Pentair made strategic progress on its Transformation Program initiatives, focusing on pricing excellence, strategic sourcing, operations excellence, and organizational effectiveness. The company expects to continue executing these initiatives to drive margin expansion.

Pentair began using 80/20 guiding principles to focus on key customers and products through quadrant-based strategies. This analysis is expected to improve operating performance by driving growth with high-value customers, reducing lower margin sales, and removing complexity.

Pentair executed certain business restructuring initiatives aimed at reducing its fixed cost structure and realigning its business. These actions are expected to continue into 2025 and drive margin growth.

Stephen J. Pilla was appointed as Executive Vice President, Chief Supply Chain Officer and Chief Transformation Officer, indicating a focus on operational improvements and strategic execution.

De'Mon L. Wiggins was appointed as Executive Vice President and President of the Flow reportable segment, indicating a focus on leadership and strategic direction within a key business segment.

Adrian C. Chiu was appointed as Executive Vice President and President of the Water Solutions reportable segment, indicating a focus on leadership and strategic direction within a key business segment.

Pentair experienced inflationary cost increases of raw materials, logistics, transportation, energy, insurance and labor costs. Continued cost inflation, new or increased tariffs, or failure to increase prices, generate cost savings or improve productivity could have a material adverse effect on business.

Material interruption of the supply of raw materials and components, interruptions in service by third-party logistic service providers, unexpected delays in shipping or processing through customs of goods, increased logistics costs, trade restrictions, or other unexpected or uncontrollable events could negatively affect ability to produce or deliver products.

Changes in general economic and political conditions in countries where Pentair operates or purchases from, relatively more severe or unpredictable economic conditions in some international markets than in the U.S., the imposition of sanctions, tariffs, duties, exchange controls, currency restrictions or other trade restrictions, and changes in tax treaties, laws or rulings that could have a material adverse impact on effective tax rate are all risks.

The markets for Pentair's products and services are geographically diverse and highly competitive. Competition may also result from new entrants into the markets Pentair serves offering products and/or services that compete with ours.

Pentair operates in global markets characterized by customer demand that is often global in scope but localized in delivery. Pentair competes with numerous smaller regional and local companies that may be positioned to offer products produced at lower cost than ours.

Patents, non-compete agreements, proprietary technologies, customer relationships, trademarks, trade names and brand names are important to our business. Intellectual property protections, however, may not preclude competitors from developing products like ours, or from challenging our names or products.

Pentair has a Transformation Program designed to accelerate growth and drive margin expansion by driving operational excellence, reducing complexity and streamlining processes.

Pentair began using 80/20 guiding principles to focus on key customers and products through quadrant-based strategies. This analysis is expected to improve operating performance by driving growth with high-value customers, reducing lower margin sales, and removing complexity.

Pentair had a cash outflow of $61.3 million as a result of changes in net working capital, primarily due to an increase in accounts receivable and decreases in accounts payable and other current liability balances, partially offset by lower inventory compared to December 31, 2022. Decreases in inventory and accounts payable were primarily related to supply chain efficiencies and improved lead times.

Pentair conducts research and development activities primarily in its own facilities, which mostly consist of development of new products, product applications and manufacturing processes. R&D expenditures during 2024, 2023 and 2022 were $93.6 million, $99.8 million and $92.2 million, respectively.

Pentair's evolution into smart products subjects it to increased cyber and technology risks. The secure operation of information technology systems and networks is critical to business operations and strategy.

The CIO/CISO has over 20 years of cybersecurity and technology experience and has previously held Chief Information Security Officer positions at a large public retail company, as well as at a public technology company and services organization. The CIO/CISO has an undergraduate degree in Management Information Systems.

In December 2020, the Board of Directors authorized the repurchase of ordinary shares up to a maximum dollar limit of $750.0 million. This authorization expires on December 31, 2025.

On December 16, 2024, the Board of Directors approved a regular quarterly cash dividend of $0.25 per share that was paid on February 7, 2025 to shareholders of record at the close of business on January 24, 2025. This dividend reflects a 9 percent increase in the Company's regular cash dividend rate.

On December 2, 2024, as part of our Pool reportable segment, we completed the acquisition of G & F Manufacturing, LLC for $116.0 million in cash, net of cash acquired and subject to customary adjustments.

Karla C. Robertson was appointed as Executive Vice President, Chief Sustainability Officer, General Counsel and Secretary since 2020.

In 2023, Pentair completed an Environmental, Social and Governance (“ESG”) assessment in alignment with the European Union's Corporate Sustainability Reporting Directive (“CSRD”). This assessment supported the topics focused on in our first set of social responsibility strategic targets, which we announced in 2021.

Climate change is receiving ever increasing attention worldwide. Many scientists, legislators and others attribute global warming to increased levels of greenhouse gases, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions.

We compete in various geographic regions and product markets around the world. Among these, the most significant are global industrial, commercial, and residential markets. We have experienced, and expect to continue to experience, fluctuations in revenues and results of operations due to economic and business cycles.

We experience seasonal demand with end customers and end users within each of our business segments. Demand for pool equipment in the Pool segment, water solution products in the Water Solutions segment, and residential water supply and agricultural products within the Flow segment follows warm weather trends, with seasonal highs ranging from April to September.

Sales outside of the U.S. for the year ended December 31, 2024 accounted for approximately 31% of our net sales. Our financial statements reflect translation of items denominated in non-U.S. currencies to U.S. dollars.