Pentair(PNR) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION ITEM 1. Financial Statements (unaudited) The unaudited statements show decreased net income and EPS despite slight sales growth, with a significant increase in operating cash flow - The interim financial statements are prepared in accordance with SEC requirements, allowing for condensed or omitted GAAP footnotes, and results may not be indicative of a full year[15][16][17] Condensed Consolidated Statements of Operations and Comprehensive Income Net sales grew slightly, but operating and net income declined for both the three and six-month periods Three months ended June 30 | Metric | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 1,123.1 | 1,099.3 | 23.8 | 2.2% | | Gross profit | 456.6 | 437.9 | 18.7 | 4.3% | | Operating income | 217.7 | 248.0 | (30.3) | (12.2)% | | Net income | 148.5 | 186.1 | (37.6) | (20.2)% | | Diluted EPS | 0.90 | 1.11 | (0.21) | (18.9)% | Six months ended June 30 | Metric | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 2,133.5 | 2,116.5 | 17.0 | 0.8% | | Gross profit | 859.9 | 828.0 | 31.9 | 3.9% | | Operating income | 420.8 | 428.8 | (8.0) | (1.9)% | | Net income | 303.4 | 319.4 | (16.0) | (5.0)% | | Diluted EPS | 1.83 | 1.91 | (0.08) | (4.2)% | Condensed Consolidated Balance Sheets Total assets and equity increased while total liabilities and long-term debt decreased | Metric (Millions $) | June 30, 2025 | December 31, 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total assets | 6,479.5 | 6,446.5 | 33.0 | 0.5% | | Total liabilities | 2,807.3 | 2,883.6 | (76.3) | (2.6)% | | Total equity | 3,672.2 | 3,562.9 | 109.3 | 3.1% | | Cash and cash equivalents | 143.0 | 118.7 | 24.3 | 20.5% | | Long-term debt | 1,398.1 | 1,638.7 | (240.6) | (14.7)% | Condensed Consolidated Statements of Cash Flows Cash from operating activities increased significantly, while cash used for financing and investing activities also rose | Metric (Six months ended June 30) | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 567.7 | 431.6 | 136.1 | 31.5% | | Net cash used for investing activities | (45.4) | (36.8) | (8.6) | 23.4% | | Net cash used for financing activities | (469.4) | (351.1) | (118.3) | 33.7% | | Change in cash and cash equivalents | 24.3 | 44.0 | (19.7) | (44.8)% | Condensed Consolidated Statements of Changes in Equity Total equity grew as net income outpaced dividends and share repurchases | Metric (Millions $) | Balance - Dec 31, 2024 | Balance - Jun 30, 2025 | Change ($M) | | :--- | :--- | :--- | :--- | | Total equity | 3,562.9 | 3,672.2 | 109.3 | | Net income (Q1+Q2 2025) | 303.4 | 303.4 | | | Dividends declared (Q1+Q2 2025) | (82.2) | (82.2) | | | Share repurchases (Q1+Q2 2025) | (125.0) | (125.0) | | Notes to Condensed Consolidated Financial Statements Note 1. Basis of Presentation and Responsibility for Interim Financial Statements The unaudited interim statements are prepared per SEC rules and include all normal recurring adjustments - The unaudited condensed consolidated financial statements are prepared following SEC interim reporting requirements, allowing for condensed or omitted GAAP footnotes[15] - The company is responsible for these financial statements, which include all normal recurring adjustments necessary for fair presentation[16] Note 2. Revenue Revenue growth was driven by the U.S. and Residential markets, offsetting declines in other regions and markets Geographic Net Sales (Six months ended June 30, in millions) | Region | 2025 | 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | U.S. | 1,532.1 | 1,478.8 | 53.3 | 3.6% | | Western Europe | 245.1 | 258.8 | (13.7) | (5.3)% | | Developing | 245.2 | 262.0 | (16.8) | (6.4)% | | Other Developed | 111.1 | 116.9 | (5.8) | (5.0)% | | Consolidated net sales | 2,133.5 | 2,116.5 | 17.0 | 0.8% | Vertical Market Net Sales (Six months ended June 30, in millions) | Market | 2025 | 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Residential | 1,227.7 | 1,124.6 | 103.1 | 9.2% | | Commercial | 524.2 | 582.2 | (58.0) | (10.0)% | | Industrial | 381.6 | 409.7 | (28.1) | (6.9)% | | Consolidated net sales | 2,133.5 | 2,116.5 | 17.0 | 0.8% | - As of June 30, 2025, remaining performance obligations on contracts with an original expected duration of one year or more totaled $121.2 million, with most expected to be recognized within 12 to 18 months[19] Note 3. Share Plans Share-based compensation expense increased significantly, driven by performance share units Share-based Compensation Expense (Six months ended June 30, in millions) | Type of Award | 2025 | 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Restricted stock units | 7.2 | 8.1 | (0.9) | (11.1)% | | Stock options | 3.5 | 2.7 | 0.8 | 29.6% | | Performance share units | 10.5 | 5.5 | 5.0 | 90.9% | | Total | 21.2 | 16.3 | 4.9 | 30.1% | - In Q1 2025, the company issued approximately 0.4 million share-based compensation awards, including 0.2 million restricted stock units, 0.1 million stock options, and 0.1 million performance share units[21] Note 4. Restructuring and Transformation Program Restructuring and transformation costs increased substantially, accompanied by a reduction of 185 employees - During the six months ended June 30, 2025, approximately 185 employees were reduced as part of restructuring and Transformation Program initiatives[24] Restructuring and Transformation Costs (Six months ended June 30, in millions) | Cost Category | 2025 | 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total restructuring costs | 25.2 | 10.3 | 14.9 | 144.7% | | Total transformation costs | 37.1 | 28.8 | 8.3 | 28.8% | | Total combined costs | 62.3 | 39.1 | 23.2 | 59.3% | Note 5. Earnings Per Share Both basic and diluted earnings per share from continuing operations decreased year-over-year Earnings Per Ordinary Share (Continuing Operations) | Metric (Three months ended June 30) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Basic EPS | $0.90 | $1.12 | $(0.22) | | Diluted EPS | $0.90 | $1.11 | $(0.21) | | Metric (Six months ended June 30) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Basic EPS | $1.84 | $1.93 | $(0.09) | | Diluted EPS | $1.83 | $1.91 | $(0.08) | Note 6. Accounts Receivable The allowance for credit losses decreased slightly due to write-offs exceeding bad debt expense Allowance for Credit Losses (in millions) | Item | June 30, 2025 | | :--- | :--- | | Beginning balance | $9.1 | | Bad debt expense | $0.2 | | Write-offs, net of recoveries | $(1.5) | | Other | $0.5 | | Ending balance | $8.3 | Note 7. Supplemental Balance Sheet Information Other current and non-current liabilities increased significantly, while inventories saw a slight decline Selected Balance Sheet Items (in millions) | Item | June 30, 2025 | December 31, 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total inventories | 602.5 | 610.9 | (8.4) | (1.4)% | | Total other current assets | 147.6 | 141.3 | 6.3 | 4.5% | | Total property, plant and equipment, net | 363.8 | 358.8 | 5.0 | 1.4% | | Total other non-current assets | 335.2 | 331.2 | 4.0 | 1.2% | | Total other current liabilities | 573.7 | 496.8 | 76.9 | 15.5% | | Total other non-current liabilities | 311.1 | 243.8 | 67.3 | 27.6% | Note 8. Goodwill and Other Identifiable Intangible Assets Goodwill increased due to currency translation, while total intangibles decreased following an impairment charge Goodwill by Segment (in millions) | Segment | December 31, 2024 | Foreign Currency Translation | June 30, 2025 | | :--- | :--- | :--- | :--- | | Flow | 730.4 | 63.6 | 794.0 | | Water Solutions | 1,392.7 | 14.1 | 1,406.8 | | Pool | 1,163.5 | — | 1,163.5 | | Total goodwill | 3,286.6 | 77.7 | 3,364.3 | Identifiable Intangible Assets (Net, in millions) | Type of Intangible | June 30, 2025 | December 31, 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Definite-life intangibles | 728.6 | 786.7 | (58.1) | (7.4)% | | Indefinite-life intangibles | 255.3 | 247.1 | 8.2 | 3.3% | | Total intangibles | 983.9 | 1,033.8 | (49.9) | (4.8)% | - An impairment charge of $30.9 million was recorded in Q2 2025 related to the write-off of a definite-lived customer relationship intangible asset due to a business exit within the Water Solutions segment[31] Note 9. Debt Total debt decreased significantly due to a substantial repayment of the Term Loan Facility Debt Outstanding (in millions) | Debt Type | June 30, 2025 | December 31, 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revolving credit facility | 19.4 | 9.5 | 9.9 | 104.2% | | Term Loan Facility | 575.0 | 825.0 | (250.0) | (30.3)% | | Senior notes | 819.3 | 819.3 | — | 0.0% | | Other | 0.1 | 9.3 | (9.2) | (98.9)% | | Total debt | 1,398.2 | 1,648.0 | (249.8) | (15.2)% | - The Senior Credit Facility was amended in May 2025, providing a $900.0 million revolving credit facility maturing May 5, 2030, with $880.6 million available as of June 30, 2025[33][34] - The Term Loan Facility has a remaining obligation of $575.0 million maturing July 28, 2027, after PFSA repaid $162.5 million in 2024[35] Note 10. Derivatives and Financial Instruments The company utilizes various derivative contracts to manage foreign currency and interest rate risks - The company uses foreign currency derivative contracts to manage market risk, with $22.0 million in gross notional U.S. dollar equivalent amounts outstanding at June 30, 2025[39][40][41] - Cross currency swap agreements totaled $819.1 million notional amount at June 30, 2025, used as cash flow or net investment hedges, resulting in deferred foreign currency losses of $94.2 million[42] - Interest rate swaps and collars with an aggregate notional amount of $500.0 million ($300.0 million swaps, $200.0 million collars) are designated as cash flow hedges to manage variable interest rate risk[43] Note 11. Income Taxes The effective income tax rate remained stable year-over-year, with minimal impact from global minimum tax rules - The effective income tax rate for both the six months ended June 30, 2025 and 2024, was 14.6%[50] - The impact of the OECD Pillar Two Model Rules for a global 15.0% minimum tax was not material for the six months ended June 30, 2025 and 2024[52] - The company is currently assessing the impact of the U.S. H.R.1 – One Big Beautiful Bill Act, enacted July 4, 2025, on its consolidated financial statements[53] Note 12. Benefit Plans Net periodic benefit expense for pension plans decreased slightly compared to the prior year Net Periodic Benefit Expense for Pension Plans (in millions) | Component | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Service cost | 0.3 | 0.4 | 0.6 | 0.8 | | Interest cost | 1.0 | 1.0 | 2.0 | 2.0 | | Expected return on assets | (0.2) | (0.1) | (0.4) | (0.2) | | Total expense | 1.1 | 1.3 | 2.2 | 2.6 | Note 13. Shareholders' Equity The company continued its capital return program through share repurchases and quarterly dividends - During the six months ended June 30, 2025, the company repurchased 1.3 million ordinary shares for $125.0 million[55] - As of June 30, 2025, $325.0 million remained available for share repurchases under the authorization expiring December 31, 2025[55] - A quarterly cash dividend of $0.25 per share was declared on May 5, 2025, payable on August 1, 2025[56] Note 14. Segment Information The Pool segment drove sales growth, while Flow and Water Solutions segments saw declines - For the first six months of 2025, the Flow, Water Solutions, and Pool segments represented approximately 36%, 26%, and 38% of total consolidated net sales, respectively[65] Segment Identifiable Assets (in millions) | Segment | June 30, 2025 | December 31, 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Flow | 1,703.0 | 1,590.7 | 112.3 | 7.1% | | Water Solutions | 2,589.5 | 2,613.5 | (24.0) | (0.9)% | | Pool | 1,742.9 | 1,801.3 | (58.4) | (3.2)% | | Total | 6,035.4 | 6,005.5 | 29.9 | 0.5% | Segment Net Sales (Six months ended June 30, in millions) | Segment | 2025 | 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Flow | 765.2 | 781.1 | (15.9) | (2.0)% | | Water Solutions | 556.5 | 583.6 | (27.1) | (4.6)% | | Pool | 811.1 | 751.0 | 60.1 | 8.0% | | Total | 2,133.5 | 2,116.5 | 17.0 | 0.8% | Note 15. Commitments and Contingencies The ending balance for service and product warranties increased during the first half of the year Service and Product Warranties (in millions) | Item | June 30, 2025 | | :--- | :--- | | Beginning balance | $67.2 | | Provision | $56.4 | | Payments | $(50.6) | | Foreign currency translation | $0.8 | | Ending balance | $73.8 | - The outstanding value of bonds, letters of credit, and bank guarantees totaled $110.8 million at June 30, 2025, up from $102.1 million at December 31, 2024[63] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, noting slight sales growth offset by lower operating income, alongside improved free cash flow - The report contains forward-looking statements subject to various risks, including global economic conditions, supply chain volatility, inflation, and regulatory changes[64] - Pentair's operating objectives for 2025 focus on profitable revenue growth, strategic capital allocation (debt reduction, dividends, share repurchases, M&A), investment in digital/innovation/sustainability, and continued implementation of its Transformation Program[69] Overview and Business Description Pentair delivers smart water solutions through its Flow, Water Solutions, and Pool segments - Pentair plc delivers smart, sustainable water solutions globally through three reportable segments: Flow, Water Solutions, and Pool[65] - The Pool segment completed the acquisition of G & F Manufacturing, LLC in December 2024 for $116.0 million, adding pool heat pumps to its offerings[66] Key Trends and Uncertainties The company anticipates continued margin expansion from its Transformation Program while facing inflationary pressures - The Transformation Program, focusing on operational excellence, complexity reduction, and streamlining processes, is expected to continue driving margin expansion and incur costs throughout 2025[67] - Inflationary cost increases for raw materials, logistics, and transportation, potentially exacerbated by tariffs, are anticipated to persist throughout 2025[67] - The OECD Pillar Two Model Rules for a global 15.0% minimum tax have negatively impacted the effective tax rate in 2025 and are likely to continue to do so[67] Consolidated Results of Operations Slight net sales growth was offset by higher SG&A expenses, leading to a decline in operating income Consolidated Financial Performance (Three months ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 1,123.1 | 1,099.3 | 23.8 | 2.2% | | Gross profit % of net sales | 40.7% | 39.8% | 0.9 pts | | | Operating income | 217.7 | 248.0 | (30.3) | (12.2)% | | Income from continuing operations before income taxes | 172.5 | 220.9 | (48.4) | (21.9)% | Consolidated Financial Performance (Six months ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net sales | 2,133.5 | 2,116.5 | 17.0 | 0.8% | | Gross profit % of net sales | 40.3% | 39.1% | 1.2 pts | | | Operating income | 420.8 | 428.8 | (8.0) | (1.9)% | | Income from continuing operations before income taxes | 355.4 | 374.3 | (18.9) | (5.0)% | Net Sales Net sales growth was driven by price increases, which more than offset a decline in volume Net Sales Change Components | Component | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :--- | :--- | :--- | | Volume | (3.1)% | (2.9)% | | Price | 4.4% | 3.2% | | Core growth | 1.3% | 0.3% | | Acquisition/Divestitures | 0.2% | 0.5% | | Currency | 0.7% | —% | | Total | 2.2% | 0.8% | - Increased selling prices across all segments and the acquisition of G & F Manufacturing were primary drivers of net sales growth[71] - Decreased sales volume in the Flow and Water Solutions segments and business exits in the Water Solutions segment partially offset sales increases[72] Gross Profit Gross profit margin improved due to higher selling prices and productivity gains from transformation initiatives - Gross profit as a percentage of net sales increased by 0.9 percentage points in Q2 2025 and 1.2 percentage points in H1 2025, primarily due to increased selling prices and productivity from transformation initiatives[72] - These increases were partially offset by inflationary cost increases and asset impairment and write-offs[72] Selling, General and Administrative Expenses (SG&A) SG&A expenses rose significantly, primarily due to a large intangible asset impairment charge - SG&A as a percentage of net sales increased by 4.0 percentage points in Q2 2025 and 1.7 percentage points in H1 2025[72] - This increase was primarily driven by a $30.9 million impairment charge on a definite-lived customer relationship intangible asset, increased transformation costs, and restructuring costs[75] Net Interest Expense Net interest expense decreased substantially as a result of lower overall debt levels - Net interest expense decreased by 31.9% in Q2 2025 and 29.9% in H1 2025, primarily due to lower debt levels compared to the prior year[74] Provision for Income Taxes The effective tax rate decreased in Q2 but remained flat for the six-month period - The effective tax rate decreased by 1.9 percentage points in Q2 2025 due to a favorable mix of global earnings and an increase in favorable discrete items[75][76] - The effective tax rate for H1 2025 remained flat at 14.6%, driven by a favorable mix of global earnings offset by a decrease in favorable discrete items[70][76] Segment Results of Operations The Pool segment's strong performance drove overall results, offsetting declines in the Flow and Water Solutions segments - Segment income represents operating income exclusive of intangible amortization, restructuring and transformation activities, impairments, legal accrual adjustments, and other unusual non-operating items[78] Flow Segment The Flow segment's net sales were flat in Q2 and down in H1, but segment income margin improved significantly Flow Segment Performance (in millions) | Metric | Q2 2025 Net Sales | Q2 2024 Net Sales | H1 2025 Net Sales | H1 2024 Net Sales | | :--- | :--- | :--- | :--- | :--- | | Net sales | 397.3 | 396.8 | 765.2 | 781.1 | | Segment income | 93.1 | 84.4 | 176.7 | 161.7 | | % of net sales | 23.4% | 21.3% | 23.1% | 20.7% | - Q2 2025 net sales increased by 0.1% due to increased selling prices and favorable foreign currency, offset by decreased sales volume. H1 2025 net sales decreased by 2.0% due to decreased sales volume, partially offset by increased selling prices[80][81] - Segment income as a percentage of net sales increased by 2.1 percentage points in Q2 and 2.4 percentage points in H1, driven by volume/price/acquisition/divestiture and productivity, partially offset by inflationary cost increases[82] Water Solutions Segment The Water Solutions segment experienced decreased net sales due to lower volume and business exits Water Solutions Segment Performance (in millions) | Metric | Q2 2025 Net Sales | Q2 2024 Net Sales | H1 2025 Net Sales | H1 2024 Net Sales | | :--- | :--- | :--- | :--- | :--- | | Net sales | 298.3 | 310.5 | 556.5 | 583.6 | | Segment income | 70.2 | 72.9 | 130.9 | 128.5 | | % of net sales | 23.5% | 23.5% | 23.5% | 22.0% | - Net sales decreased due to lower sales volume and business exits in residential and commercial businesses, partially offset by increased selling prices[84][86] - Segment income as a percentage of net sales was flat in Q2 2025 but increased by 1.5 percentage points in H1 2025, driven by productivity and pricing, offset by inflationary cost increases[85][88] Pool Segment The Pool segment delivered strong growth in both net sales and segment income, driven by volume, price, and an acquisition Pool Segment Performance (in millions) | Metric | Q2 2025 Net Sales | Q2 2024 Net Sales | H1 2025 Net Sales | H1 2024 Net Sales | | :--- | :--- | :--- | :--- | :--- | | Net sales | 427.2 | 391.5 | 811.1 | 751.0 | | Segment income | 152.7 | 133.6 | 278.7 | 244.4 | | % of net sales | 35.7% | 34.1% | 34.4% | 32.5% | - Net sales increased due to higher sales volume, increased selling prices, and the acquisition of G & F Manufacturing[92][97] - Segment income as a percentage of net sales increased by 1.6 percentage points in Q2 and 1.9 percentage points in H1, driven by volume/price/acquisition/divestiture and productivity, partially offset by inflationary cost increases[92][98] Liquidity and Capital Resources The company maintains sufficient liquidity through operating cash flows and credit facilities to meet its needs - The company funds cash requirements primarily from cash generated from operations and existing revolving credit facilities[93] - Seasonal cash flows are experienced, with cash usage in Q1 and significant generation in Q2 due to warm weather trends impacting demand for pool, water solutions, and residential/agricultural products[94][95] - Management believes existing liquidity and anticipated operating cash flows will be sufficient to meet cash needs for the next twelve months[96] Summary of Cash Flows A significant increase in operating cash flow was largely allocated to financing activities, primarily debt repayment Net Cash Provided by (Used for) Activities (Six months ended June 30, in millions) | Activity | 2025 | 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating activities of continuing operations | 567.7 | 431.8 | 135.9 | 31.5% | | Investing activities | (45.4) | (36.8) | (8.6) | 23.4% | | Financing activities | (469.4) | (351.1) | (118.3) | 33.7% | Operating Activities Operating cash flow increased substantially, driven by net income and favorable working capital changes - Net cash provided by operating activities of continuing operations increased to $567.7 million in H1 2025, up from $431.8 million in H1 2024[99][100] - This increase was primarily driven by net income (adjusted for non-cash items) and a cash inflow of $83.3 million from changes in net working capital, mainly due to increased cash collections and higher accounts payable[100] Investing Activities Cash used for investing activities increased due to capital expenditures and investment purchases - Net cash used for investing activities increased to $45.4 million in H1 2025, compared to $36.8 million in H1 2024[99][102] - This was primarily due to capital expenditures of $27.7 million and the purchase of investments of $18.0 million[102] Financing Activities Cash used for financing increased significantly due to debt repayment, share repurchases, and dividends - Net cash used for financing activities increased to $469.4 million in H1 2025, compared to $351.1 million in H1 2024[99][103] - Major outflows included the repayment of $250.0 million of the Term Loan Facility, $125.0 million in share repurchases, and $82.4 million in dividend payments[103] Free Cash Flow Free cash flow from continuing operations showed strong year-over-year growth Free Cash Flow from Continuing Operations (Six months ended June 30, in millions) | Metric | 2025 | 2024 | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities of continuing operations | 567.7 | 431.8 | 135.9 | 31.5% | | Capital expenditures of continuing operations | (27.7) | (36.3) | 8.6 | (23.7)% | | Free cash flow from continuing operations | 540.1 | 395.5 | 144.6 | 36.6% | - Free cash flow is a non-U.S. GAAP financial measure used to assess cash flow performance and as a criterion for compensation-based incentives[105] Debt and Capital Management The company maintains a strong capital structure with ample availability under its revolving credit facility - The company has a $900.0 million senior unsecured revolving credit facility, with $880.6 million available as of June 30, 2025[107][108] - The Term Loan Facility has a remaining obligation of $575.0 million maturing July 28, 2027[109] - Debt agreements contain financial covenants, including a Leverage Ratio (consolidated debt to EBITDA) not to exceed 3.75 to 1.00 and an EBITDA to consolidated interest expense ratio not less than 3.00 to 1.00[110] Share Repurchases The company actively repurchased shares in H1 2025, with significant capacity remaining under its authorization - During the six months ended June 30, 2025, the company repurchased 1.3 million ordinary shares for $125.0 million[113] - As of June 30, 2025, $325.0 million remained available under the $750.0 million share repurchase authorization, which expires on December 31, 2025[113] Dividends Payable The company continued its consistent dividend payments, with an increased per-share amount year-over-year - A quarterly cash dividend of $0.25 per share was declared on May 5, 2025[114] - Dividends paid in the first six months of 2025 totaled $82.4 million ($0.50 per ordinary share), compared to $76.2 million ($0.46 per ordinary share) in the prior year period[115] Supplemental Guarantor Information The parent company fully guarantees the senior notes issued by its subsidiary, Pentair Finance S.à r.l - Pentair plc (Parent Company Guarantor) fully and unconditionally guarantees the senior notes of Pentair Finance S.à r.l (Subsidiary Issuer)[117] Summarized Financial Information for Parent Company Guarantor and Subsidiary Issuer (Combined, in millions) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current assets | 1.9 | 1.3 | | Noncurrent assets | 2,551.1 | 2,551.7 | | Current liabilities | 2,359.5 | 1,893.1 | | Noncurrent liabilities | 1,672.0 | 1,828.6 | Critical Accounting Policies No material changes were made to the company's critical accounting policies during the period - There have been no material changes to the company's critical accounting policies and estimates from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[121] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The company's market risk profile remained materially unchanged from the previous annual report - No material changes in market risk occurred during the quarter ended June 30, 2025[122] ITEM 4. Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal controls during the quarter - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[123] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[124] - A multi-year implementation of a new global ERP system is underway, which is expected to enhance internal control over financial reporting[125] (a) Evaluation of Disclosure Controls and Procedures Executive management concluded that the company's disclosure controls and procedures were effective - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2025[123] (b) Changes in Internal Control over Financial Reporting No material changes affected internal controls, while an ERP implementation is expected to bring future enhancements - There was no change in internal control over financial reporting that materially affected or is reasonably likely to materially affect the company's internal control over financial reporting during Q2 2025[124] - The ongoing multi-year implementation of a new global ERP system is expected to enhance internal control over financial reporting[125] PART II OTHER INFORMATION ITEM 1. Legal Proceedings The company is involved in various legal actions and claims incidental to its business operations - Pentair is subject to a number of actions and potential claims relating to the conduct of its business, including commercial, regulatory, intellectual property, environmental, product liability, and employment matters[127] ITEM 1A. Risk Factors No material changes were reported to the risk factors disclosed in the latest Annual Report - No material changes from the risk factors previously disclosed in Item 1A. of the Annual Report on Form 10-K for the year ended December 31, 2024[128] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds The company details its Q2 share repurchase activities, including volume and remaining authorization Ordinary Share Purchases (Second Quarter 2025) | 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 | | :--- | :--- | :--- | :--- | :--- | | April 1 - April 26 | 60,801 | $90.21 | — | $400,002,380 | | April 27 - May 24 | 1,132 | $95.99 | — | $400,002,380 | | May 25 - June 30 | 758,428 | $99.01 | 757,512 | $325,002,438 | | Total | 820,361 | | 757,512 | | - The purchases include shares deemed surrendered by participants in equity incentive plans to satisfy exercise prices or withholding tax obligations[129][131] ITEM 5. Other Information No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading arrangements in Q2 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or Section 16 officers during the second quarter of 2025[130] ITEM 6. Exhibits This section lists all exhibits filed with the report, including credit agreements and officer certifications - Exhibits include the Second Amended and Restated Credit Agreement, certifications of the Chief Executive Officer and Chief Financial Officer, and financial statements formatted in iXBRL[134] Signatures The report is duly signed by the company's Chief Financial Officer and Chief Accounting Officer - The report was signed by Robert P. Fishman (Executive Vice President and Chief Financial Officer) and Jennifer M. Hensley (Senior Vice President, Chief Accounting Officer and Controller) on July 22, 2025[136][137]