Pentair continues to execute its Transformation Program initiatives, which focus on pricing excellence, strategic sourcing, operations excellence, and organizational effectiveness. The company expects to continue incurring transformation costs throughout the remainder of 2024 and beyond.

In 2024, Pentair began using 80/20 guiding principles to enable its Transformation Program. This analysis is expected to create value by focusing on the right customers and products through quadrant-based strategies, potentially reducing lower margin sales and complexity.

Pentair executed certain business restructuring initiatives aimed at reducing fixed costs and realigning the business. These actions are expected to continue throughout the remainder of 2024 and to drive margin growth.

The effective income tax rate decreased from 13.6% to 12.9% for the three months ended September 30, 2024, and from 14.5% to 14.1% for the nine months ended September 30, 2024. This reflects management's efforts to reduce the effective tax rate.

Pentair continues to focus on capital allocation by committing to maintaining its investment grade rating, reducing long-term debt, returning cash to shareholders through dividends and share repurchases, and accelerating performance with strategically aligned mergers and acquisitions.

The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the quarter ended September 30, 2024, ensuring the reliability of financial reporting.

There have been 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, 2023.

The Organization for Economic Co-operation and Development Pillar Two Model Rules for a global 15.0% minimum tax are in the process of being adopted by a number of jurisdictions in which Pentair operates, and this has negatively impacted the effective tax rate in 2024. This impact could change in the future.

The current volatile market for commodities has the potential to continue to drive price increases in Pentair's supply chain. While the company has taken pricing actions and implemented transformation initiatives to improve productivity and offset cost increases, it anticipates inflationary cost increases to continue for the remainder of 2024.

Pentair has identified specific product and geographic market opportunities that it finds attractive and continues to pursue, both within and outside the U.S. The company expects to continue investing in its businesses to drive these opportunities through research and development and additional sales and marketing resources.

The total backlog of orders decreased from $738.3 million to $523.6 million, a 29.1% decrease. The decrease in overall backlog from December 31, 2023 was primarily driven by the backlog trending down to more historical levels as a result of increased manufacturing capacity and improved lead times.

Increased productivity, mainly driven by transformation initiatives across all segments and manufacturing leverage within the Pool segment, contributed to gross profit increases.

Selling, general, and administrative expenses increased as a percentage of net sales due to transformation costs and restructuring and other costs.

During the nine months ended September 30, 2024, Pentair repurchased 1.2 million of its ordinary shares for $100.0 million, with $500.0 million remaining available for share repurchases under the authorization.

On September 23, 2024, the Board of Directors declared a quarterly cash dividend of $0.23 per share, payable on November 1, 2024.

During the nine months ended September 30, 2024, Pentair repaid $200.0 million term loans under the Senior Credit Facility and $162.5 million Term Loan Facility principal payments.

Pentair experiences seasonal cash flows primarily due to seasonal demand in a number of markets, with seasonal highs from April to September.

End-user demand for pool equipment, water solution products, and residential water supply and agricultural products follows warm weather trends, with seasonal highs from April to September.