of our business, including those relating to commercial, contractual or ~~contractual~~regulatory disputes with suppliers, customers, authorities or parties to acquisitions and ~~divestitures,~~divestitures; intellectual property ~~matters,~~matters; environmental, asbestos, safety and health ~~matters,~~matters; product ~~liability,~~liability; the use or installation of our ~~products,~~products; consumer ~~matters,~~matters; and employment and labor matters.

~~Asbestos matters~~

Our current and former subsidiaries and numerous other unaffiliated companies are named as defendants in personal injury lawsuits based on alleged exposure to asbestos-containing materials. These cases typically involve product liability claims based primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were attached to or used with asbestos-containing components manufactured by third-parties. Each case typically names between several dozen to more than a hundred corporate defendants. Our historical strategy has been to mount a vigorous defense aimed at having unsubstantiated suits dismissed, and, where appropriate, settling suits before trial. Although a large percentage of litigated suits have been dismissed, we cannot predict the extent to which we will be successful in resolving lawsuits in the future.

As of March 31, 2020, there were approximately 770 claims outstanding against our subsidiaries. This amount is not adjusted for claims that are not actively being prosecuted, identified incorrect defendants, or duplicated other actions, which would ultimately reflect our current estimate of the number of viable claims made against us, our affiliates, or entities for which we assumed responsibility in connection with acquisitions or divestitures. In addition, the amount does not include certain claims pending against third parties for which we have been provided an indemnification.

~~Environmental matters~~

~~Product liability claims~~

There have been no material changes from the risk factors previously disclosed in Item 1A. of our ~~2019~~2020 Annual Report on Form 10-K for the year ended December 31, ~~2019, except for the addition~~2020.

Table of ~~the risk factor set forth below.~~Contents

~~The COVID-19 pandemic is expected to have a material negative impact on our business, financial condition, results of operations and cash flows.~~

Our business and financial results are expected to be negatively impacted by the COVID-19 pandemic. The severity, magnitude and duration of the current COVID-19 pandemic is uncertain, rapidly changing and hard to predict. In 2020, COVID-19 has significantly impacted economic activity and markets around the world, and it is expected to negatively impact our business in numerous ways, including but not limited to those outlined below:

~~The COVID-19 pandemic has caused a global economic slowdown that may last for a potentially extended duration, and it is possible that it could cause a global recession.~~

Due to the impacts of the COVID-19 pandemic, we have experienced and expect to continue to experience reductions in customer demand for certain of our products and in several of our end-markets, including new pool construction and remodeling, residential and industrial filtration, commercial food service, and residential flow.

The COVID-19 pandemic is adversely affecting, and is expected to continue to adversely affect, certain elements of our business (including certain elements of our operations, supply chains and distribution systems), including as a result of impacts associated with required, preventive and precautionary measures that we, other businesses, our communities and governments are taking. These impacts include requiring employees to work from home or not go into their offices or plants, limiting the number of employees attending meetings, reducing the number of people in our sites at any one time, reducing employee travel and adopting other employee safety measures. These measures may also impact our ability to meet production demands or requests depending on employee attendance or ability to continue to work.

If the COVID-19 pandemic continues and economic conditions worsen, we expect to experience additional adverse impacts on our operational and commercial activities, customer orders and our collections of accounts receivable, which may be material, and it remains uncertain the impact on future operational and commercial activities, customer orders, and collections even if economic conditions begin to improve.

Government or regulatory responses to the COVID-19 pandemic have and are likely to continue to negatively impact our business. Mandatory lockdowns or other restrictions on operations in some countries have temporarily disrupted our ability to manufacture or distribute our products in some of these markets. Continuation or expansion of these disruptions could materially adversely impact our operations and results. In addition to existing travel restrictions, jurisdictions may continue to close borders, impose prolonged quarantines and further restrict travel and business activity, which could significantly impact our ability to support our operations and customers and the ability of our employees to get to their workplaces to produce products and services, or significantly hamper our products from moving through the supply chain.

The impacts of the COVID-19 pandemic may limit our ability to reduce our overall operating costs. We expect increased costs relating to our efforts to mitigate the impact of the COVID-19 pandemic through enhanced sanitization procedures and social-distancing measures we have enacted and will likely continue to enact at our locations around the world in an effort to protect our employees’ health and well-being.

The COVID-19 pandemic has disrupted and is expected to continue to disrupt our global supply chain, operations and routes to market or those of our suppliers or their suppliers. These disruptions or our failure to effectively respond to them have increased and are expected to continue to increase product or distribution costs or cause delays in delivering or an inability to deliver products to our customers.

Disruptions or uncertainties related to the COVID-19 pandemic for a sustained period of time could result in delays or modifications to some of our strategic plans and initiatives and hinder our ability to achieve our growth targets.

The COVID-19 pandemic has increased volatility and pricing in and disrupted the capital markets and commercial paper markets, and volatility is likely to continue. We might not be able to continue to access preferred sources of liquidity when we would like, and our borrowing costs could increase.

We might not be able to predict or respond to all impacts of the COVID-19 pandemic on a timely basis to prevent near- or long-term adverse impacts to our results. Due to the speed with which the COVID-19 situation continues to develop, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate impact; therefore, any negative impact on our business, financial condition (including without limitation our liquidity), results of operations and cash flows cannot be reasonably estimated at this time, but the COVID-19 pandemic could lead to extended disruption of economic activity and the impact on our business, financial condition, results of operations and cash flows could be material. The ultimate impact of these disruptions also depends on events beyond our knowledge or control, including the duration and severity of the COVID-19 pandemic and actions taken by parties other than us to respond to them. The foregoing and other impacts of the COVID-19 pandemic could have the effect of heightening many of the other risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and any of these impacts could materially adversely affect our business, financial condition, results of operations and cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to purchases we made of our ordinary shares during the first quarter of ~~2020:~~2021:


	(a)	(b)		(c)	(d)
Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Dollar value of shares that may yet be purchased under the plans or programs
January 1 - January 30	11,426	$	51.53	—	$	849,718,419
January 31 - February 27	226,707	54.56		176,711	840,085,806
February 28 - March 31	35,090	57.97		—	840,085,806
Total	273,223			176,711

(a)The purchases in this column include 11,426 shares for the period January 1 - January 30, 49,996 shares for the period January 31 - February 27 and 35,090 shares for the period February 28 - March 31 deemed surrendered to us by participants in our equity incentive plans to satisfy the exercise price or withholding of tax obligations related to the exercise of stock options and vesting of restricted and performance shares.

(b)The average price paid in this column includes shares deemed surrendered to us by participants in our equity incentive plans to satisfy the exercise price for the exercise price of stock options and withholding tax obligations due upon stock option exercises and vesting of restricted and performance shares.

(c)The number of shares in this column represents the number of shares repurchased as part of our publicly announced plans to repurchase our ordinary shares up to the maximum dollar limit authorized by the Board of Directors, discussed below.

(d)In May 2018, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 million (the “2018 Authorization”). The 2018 Authorization expires on May 31, 2021. On December 8, 2020, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 million (the “2020 Authorization”). The 2020 Authorization expires on December 31, 2025. The 2020 Authorization supplements the 2018 Authorization. As of March 31, 2021, we had $90.1 million and $750.0 million available for share repurchases under the 2018 Authorization and 2020 Authorization, respectively. From time to time, we may enter into a Rule 10b5-1 trading plan for the purpose of repurchasing shares under the 2018 and 2020 authorizations.

(a) (b) (c) (d)
Period
Total number
of shares
purchased
Average price
paid per share
Total number of shares purchased as part of publicly announced plans or programs Dollar value of shares that may yet be purchased under the plans or programs
January 1 - January 25 52,165
$ 46.38
—
$ 250,000,187
January 26 - February 22 991
$ 43.25
—
$ 250,000,187
February 23 - March 31 3,065,304
$ 38.10
3,038,000
$ 134,718,028
Total 3,118,460
3,038,000

Table of Contents

~~(a)~~

The purchases in this column include 52,165 shares for the period January 1 - January 25, 991 shares for the period January 26 - February 22 and 27,304 shares for the period February 23 - March 31 deemed surrendered to us by participants in our 2012 Stock and Incentive Plan (the “2012 Plan”) and earlier stock incentive plans that are now outstanding under the 2012 Plan (collectively the “Plans”) to satisfy the exercise price or withholding of tax obligations related to the exercise of stock options and vesting of restricted and performance shares.


~~(b)~~	The average price paid in this column includes shares deemed surrendered to us by participants in the Plans to satisfy the exercise price for the exercise price of stock options and withholding tax obligations due upon stock option exercises and vesting of restricted and performance shares.


~~(c)~~	The number of shares in this column represents the number of shares repurchased as part of our publicly announced plans to repurchase our ordinary shares up to the maximum dollar limit authorized by the Board of Directors, discussed below.

~~(d)~~

In May 2018, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 million. The 2018 authorization expires on May 31, 2021. As of March 31, 2020, we had $134.7 million available for share repurchases under this authorization. From time to time, we may enter into a Rule 10b5-1 trading plan for the purpose of repurchasing shares under this authorization.

ITEM 6. EXHIBITS

The exhibits listed in the following Exhibit Index are filed as part of this Quarterly Report on Form 10-Q.

Exhibit Index to Form 10-Q for the Period Ended March 31, ~~2020~~2021






2210.1						Form of Key Executive Employment and Severance Agreement for Adrian C. Chiu.*
22						List of Guarantors and Subsidiary Issuers of Guaranteed Securities (Incorporated by reference to Exhibit 22 to the Quarterly Report on Form 10-Q of Pentair plc for the quarter ended September 30, 2020 (File No. 001-11625)).
31.1						Certification of Chief Executive Officer.
31.2						Certification of Chief Financial Officer.
32.1						Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101						The following materials from Pentair plc’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2020~~2021 are filed herewith, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, (ii) the Condensed Consolidated Balance Sheets as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, (iii) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, (iv) the Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, and (v) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Denotes a management contract or compensatory plan or arrangement

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April ~~30, 2020.~~22, 2021.



			Pentair plc
	~~Pentair plc~~Registrant
	~~Registrant~~
	By	/s/ Robert P. Fishman
	By	~~/s/ Mark C. Borin~~Robert P. Fishman
		~~Mark C. Borin~~
Executive Vice President, Chief Financial Officer and Chief Accounting Officer


	March 31, 2020			December 31, 2019				March 31, 2021		December 31, 2020
In millions, except per-share data							In millions, except per-share data
Assets	Assets						Assets
Current assets							Current assets
Cash and cash equivalents	$	169.3		$	82.5		Cash and cash equivalents	$	95.0	$	82.1
Accounts and notes receivable, net of allowances of $8.6 and $10.3, respectively	665.0			502.9
Accounts receivable, net of allowances of $8.0 and $8.4, respectively							Accounts receivable, net of allowances of $8.0 and $8.4, respectively	566.4		367.5
Inventories	392.4			377.4			Inventories	429.1		420.0
Other current assets	112.9			99.1			Other current assets	118.0		105.5

Total current assets	1,339.6			1,061.9			Total current assets	1,208.5		975.1
Property, plant and equipment, net	280.7			283.2			Property, plant and equipment, net	293.4		301.2
Other assets							Other assets
Goodwill	2,256.8			2,258.3			Goodwill	2,367.2		2,392.2
Intangibles, net	326.5			339.2			Intangibles, net	315.5		325.9
Other non-current assets	223.1			196.9			Other non-current assets	199.5		202.8

Total other assets	2,806.4			2,794.4			Total other assets	2,882.2		2,920.9
Total assets	$	4,426.7		$	4,139.5		Total assets	$	4,384.1	$	4,197.2
Liabilities and Equity	Liabilities and Equity						Liabilities and Equity
Current liabilities							Current liabilities

Accounts payable	$	268.2		$	325.1		Accounts payable	$	297.1	$	245.1
Employee compensation and benefits	68.0			71.0			Employee compensation and benefits	101.0		117.0
Other current liabilities	346.6			352.9			Other current liabilities	425.8		410.4

Total current liabilities	682.8			749.0			Total current liabilities	823.9		772.5
Other liabilities							Other liabilities
Long-term debt	1,450.5			1,029.1			Long-term debt	932.4		839.6
Pension and other post-retirement compensation and benefits	95.7			96.4			Pension and other post-retirement compensation and benefits	101.2		102.0
Deferred tax liabilities	114.5			104.4			Deferred tax liabilities	101.4		107.4
Other non-current liabilities	190.7			206.7			Other non-current liabilities	231.4		269.4

Total liabilities	2,534.2			2,185.6			Total liabilities	2,190.3		2,090.9
Commitments and contingencies (Note 16)							Commitments and contingencies (Note 16)
Equity							Equity
Ordinary shares $0.01 par value, 426.0 authorized, 165.7 and 168.3 issued at March 31, 2020 and December 31, 2019, respectively	1.7			1.7
Ordinary shares $0.01 par value, 426.0 authorized, 166.2 and 166.1 issued at March 31, 2021 and December 31, 2020, respectively							Ordinary shares $0.01 par value, 426.0 authorized, 166.2 and 166.1 issued at March 31, 2021 and December 31, 2020, respectively	1.7		1.7

Additional paid-in capital	1,673.9			1,777.7			Additional paid-in capital	1,676.6		1,680.7
Retained earnings	442.1			401.0			Retained earnings	726.5		631.2
Accumulated other comprehensive loss	(225.2		)	(226.5		)	Accumulated other comprehensive loss	(211.0)		(207.3)
Total equity	1,892.5			1,953.9			Total equity	2,193.8		2,106.3
Total liabilities and equity	$	4,426.7		$	4,139.5		Total liabilities and equity	$	4,384.1	$	4,197.2


In millions	Ordinary shares			Additional paid-in capital	Retained earnings		Accumulated other comprehensive loss				Total
	Number	Amount
Balance - December 31, 2020	166.1	$	1.7		$	1,680.7	$	631.2	$	(207.3)		$	2,106.3
Net income	—	—			—		128.6		—			128.6
Other comprehensive loss, net of tax	—	—			—		—		(3.7)			(3.7)
Dividends declared, $0.20 per share	—	—			—		(33.3)		—			(33.3)
Share repurchases	(0.2)	—			(9.6)		—		—			(9.6)
Exercise of options, net of shares tendered for payment	0.1	—			5.2		—		—			5.2
Issuance of restricted shares, net of cancellations	0.2	—			—		—		—			0
Shares surrendered by employees to pay taxes	0	—			(5.3)		—		—			(5.3)
Share-based compensation	—	—			5.6		—		—			5.6
Balance - March 31, 2021	166.2	$	1.7		$	1,676.6	$	726.5	$	(211.0)		$	2,193.8



	Q2-Q4
In millions	2020		2021		2022		2023		2024		2025
Estimated amortization expense	$	19.6	$	22.0	$	15.4	$	12.8	$	12.3	$	12.3



	March 31, 2020
In millions	Level 1		Level 2		Level 3		NAV		Total
Recurring fair value measurements
Foreign currency contract assets	$	—	$	32.8	$	—	$	—	$	32.8
Deferred compensation plan assets	8.7		—		—		7.0		15.7
Total recurring fair value measurements	$	8.7	$	32.8	$	—	$	7.0	$	48.5



	December 31, 2019
In millions	Level 1		Level 2			Level 3		NAV		Total
Recurring fair value measurements
Foreign currency contract assets	$	—	$	0.1		$	—	$	—	$	0.1
Foreign currency contract liabilities	—		(11.6		)	—		—		(11.6		)
Deferred compensation plan assets	12.5		—			—		8.8		21.3
Total recurring fair value measurements	$	12.5	$	(11.5	)	$	—	$	8.8	$	9.8
Nonrecurring fair value measurements ⁽¹⁾


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~


◦	~~Protecting our employees, customers and our businesses;~~


◦	~~Delivering the best financial results possible in the near-term while staying focused on longer-term strategies.~~


				Three months ended March 31, 2021
				over the prior year period
Growth/Price/Acquisition				2.8	pts

Inflation			~~Three months ended March 31, 2020~~	(2.8)
Productivity			~~over the prior year period~~	3.3
~~Growth~~Total			~~1.6~~	3.3	pts
~~Acquisition~~	~~0.3~~
~~Inflation~~	~~(1.4~~	)
~~Productivity/Price~~	~~0.3~~
~~Total~~	~~0.8~~	~~pts~~



	Three months ended March 31, ~~2020~~2021
			over the prior year period
~~Growth~~Growth/Price/Acquisition		~~(0.7~~	)0.9	pts
~~Inflation~~Currency		~~(1.2~~	)0.1	%
~~Productivity/Price~~Inflation		~~3.4~~	(1.7)
~~Total~~Productivity		~~1.5~~	1.3
Total			0.6	pts



	~~Three months ended~~
~~In millions~~	March 31, 2020
~~In millions~~	March 31, 2020
~~Net sales~~	$	—
~~Gross profit~~	—
~~Loss from continuing operations before taxes~~	~~(4.1~~		)
~~Net loss of continuing operations~~	~~(4.1~~		)


4.	~~Share Plans~~


5.	~~Restructuring~~