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Pentair(PNR) - 2023 Q1 - Quarterly Report

Filing Information This section details Pentair plc's Form 10-Q filing, identifying it as a large accelerated filer incorporated in Ireland with ordinary shares listed on the NYSE Form 10-Q Details This chapter outlines the specifics of Pentair plc's Q1 2023 Form 10-Q, including its Irish incorporation, NYSE listing, and large accelerated filer status - Filing Type: Quarterly Report on Form 10-Q for the period ended March 31, 20232 - Registrant: Pentair plc, incorporated in Ireland, with its principal executive offices in Twickenham, London, United Kingdom23 Securities Registered | 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 | - Filer Status: Large accelerated filer4 - Outstanding Shares: 164,950,305 shares of common stock outstanding as of March 31, 20234 PART I FINANCIAL INFORMATION This part presents Pentair plc's unaudited condensed consolidated financial statements and management's discussion and analysis for Q1 2023 ITEM 1. Financial Statements This section provides Pentair plc's unaudited condensed consolidated financial statements for Q1 2023, showing growth in key income statement metrics driven by pricing and acquisitions Condensed Consolidated Statements of Operations and Comprehensive Income This statement details Pentair plc's financial performance for the three months ended March 31, 2023, showing increases in net sales, gross profit, and net income Condensed Consolidated Statements of Operations and Comprehensive Income (Three months ended March 31) | In millions, except per-share data | 2023 | 2022 | Change (%) | | :--------------------------------- | :--- | :--- | :--------- | | Net sales | $1,028.6 | $999.6 | 2.9% | | Gross profit | $381.8 | $332.2 | 14.9% | | Operating income | $183.6 | $145.8 | 25.9% | | Net income | $129.7 | $117.6 | 10.3% | | Diluted earnings per ordinary share | $0.79 | $0.70 | 12.9% | - Gross profit as a percentage of net sales increased from 33.2% in Q1 2022 to 37.1% in Q1 20239 - Operating income as a percentage of net sales increased from 14.6% in Q1 2022 to 17.8% in Q1 20239 Condensed Consolidated Balance Sheets This balance sheet provides a snapshot of Pentair plc's financial position as of March 31, 2023, showing changes in assets, liabilities, and equity Condensed Consolidated Balance Sheets (As of March 31, 2023 vs. December 31, 2022) | In millions | March 31, 2023 | December 31, 2022 | Change ($) | Change (%) | | :-------------------------- | :------------- | :---------------- | :--------- | :--------- | | Total current assets | $1,766.7 | $1,558.5 | $208.2 | 13.4% | | Total assets | $6,671.2 | $6,447.5 | $223.7 | 3.5% | | Total current liabilities | $1,001.6 | $1,063.1 | $(61.5) | (5.8)% | | Long-term debt | $2,491.8 | $2,317.3 | $174.5 | 7.5% | | Total liabilities | $3,861.7 | $3,739.4 | $122.3 | 3.3% | | Total equity | $2,809.5 | $2,708.1 | $101.4 | 3.7% | - Accounts receivable, net, increased significantly from $531.5 million at December 31, 2022, to $718.1 million at March 31, 2023, reflecting an increase of $186.6 million12 Condensed Consolidated Statements of Cash Flows This statement outlines Pentair plc's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2023 Condensed Consolidated Statements of Cash Flows (Three months ended March 31) | In millions | 2023 | 2022 | Change ($) | | :------------------------------------ | :----- | :----- | :--------- | | Net cash used for operating activities | $(106.6) | $(131.5) | $24.9 | | Net cash used for investing activities | $(16.2) | $(19.1) | $2.9 | | Net cash provided by financing activities | $133.3 | $153.8 | $(20.5) | | Cash and cash equivalents, end of period | $119.2 | $102.3 | $16.9 | - Operating cash outflow improved by $24.9 million, primarily due to a smaller cash outflow from changes in net working capital in 2023 compared to 202214 Condensed Consolidated Statements of Changes in Equity This statement details the changes in Pentair plc's total equity for the three months ended March 31, 2023, influenced by net income, other comprehensive income, and dividends Condensed Consolidated Statements of Changes in Equity (Three months ended March 31) | In millions | Balance - Dec 31, 2022 | Net Income | Other Comprehensive Income | Dividends Declared | Balance - Mar 31, 2023 | | :---------- | :--------------------- | :--------- | :------------------------- | :----------------- | :--------------------- | | Total Equity | $2,708.1 | $129.7 | $4.9 | $(36.3) | $2,809.5 | - Total equity increased by $101.4 million from December 31, 2022, to March 31, 2023, primarily due to net income and other comprehensive income, partially offset by dividends16 Notes to Condensed Consolidated Financial Statements This section provides detailed explanatory notes to Pentair plc's condensed consolidated financial statements, offering further context on accounting policies, revenue, acquisitions, and other financial items Note 1. Basis of Presentation and Responsibility for Interim Financial Statements This note clarifies the preparation basis for the unaudited interim financial statements, adhering to U.S. SEC reporting requirements - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. SEC interim reporting requirements, allowing for condensation or omission of certain GAAP footnotes18 - The company's fiscal year ends on December 31, and interim quarterly periods are reported on a calendar quarter basis20 Note 2. Revenue This note provides a breakdown of Pentair plc's net sales by geographic region and vertical market, along with details on remaining performance obligations and contract liabilities Geographic Net Sales (Three months ended March 31) | In millions | 2023 | 2022 | Change ($) | Change (%) | | :---------------- | :----- | :----- | :--------- | :--------- | | U.S. | $715.8 | $706.0 | $9.8 | 1.4% | | Western Europe | $127.8 | $117.9 | $9.9 | 8.4% | | Developing | $121.1 | $110.6 | $10.5 | 9.5% | | Other Developed | $63.9 | $65.1 | $(1.2) | (1.9)% | | Consolidated net sales | $1,028.6 | $999.6 | $29.0 | 2.9% | Vertical Market Net Sales (Three months ended March 31) | In millions | 2023 | 2022 | Change ($) | Change (%) | | :---------- | :----- | :----- | :--------- | :--------- | | Residential | $566.4 | $682.8 | $(116.4) | (17.0)% | | Commercial | $273.3 | $149.7 | $123.6 | 82.6% | | Industrial | $188.9 | $167.1 | $21.8 | 13.0% | | Consolidated net sales | $1,028.6 | $999.6 | $29.0 | 2.9% | - Remaining performance obligations on contracts with an original expected duration of one year or more totaled $98.1 million as of March 31, 2023, with the majority expected to be recognized within the next 12 to 18 months23 - Net contract liabilities decreased by $8.6 million from December 31, 2022, to March 31, 2023, primarily due to the timing of milestone payments, with approximately 60% of December 31, 2022, contract liabilities recognized in Q1 2023 revenue24 Note 3. Acquisitions This note details Pentair plc's acquisition of Welbilt's Manitowoc Ice business, including the purchase price and preliminary allocation of goodwill and intangible assets - In July 2022, Pentair acquired Welbilt's Manitowoc Ice business for approximately $1.6 billion in cash, enhancing its Water Solutions segment with commercial ice machine design, manufacturing, and distribution2526 - The preliminary purchase price allocation for Manitowoc Ice was revised as of March 31, 2023, with goodwill preliminarily allocated at $791.0 million, reflecting future economic benefits from synergies2829 - Identifiable intangible assets acquired include $588.4 million in definite-lived customer relationships (20-year useful life), $78.4 million in indefinite-lived trade names, and $47.1 million in definite-lived proprietary technology (10-year useful life)30 Note 4. Share Plans This note outlines Pentair plc's share-based compensation expense and the number of awards issued under its equity incentive plans Share-Based Compensation Expense (Three months ended March 31) | In millions | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Restricted stock units | $3.7 | $3.6 | | Stock options | $1.1 | $1.0 | | Performance share units | $2.4 | $2.3 | | Total share-based compensation expense | $7.2 | $6.9 | - In Q1 2023, approximately 0.9 million share-based compensation awards were issued, comprising 0.3 million RSUs, 0.4 million stock options, and 0.2 million PSUs33 Note 5. Restructuring and Transformation Program This note details Pentair plc's ongoing Transformation Program, including restructuring initiatives and associated costs aimed at accelerating growth and margin expansion - Pentair launched a Transformation Program in 2021 to accelerate growth and drive margin expansion through operational excellence, complexity reduction, and process streamlining35 - During Q1 2023, the company initiated and continued restructuring initiatives, including a reduction of approximately 200 hourly and salaried employees, to reduce fixed costs and realign the business36 Total Restructuring and Transformation Costs (Three months ended March 31) | In millions | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Total restructuring costs | $3.1 | $1.9 | | Total transformation costs | $8.5 | $5.5 | | Total restructuring and transformation costs | $11.6 | $7.4 | Note 6. Earnings Per Share This note presents Pentair plc's basic and diluted earnings per ordinary share for the three months ended March 31, 2023 Earnings Per Ordinary Share (Three months ended March 31) | In millions, except per-share data | 2023 | 2022 | | :--------------------------------- | :----- | :----- | | Basic earnings per ordinary share | $0.79 | $0.71 | | Diluted earnings per ordinary share | $0.79 | $0.70 | - Weighted average ordinary shares outstanding (basic) were 164.8 million in Q1 2023, down from 165.3 million in Q1 202239 Note 7. Accounts Receivable This note provides information on Pentair plc's accounts receivable, including the allowance for credit losses and bad debt expense - The allowance for credit losses increased to $11.4 million at March 31, 2023, from $10.8 million at December 31, 2022, with bad debt expense of $0.1 million incurred in Q1 202341 Note 8. Supplemental Balance Sheet Information This note provides detailed breakdowns of Pentair plc's inventories and other current liabilities as of March 31, 2023 Inventories (As of March 31, 2023 vs. December 31, 2022) | In millions | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Raw materials and supplies | $414.1 | $404.1 | | Work-in-process | $105.6 | $95.6 | | Finished goods | $263.1 | $290.3 | | Total inventories | $782.8 | $790.0 | Other Current Liabilities (As of March 31, 2023 vs. December 31, 2022) | In millions | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Dividends payable | $36.3 | $36.2 | | Accrued warranty | $66.1 | $63.1 | | Accrued rebates and incentives | $177.9 | $200.1 | | Accrued restructuring | $19.8 | $23.2 | | Total other current liabilities | $576.2 | $602.1 | Note 9. Goodwill and Other Identifiable Intangible Assets This note details Pentair plc's goodwill by reportable segment and identifiable intangible assets, including amortization expense Goodwill by Reportable Segment (As of March 31, 2023) | In millions | December 31, 2022 | Purchase Accounting Adjustments | Foreign Currency Translation | March 31, 2023 | | :-------------------------- | :------------------ | :------------------------------ | :--------------------------- | :------------- | | Industrial & Flow Technologies | $747.6 | — | $8.1 | $755.7 | | Water Solutions | $1,398.1 | $0.5 | $2.0 | $1,400.6 | | Pool | $1,106.9 | — | — | $1,106.9 | | Total goodwill | $3,252.6 | $0.5 | $10.1 | $3,263.2 | Identifiable Intangible Assets (As of March 31, 2023 vs. December 31, 2022) | In millions | March 31, 2023 Net | December 31, 2022 Net | | :-------------------------- | :----------------- | :-------------------- | | Definite-life intangibles | $831.9 | $845.7 | | Indefinite-life intangibles | $250.0 | $248.9 | | Total intangibles | $1,081.9 | $1,094.6 | - Identifiable intangible asset amortization expense was $13.8 million for the three months ended March 31, 2023, an increase from $6.6 million in the prior year, primarily due to the Manitowoc Ice acquisition43 Note 10. Debt This note provides a comprehensive overview of Pentair plc's debt structure, including revolving credit facilities, term loans, senior notes, and associated covenants Debt Outstanding (As of March 31, 2023 vs. December 31, 2022) | In millions | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Revolving credit facility | $493.6 | $320.0 | | Term Loan Facility | $1,000.0 | $1,000.0 | | Senior notes - fixed rate | $819.3 | $819.3 | | Total debt | $2,491.8 | $2,317.3 | - Total debt increased by $174.5 million from December 31, 2022, to March 31, 2023, primarily due to increased borrowings under the revolving credit facility45 - The company has a $900.0 million senior unsecured revolving credit facility (maturity Dec 2026) and a $200.0 million senior unsecured term loan facility (maturity Dec 2024)45 - A $1.0 billion senior unsecured Term Loan Facility (maturity July 2027) and $400.0 million in 5.900% Senior Notes due 2032 were used to finance the Manitowoc Ice acquisition4748 - Debt agreements include covenants such as a Leverage Ratio not exceeding 3.75 to 1.00 and an EBITDA to consolidated interest expense ratio not less than 3.00 to 1.0049 Note 11. Derivatives and Financial Instruments This note describes Pentair plc's use of derivative financial instruments to manage market risks related to foreign currency exchange rates and interest rates - Pentair uses derivative financial instruments, including foreign currency contracts, cross currency swaps, and interest rate swaps/collars, to manage market risks related to foreign currency exchange rates and interest rates5354565758 - As of March 31, 2023, outstanding foreign currency derivative contracts had gross notional U.S. dollar equivalent amounts of $17.1 million55 - The company entered into floating-to-fixed interest rate swap agreements with a combined notional amount of $300.0 million and interest rate collar agreements with a notional value of $200.0 million to hedge interest rate variability5758 Note 12. Income Taxes This note provides information on Pentair plc's effective income tax rate and the total gross liability for uncertain tax positions - The effective income tax rate for the three months ended March 31, 2023, was 14.6%, a decrease from 15.4% in the prior year, primarily driven by a favorable mix of global earnings64 - The total gross liability for uncertain tax positions remained at $39.6 million as of March 31, 2023, and December 31, 202265 Note 13. Benefit Plans This note details Pentair plc's net periodic benefit expense for pension plans for the three months ended March 31, 2023 Net Periodic Benefit Expense for Pension Plans (Three months ended March 31) | In millions | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Service cost | $0.4 | $0.6 | | Interest cost | $1.0 | $0.6 | | Expected return on plan assets | $(0.2) | $(0.1) | | Net periodic benefit expense | $1.2 | $1.1 | Note 14. Shareholders' Equity This note provides information on Pentair plc's share repurchase authorization and declared cash dividends - As of March 31, 2023, Pentair had $600.0 million available for share repurchases under an authorization expiring December 31, 2025; no ordinary shares were repurchased in Q1 202368 - A quarterly cash dividend of $0.22 per share was declared on February 20, 2023, resulting in $36.3 million in dividends payable at March 31, 202369 Note 15. Segment Information This note outlines Pentair plc's reorganized reporting segments and provides net sales and segment income performance for each - Effective January 1, 2023, Pentair reorganized its reporting segments into Industrial & Flow Technologies, Water Solutions, and Pool to improve customer experience, differentiate products, and drive profitability70 Net Sales by Reportable Segment (Three months ended March 31) | In millions | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Industrial & Flow Technologies | $391.8 | $358.1 | $33.7 | 9.4% | | Water Solutions | $272.0 | $205.8 | $66.2 | 32.2% | | Pool | $364.3 | $435.4 | $(71.1) | (16.3)% | | Consolidated | $1,028.6 | $999.6 | $29.0 | 2.9% | Segment Income by Reportable Segment (Three months ended March 31) | In millions | 2023 | 2022 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Industrial & Flow Technologies | $65.0 | $52.2 | $12.8 | 24.5% | | Water Solutions | $52.4 | $22.2 | $30.2 | 136.0% | | Pool | $116.2 | $116.3 | $(0.1) | (0.1)% | | Consolidated | $211.0 | $172.1 | $38.9 | 22.6% | Note 16. Commitments and Contingencies This note details Pentair plc's accrued warranty balance and outstanding bonds, letters of credit, and bank guarantees - The accrued warranty balance increased to $66.1 million at March 31, 2023, from $63.1 million at the beginning of the period, with a provision of $20.9 million and payments of $18.0 million in Q1 202375 - Outstanding bonds, letters of credit, and bank guarantees totaled $101.6 million as of March 31, 2023, up from $99.7 million at December 31, 202277 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section offers management's analysis of Pentair plc's Q1 2023 financial performance, highlighting strategic objectives, consolidated results, segment performance, and liquidity management amidst market challenges Forward-looking Statements This section cautions that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including global economic conditions, supply chain issues, inflation, currency volatility, and the ability to integrate acquisitions79 Overview This overview introduces Pentair plc as a global provider of smart, sustainable water solutions, detailing its three reporting segments and a key acquisition - Pentair provides smart, sustainable water solutions globally, operating through three reporting segments: Industrial & Flow Technologies (38% of Q1 2023 revenue), Water Solutions (26%), and Pool (36%)80 - The Water Solutions segment was expanded by the July 2022 acquisition of Welbilt's Manitowoc Ice business for approximately $1.6 billion82 Key Trends and Uncertainties Regarding Our Existing Business This section outlines Pentair plc's operating objectives and capital allocation priorities for 2023, addressing ongoing supply chain and inflationary challenges - Operating objectives for 2023 focus on delivering core business, building for the future, driving margin growth through restructuring and transformation, and addressing supply chain challenges and inflationary costs8386 - Strategic capital allocation priorities include maintaining an investment-grade rating, reducing long-term debt, returning cash to shareholders via dividends and share repurchases, and pursuing strategically-aligned M&A8386 - The company expects supply chain pressures and inflationary cost increases to continue throughout 2023, despite pricing actions and productivity initiatives83 Consolidated Results of Operations This section analyzes Pentair plc's consolidated financial performance for Q1 2023, highlighting net sales growth, gross profit margin improvement, and increased net interest expense Consolidated Results of Operations (Three months ended March 31) | In millions | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------------------ | :----- | :----- | :--------- | :--------- | | Net sales | $1,028.6 | $999.6 | $29.0 | 2.9% | | Gross profit | $381.8 | $332.2 | $49.6 | 14.9% | | Operating income | $183.6 | $145.8 | $37.8 | 25.9% | | Income from continuing operations before income taxes | $150.5 | $140.0 | $10.5 | 7.5% | - Net sales increased by 2.9%, driven by a 9.3% price increase and 6.6% from acquisitions, partially offset by an 11.9% volume decrease and 1.1% unfavorable currency effects88 - Gross profit margin improved by 3.9 percentage points to 37.1%, primarily due to price increases and productivity gains in Water Solutions and Industrial & Flow Technologies, despite inflationary costs and asset impairments8589 - Net interest expense increased significantly due to higher debt from the Manitowoc Ice acquisition and increased variable interest rates90 Segment Results of Operations This section provides a detailed analysis of the financial performance for Pentair plc's Industrial & Flow Technologies, Water Solutions, and Pool segments Industrial & Flow Technologies This section reviews the Industrial & Flow Technologies segment's Q1 2023 performance, noting net sales growth and improved segment income percentage Industrial & Flow Technologies Performance (Three months ended March 31) | In millions | 2023 | 2022 | Change (%) | | :---------- | :----- | :----- | :--------- | | Net sales | $391.8 | $358.1 | 9.4% | | Segment income | $65.0 | $52.2 | 24.5% | | % of net sales | 16.6% | 14.6% | 2.0 pts | - Net sales growth of 9.4% was driven by a 10.2% price increase and 1.2% volume growth in commercial flow and industrial solutions, partially offset by 2.0% unfavorable currency effects94 - Segment income as a percentage of net sales increased by 2.0 percentage points, primarily due to price increases and productivity from manufacturing leverage and transformation initiatives, despite inflationary costs9596 Water Solutions This section examines the Water Solutions segment's Q1 2023 performance, highlighting significant net sales growth and improved segment income percentage driven by acquisitions and pricing Water Solutions Performance (Three months ended March 31) | In millions | 2023 | 2022 | Change (%) | | :---------- | :----- | :----- | :--------- | | Net sales | $272.0 | $205.8 | 32.2% | | Segment income | $52.4 | $22.2 | 136.0% | | % of net sales | 19.3% | 10.8% | 8.5 pts | - Net sales increased by 32.2%, primarily due to the Manitowoc Ice acquisition (32.1%) and price increases (4.8%), partially offset by decreased residential sales volume and unfavorable currency98 - Segment income as a percentage of net sales increased by 8.5 percentage points, driven by the Manitowoc Ice acquisition, price increases, and productivity from transformation and restructuring initiatives, despite inflationary costs99100 Pool This section analyzes the Pool segment's Q1 2023 performance, noting a decrease in net sales due to volume declines but an increase in segment income percentage due to pricing Pool Segment Performance (Three months ended March 31) | In millions | 2023 | 2022 | Change (%) | | :---------- | :----- | :----- | :--------- | | Net sales | $364.3 | $435.4 | (16.3)% | | Segment income | $116.2 | $116.3 | (0.1)% | | % of net sales | 31.9% | 26.7% | 5.2 pts | - Net sales decreased by 16.3%, primarily due to a 26.9% volume decrease caused by unusual U.S. weather, higher channel inventory, and lower demand, partially offset by 10.8% price increases101103 - Segment income as a percentage of net sales increased by 5.2 percentage points, mainly due to price increases mitigating inflationary cost increases102104 Backlog of Orders by Segment This section presents the backlog of orders by segment, highlighting a significant decrease in total backlog driven by the Pool segment Backlog of Orders by Segment (As of March 31, 2023 vs. December 31, 2022) | In millions | March 31, 2023 | December 31, 2022 | Change ($) | Change (%) | | :-------------------------- | :------------- | :---------------- | :--------- | :--------- | | Industrial & Flow Technologies | $469.0 | $512.1 | $(43.1) | (8.4)% | | Water Solutions | $206.2 | $193.5 | $12.7 | 6.6% | | Pool | $76.9 | $289.6 | $(212.7) | (73.4)% | | Total | $752.1 | $995.2 | $(243.1) | (24.4)% | - Total backlog decreased by 24.4% from December 31, 2022, primarily driven by a significant reduction in the Pool segment's backlog as it returned to more historical levels due to increased manufacturing capacity and improved lead times106 Liquidity and Capital Resources This section discusses Pentair plc's funding sources and seasonal cash flow patterns, affirming sufficient liquidity for the next twelve months - Pentair funds cash requirements through operations, existing revolving credit facilities, and debt/equity offerings, expecting sufficient liquidity for the next twelve months107110 - The company experiences seasonal cash flows, with cash usage in Q1 typically reversing in Q2 due to peak seasonal demand for pool and certain pumping equipment108109 Free Cash Flow This section presents Pentair plc's free cash flow, a non-GAAP measure, for the three months ended March 31, 2023 Free Cash Flow (Three months ended March 31) | In millions | 2023 | 2022 | | :------------------------------------ | :----- | :----- | | Net cash used for operating activities | $(106.6) | $(131.5) | | Capital expenditures | $(16.6) | $(17.7) | | Proceeds from sale of property and equipment | $0.2 | — | | Free cash flow | $(123.0) | $(149.2) | - Free cash flow, a non-GAAP measure, improved to $(123.0) million in Q1 2023 from $(149.2) million in Q1 2022, indicating reduced cash usage117 Debt and Capital This section details Pentair plc's debt structure, including credit facilities, term loans, senior notes, and compliance with debt covenants - Pentair's Senior Credit Facility includes a $900.0 million revolving credit facility (maturity Dec 2026) and a $200.0 million term loan facility (maturity Dec 2024), with $406.4 million total availability as of March 31, 2023118119 - The company has a $1.0 billion Term Loan Facility (maturity July 2027) and $400.0 million in 5.900% Senior Notes due 2032, primarily used to finance the Manitowoc Ice acquisition120121 - Debt covenants require a Leverage Ratio not exceeding 3.75 to 1.00 and an EBITDA to consolidated interest expense ratio not less than 3.00 to 1.00122123 Share Repurchases This section reports on Pentair plc's share repurchase authorization and confirms no open market repurchases occurred in Q1 2023 - As of March 31, 2023, $600.0 million remained available for share repurchases under an authorization expiring December 31, 2025; no ordinary shares were repurchased in Q1 2023126 Dividends Payable This section details the quarterly cash dividend declared by Pentair plc and the total dividends paid in Q1 2023 - A quarterly cash dividend of $0.22 per share was declared on February 20, 2023, resulting in $36.3 million in dividends payable at March 31, 2023127 - Dividends paid in Q1 2023 totaled $36.2 million ($0.22 per share), compared to $34.7 million ($0.21 per share) in Q1 2022128 Supplemental Guarantor Information This section provides summarized financial information for Pentair plc as the Parent Company Guarantor and its Subsidiary Issuer - Pentair plc (Parent Company Guarantor) fully and unconditionally guarantees the senior notes of Pentair Finance S.à r.l (Subsidiary Issuer)130 Summarized Financial Information for Guarantor and Issuer (Combined Basis) | In millions | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Current assets | $2.0 | $2.4 | | Noncurrent assets | $2,680.6 | $2,677.4 | | Current liabilities | $961.0 | $1,068.6 | | Noncurrent liabilities | $2,805.9 | $2,640.3 | Critical Accounting Policies This section confirms no material changes to Pentair plc's critical accounting policies and estimates from the prior annual report - There have been no material changes to the critical accounting policies and estimates from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022134 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This section confirms no material changes in Pentair plc's market risk during Q1 2023, referencing the prior annual report for detailed disclosures - No material changes in market risk occurred during the quarter ended March 31, 2023136 ITEM 4. Controls and Procedures This section affirms the effectiveness of Pentair plc's disclosure controls and procedures, noting ongoing internal control integration for the Manitowoc Ice acquisition Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of Pentair plc's disclosure controls and procedures at a reasonable assurance level as of March 31, 2023 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023137 Changes in Internal Control over Financial Reporting This section notes ongoing internal control integration for the Manitowoc Ice acquisition, with no other material changes to financial reporting controls - The company is reviewing and augmenting internal controls for the Manitowoc Ice acquisition; no other material changes to internal control over financial reporting occurred in Q1 2023138 PART II OTHER INFORMATION This part covers other information for Pentair plc, including legal proceedings, risk factors, equity security sales, exhibits, and required signatures ITEM 1. Legal Proceedings This section discloses Pentair plc's involvement in various legal actions and potential claims arising from its business operations - Pentair is subject to various legal proceedings and potential claims related to its business, including commercial, contractual, regulatory, intellectual property, environmental, product liability, and employment matters140 ITEM 1A. Risk Factors This section confirms no material changes to the risk factors previously disclosed in Pentair plc's Annual Report on Form 10-K - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022141 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details shares surrendered by employees for tax obligations related to equity plans and confirms no open market share repurchases in Q1 2023 Purchases of Ordinary Shares (Q1 2023) | Period | Total number of shares purchased | Average price paid per share | | :---------------------- | :----------------------------- | :--------------------------- | | January 1 - January 28 | 16,498 | $45.45 | | January 29 - February 25 | 49,111 | $54.81 | | February 26 - March 31 | 57,312 | $55.29 | | Total | 122,921 | | - The shares purchased represent shares deemed surrendered by employees to satisfy exercise price or withholding tax obligations related to equity incentive plans143144 - As of March 31, 2023, $600.0 million remained available under the $750.0 million share repurchase authorization, which expires on December 31, 2025; no shares were repurchased as part of publicly announced plans in Q1 2023143144 ITEM 6. Exhibits This section lists the exhibits accompanying the Form 10-Q, including CEO and CFO certifications and iXBRL-formatted financial statements - Exhibits include certifications from the Chief Executive Officer (31.1, 32.1) and Chief Financial Officer (31.2, 32.2)147 - Financial statements are filed in iXBRL (Inline Extensible Business Reporting Language) format147 Signatures This section contains the required signatures for the Quarterly Report on Form 10-Q, confirming its submission by Pentair plc's Executive Vice President, CFO, and CAO - The report was signed on April 27, 2023, by Robert P. Fishman, Executive Vice President, Chief Financial Officer, and Chief Accounting Officer of Pentair plc149150