Pentair (PNR) 10-K risk factor changes: FY2019 vs FY2018

[removed: Risks] [added: Risks] Relating to Our [removed: Business][added: Business]

[removed: General] [added: General] global economic and business conditions affect demand for our [removed: products.][added: products.]

Important factors for our businesses and the businesses of our customers include the overall strength of the [added: global] economy and [added: various regional economies and] our customers’ confidence in [removed: the economy,] [added: these economies,] industrial and governmental capital spending, the strength of the residential and commercial real estate markets, the residential housing market, the commercial business climate, unemployment rates, availability of consumer and commercial financing, interest rates, and energy and commodity prices.

[removed: We] [added: We] compete in attractive markets with a high level of competition, which may result in pressure on our profit margins and limit our ability to maintain or increase the market share of our [removed: products.][added: products.]

If we are unable to continue to differentiate our products, services and [removed: solutions,] [added: solutions] or [added: adapt to changes in customer purchasing behavior or shifts in distribution channels, or] if we are forced to cut prices or to incur additional costs to remain competitive, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

[removed: Volatility] [added: Volatility] in currency exchange rates could have a material adverse effect on our financial condition, results of operations and cash [removed: flows.][added: flows.]

Sales outside of the U.S. for the year ended December 31, [removed: 2018] [added: 2019] accounted for 37% of our net sales.

Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S. dollar against the euro, could have a [removed: material adverse effect on our reported revenue in future periods.]

[removed: Our] [added: Our] future growth is dependent upon our ability to [removed: continue to] [added: transform and] adapt our products, [removed: services] [added: services, solutions,] and organization to meet the demands of local markets in both developed and emerging economies and by developing or acquiring new technologies that achieve market acceptance with acceptable [removed: margins.][added: margins.]

Also, in several emerging [removed: markets] [added: markets,] potential customers prefer local suppliers, in some cases because of existing relationships and in other cases because of local legal restrictions or incentives that favor local businesses.

Accordingly, our future success depends upon a number of factors, including our ability to [added: transform and] adapt our products, services, [added: solutions,] organization, workforce and sales strategies to fit localities throughout the world, particularly in high growth emerging markets; identify emerging technological and other trends in our target [removed: end-markets;] [added: end markets;] and develop or acquire competitive [removed: products] [added: technologies, products, services,] and [removed: services] [added: solutions] and bring them to market quickly and cost-effectively.

The failure to effectively adapt our [removed: products] [added: products, services,] or [removed: services] [added: solutions] could have a material adverse effect on our business, financial condition, results of operations and cash flows.

[removed: We] [added: We] may not be able to identify, finance and complete suitable acquisitions and investments, and any completed acquisitions and investments [removed: could] [added: may] be unsuccessful or consume significant [removed: resources.][added: resources.]

We continue to analyze and evaluate the acquisition of strategic businesses or product lines with the potential to strengthen our industry position or enhance our existing set of [removed: product] [added: product, service,] and [removed: service] [added: solution] offerings.

| • | assumption of the liabilities and exposure to unforeseen liabilities of acquired companies, including risks relating to the U.S. Foreign Corrupt Practices Act (the [removed: “FCPA”);] [added: “FCPA”)] and [added: privacy laws, including the General Data Protection Regulation (“GDPR”); and] |

[removed: We] [added: We] may not achieve some or all of the expected benefits of our business [removed: initiatives.][added: initiatives.]

During [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016,] [added: 2017,] we initiated and continued execution of certain business initiatives aimed at reducing our fixed cost structure and realigning our business.

[removed: We] [added: We] are exposed to political, regulatory, economic, trade, and other risks that arise from operating a multinational [removed: business.][added: business.]

| • | the imposition of tariffs, [added: duties,] exchange controls or other trade restrictions; |

| • | the difficulty of communicating and monitoring [added: evolving] standards and directives across our [added: product lines, services, and] global facilities; |

Given the lack of comparable [removed: precedent and the status of the negotiations,] [added: precedent,] the implications of Brexit, or how such implications might affect our company, continue to remain unclear at this time.

[removed: Changes] [added: Changes] in U.S. or foreign government administrative policy, including changes to existing trade agreements, could have a material adverse effect on [removed: us.][added: us.]

As a result of changes to U.S. or foreign government administrative policy, there may be changes to existing trade agreements, like the North American Free Trade Agreement (“NAFTA”) and its anticipated successor agreement, the U.S.-Mexico-Canada Agreement [removed: (“USMCA”)] [added: (“USMCA”),] which is still subject to approval by [removed: the U.S., Mexico and] Canada, greater restrictions on free trade generally, and significant increases in tariffs on goods imported into the U.S., particularly tariffs on products manufactured in Mexico, China, or other U.S. trading countries where we have operations or manufacture or sell products, among other possible changes.

[added: It remains unclear what the U.S.] administration or foreign governments, including China, will or will not do with respect to tariffs, NAFTA, USMCA or other international trade agreements and policies.

[removed: We] [added: We] may experience cost and other [removed: inflation.][added: inflation.]

[removed: Intellectual] [added: Intellectual] property challenges may hinder our ability to develop, engineer and market our [removed: products.][added: products.]

Our pending patent applications, and our pending copyright and trademark registration applications, may not be [removed: allowed] [added: allowed,] or competitors may challenge the validity or scope of our patents, copyrights or trademarks.

We may need to spend significant resources monitoring, enforcing and defending our intellectual property [removed: rights] [added: rights,] and we may or may not be able to detect infringement by third parties.

[removed: We] [added: We] have significant goodwill and intangible assets and future impairment of our goodwill and intangible assets could have a material adverse effect on our results of [removed: operations.][added: operations.]

As of December 31, [removed: 2018] [added: 2019] our goodwill and intangible assets were [removed: $2,349] [added: $2,598] million and represented [removed: 62%] [added: 63%] of our total assets.

[removed: A] [added: A] loss of, or material cancellation, reduction, or delay in purchases by, one or more of our largest customers could harm our [removed: business.][added: business.]

Our net sales to our largest customer represented approximately 15% of our consolidated net sales in [removed: 2018.][added: 2019.]

While we do not have any other customers that accounted for 10% or more of our consolidated net sales in [removed: 2018,] [added: 2019,] we have other customers that are key to the success of our business.

If operations at any of our manufacturing facilities [added: or those of our suppliers] were to be disrupted as a result of significant equipment failures, natural disasters, earthquakes, power outages, fires, explosions, terrorism, adverse weather conditions, labor [removed: disputes] [added: disputes, public health epidemics] or other [removed: reasons,] [added: catastrophic events or events outside of our control,] we may be unable to fill customer orders and otherwise meet customer demand for our [removed: products, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.][added: products.]

However, any recovery under our insurance policies may not offset the lost sales or increased costs that may be experienced [added: during the disruption of operations, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.]

[removed: during the disruption] [added: As a result, any] of [removed: operations, which] [added: such events] could have a material adverse effect on our business, financial condition, results of operations and cash flows.

[removed: Seasonality] [added: Seasonality] of sales and weather conditions could have a material adverse effect on our financial [removed: results.][added: results.]

Demand for pool equipment in the [removed: Aquatic Systems segment,] [added: Pool business,] water [removed: filtration products] [added: treatment solutions] in [removed: the Filtration] [added: our Water] Solutions [removed: segment,] and [added: Industrial Filtration businesses, and] residential water supply, infrastructure and agricultural products in the [added: businesses within the Industrial &] Flow Technologies segment follows warm weather trends and is at seasonal highs from April to August.

[removed: While we attempt to mitigate the magnitude of the sales spike in the Aquatic Systems and Flow Technologies segments by] employing some advance sale “early buy” programs (generally including extended payment terms and/or additional discounts), we cannot provide any assurance that such programs will be successful.

In addition, seasonal effects in the [added: Pool business and in the businesses within the Industrial &] Flow Technologies segment may vary from year to year and be impacted by weather patterns, particularly by temperature, heavy flooding and droughts.

Competition may also result from new entrants into the markets we serve, offering products and/or services that compete with us.

Competition may also result from new entrants into the markets we serve, offering products and/or services that compete with us.

Moreover, demand for our products, which impacts profit margins, is affected by changes in customer order patterns, such as changes in the levels of inventory maintained by customers and the timing of customer purchases, and changes in customers’ preferences for our products, including the success of products offered by our competitors.

Customer purchasing behavior may also shift by product mix in the market or result in a shift to new distribution channels, including e-commerce, which is a rapidly developing area.

material adverse effect on our reported revenue in future periods.

Sales outside of the U.S. for the year ended December 31, 2019 accounted for 37% of our net sales.

| • | limitations on repatriation of earnings or other regionally-imposed capital requirements; |

The Brexit bill was passed by the United Kingdom on January 23, 2020, and it was passed by the European Parliament on January 29, 2020.

The United Kingdom’s exit from the European Union became effective on January 31, 2020.

If the USMCA is ratified by Canada, its provisions will go into effect shortly thereafter.

Catastrophic and other events beyond our control may disrupt operations at our manufacturing facilities and those of our suppliers, which could cause us to be unable to meet customer demands or increase our costs, or reduce customer spending.

In addition, these types of events may negatively impact residential, commercial and industrial spending in impacted regions or, depending on the severity, globally.

For example, we are evaluating the potential impact of the coronavirus (COVID-19) outbreak that originated in China, including evaluating the impact on our employees, customers, and global supply chain, and of governmental actions being taken to curtail the spread of the virus.

The significance of the impact of the coronavirus outbreak to us remains unclear at this time; however, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

While we attempt to mitigate the magnitude of the sales spike in the Pool business and in the businesses within the Industrial & Flow Technologies segment by

Moreover, adverse weather conditions, such as cold or wet weather, may negatively impact demand for, and sales of, pool equipment in the Pool business and residential water supply, commercial, infrastructure and agricultural products in the businesses within the Industrial & Flow Technologies segment.

In addition, borrowings under our revolving credit facility and term loans bear interest at a rate equal to an adjusted base rate or the London Interbank Offered Rate (“LIBOR”), plus, in each case, an applicable margin.

The U.K. Financial Conduct Authority, which regulates LIBOR, has announced it intends to stop compelling banks to submit rates for calculation of LIBOR after 2021.

The credit agreement governing our revolving credit facility and term loans provides procedures for determining a replacement or alternative base rate in the event that LIBOR is discontinued; however, any calculation of interest based upon such replacement or alternative base rate may result in higher interest rates.

To the extent that our interest rates increase, our interest expense will increase, which could adversely affect our financial condition, results of operations and cash flows.

access credit markets if the need arises.

greenhouse gas emissions.

In addition, as customers become increasingly concerned about the environmental impact of their purchases, if we fail to keep up with changing regulations or innovate in ways that minimize the energy use of our products, customers may choose more energy efficient alternatives.

Our evolution into smart products, Internet of Things, business-to-consumer, and e-commerce subjects us to increased cyber and technology risks.

Within the United States, many states are considering adopting, or have already adopted privacy regulations, including, for example, the California Consumer Privacy Act.

In addition, some of our businesses, customers, and dealers are subject to various laws and regulations regarding consumer protection and advertising and sales practices, and we have been named, and may be named in the future, as a defendant in litigation, some of which are or may be class action complaints, arising from alleged violation of these laws and regulations.

Our focus on consumer solutions for residential and commercial water treatment as a strategic priority exposes us to certain risks that could have a material adverse impact on our revenue and profitability as well as our reputation.

As we introduce residential and commercial water solutions, we may have limited experience in markets we choose to enter, and our customers may not like our value propositions.

New initiatives we test through trials and pilots may not scale or grow effectively or as we expected, which could limit our growth and negatively affect our operating results.

Designing, marketing and executing these solutions is subject to incremental risks.

These risks include, for example:

| | |

| --- | --- |

| • | increased labor expense to fulfill our customer promises, which may be higher than the related revenue; |

| | |

| --- | --- |

| • | the requirement to recruit, train and retain qualified personnel; |

| | |

| --- | --- |

| • | increased risk of errors or omissions in the fulfillment of solutions or services; |

| • | limitations on repatriation of earnings; |

Negotiations continue to determine the terms of Brexit.

If the USMCA is ratified by all three countries, many of its provisions will not take effect until 2020.

It remains unclear what the U.S.

A material disruption at any of our manufacturing facilities could cause us to be unable to meet customer demands or increase our costs.

increased costs of debt financing or difficulties in obtaining debt financing.

that limit emissions of GHGs from certain mobile or stationary sources.

consequential damages and other damages in the contracts for these projects, we could be exposed to significant monetary damages and other liabilities in connection with the sale of our products for these projects for a variety of reasons.

We may be unable to achieve some or all of the benefits that we expect to achieve from the spin-off.

Following the spin-off, we are a smaller and less diversified company with a narrower business focus and, as a result, we may be more vulnerable to changing market conditions.

Although we believe that the spin-off of nVent Electric plc will provide financial, operational, managerial and other benefits to us and our shareholders, the spin-off may not provide the results on the scope or on the scale we anticipate, and we may not realize any or all of the intended benefits.

In addition, we have and will continue to incur one-time costs and ongoing costs in connection with, or as a result of, the spin-off, including costs of operating as independent, publicly-traded companies that the two businesses are no longer able to share.

Those costs may exceed our estimates or could negate some of the benefits we expect to realize.

If we do not realize the intended benefits or if our costs exceed our estimates, we could suffer a material adverse effect on the business, financial condition, results of operations, cash flows and trading prices.

The MLI has been signed and ratified by a number of countries, including Ireland and the U.K. The MLI allows signatories to opt into or out of certain changes: the effect for a given double tax convention depends on the options chosen by the two contracting states.

The MLI has not yet entered into force effect in order to amend the residence tie-breaker.

[removed: Forward-looking statements][added: Forward-looking statements]

These factors include overall global economic and business conditions impacting our business, including the strength of housing and related markets; [added: demand,] competition and pricing pressures in the markets we serve; volatility in currency exchange rates; failure of markets to accept new product introductions and enhancements; the ability to successfully identify, finance, complete and integrate [removed: acquisitions, including] [added: acquisitions;] the [added: ability to successfully integrate the] Aquion, Inc. (“Aquion”) and Pelican Water Systems (“Pelican”) acquisitions; the ability to achieve the benefits of our restructuring plans and cost reduction initiatives; risks associated with operating foreign businesses; the impact of material cost and other inflation; [added: the impact of seasonality of sales and weather conditions;] our ability to comply with laws and regulations; the impact of changes in laws, regulations and administrative policy, including those that limit U.S. tax benefits or impact trade agreements and tariffs; the outcome of litigation and governmental proceedings; the [removed: ability to realize the anticipated benefits from] [added: potential negative impact of] the [removed: Separation (as defined below);] [added: coronavirus (COVID-19) outbreak on our business;] and the ability to achieve our long-term strategic operating goals.

[removed: Overview][added: Overview]

Pentair plc and its consolidated subsidiaries (“we,” “us,” “our,” “Pentair” or the “Company”) is a pure play water industrial manufacturing company [added: and in 2019 we were] comprised of three reporting segments: Aquatic Systems, Filtration Solutions and Flow Technologies.

For the year ended December 31, [removed: 2018,] [added: 2019,] the Aquatic Systems, Filtration Solutions and Flow Technologies segments represented approximately [removed: 35%, 34%] [added: 33%, 36%] and 31% of total revenues, respectively.

[removed: Key] [added: Key] trends and uncertainties regarding our existing [removed: business][added: business]

The following trends and uncertainties affected our financial performance in [removed: 2018 and 2017,] [added: 2019,] and will likely impact our results in the future:

| • | During [removed: 2018 and 2017,] [added: 2019,] we [removed: continued execution of] [added: executed] certain business restructuring initiatives aimed at reducing our fixed cost structure and [removed: realigned] [added: realigning] our [removed: business in contemplation of the Separation and Distribution of nVent.] [added: business.] We expect these actions will contribute to margin growth in [removed: 2019.] [added: 2020.] |

In [removed: 2019,] [added: 2020,] our operating objectives include the following:

| • | Accelerating [removed: PIMS,] [added: Pentair Integrated Management System (“PIMS”),] with specific focus on the area of commercial excellence and acquisition integrations; |

| • | Delivering our growth priorities through new products and global and market expansion, specifically in the areas of pool and residential and commercial [removed: water treatment especially through acquisitions and focus on China and Southeast Asia;] [added: filtration solutions;] |

| • | Building a [added: high performance] growth culture and delivering on our commitments while living our Win Right values. |

[removed: We completed] [added: | • |] the [added: acquisitions of the] Aquion [removed: acquisition on February 13, 2019] and [removed: the] Pelican [removed: acquisition on February 12,] [added: businesses in] 2019. [added: |]

[removed: CONSOLIDATED] [added: CONSOLIDATED] RESULTS OF [removed: OPERATIONS][added: OPERATIONS]

| | [removed: Years] [added: Years] ended December [removed: 31] [added: 31] | | | | | | | | | | [removed: %] [added: %] / point [removed: change] [added: change] | | | |

| [removed: In millions] [added: *In millions*] | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | | [removed: 2018] [added: 2019] vs [removed: 2017] [added: 2018] | | [removed: 2017] [added: 2018] vs [removed: 2016] [added: 2017] | |

| Net sales | $ | [removed: 2,965.1] [added: 2,957.2] | | $ | [removed: 2,845.7] [added: 2,965.1] | | $ | [removed: 2,780.6] [added: 2,845.7] | | | [removed: 4.2] [added: (0.3] | [removed: %] [added: )%] | [removed: 2.3] [added: 4.2] | % |

| Cost of goods sold | [removed: 1,917.4] [added: 1,905.7] | | | [removed: 1,858.2] [added: 1,917.4] | | | [removed: 1,821.5] [added: 1,858.2] | | | | [removed: 3.2] [added: (0.6] | [removed: %] [added: )%] | [removed: 2.0] [added: 3.2] | % |

| Gross profit | [removed: 1,047.7] [added: 1,051.5] | | | [removed: 987.5] [added: 1,047.7] | | | [removed: 959.1] [added: 987.5] | | | | [removed: 6.1] [added: 0.4] | % | [removed: 3.0] [added: 6.1] | % |

| [removed: %] [added: *%] of net [removed: sales] [added: sales*] | [removed: 35.3] [added: *35.6*] | | [removed: %] [added: *%*] | [removed: 34.7] [added: *35.3*] | | [removed: %] [added: *%*] | [removed: 34.5] [added: *34.7*] | | [removed: %] [added: *%*] | | [removed: 0.6] [added: *0.3*] | [removed: pts] [added: *pts*] | [removed: 0.2] [added: *0.6*] | [removed: pts] [added: *pts*] |

| Selling, general and administrative | [added: 540.1 | | |] 534.3 | | | 536.0 | | | [removed: 531.4] | [removed: |] [added: 1.1] | [added: %] | (0.3 | )% | [removed: 0.9 | % |]

| [removed: %] [added: *%] of net [removed: sales] [added: sales*] | [removed: 18.0] [added: *18.3*] | | [removed: %] [added: *%*] | [removed: 18.8] [added: *18.0*] | | [removed: %] [added: *%*] | [removed: 19.1] [added: *18.8*] | | [removed: %] [added: *%*] | | [removed: (0.8] [added: *0.3*] | [removed: ) pts] [added: *pts*] | [removed: (0.3] [added: *(0.8*] | [removed: ) pts] [added: *) pts*] |

| Research and development | [removed: 76.7] [added: 78.9] | | | [removed: 73.2] [added: 76.7] | | | [removed: 73.3] [added: 73.2] | | | | [removed: 4.8] [added: 2.9] | % | [removed: (0.1] [added: 4.8] | [removed: )%] [added: %] |

[removed: | % of net sales | 2.6 | | % | 2.6 | | % | 2.6 | | % | | — | | — | |][added: Net sales]

| Operating income | [removed: 436.7] [added: 432.5] | | | [removed: 378.3] [added: 436.7] | | | [removed: 354.4] [added: 378.3] | | | | [removed: 15.4] [added: (1.0] | [removed: %] [added: )%] | [removed: 6.7] [added: 15.4] | % |

| [removed: %] [added: *%] of net [removed: sales] [added: sales*] | [removed: 14.7] [added: *14.6*] | | [removed: %] [added: *%*] | [removed: 13.3] [added: *14.7*] | | [removed: %] [added: *%*] | [removed: 12.7] [added: *13.3*] | | [removed: %] [added: *%*] | | [removed: 1.4] [added: *(0.1*] | [removed: pts] [added: *) pts*] | [removed: 0.6] [added: *1.4*] | [removed: pts] [added: *pts*] |

| [removed: Loss] [added: (Gain) loss] on sale of businesses | [removed: 7.3] [added: (2.2] | | [added: )] | [removed: 4.2] [added: 7.3] | | | [removed: 3.9] [added: 4.2] | | | | N.M. | | [removed: 7.7] [added: N.M.] | [removed: %] |

| Loss on early extinguishment of debt | [removed: 17.1] [added: —] | | | [removed: 101.4] [added: 17.1] | | | [removed: —] [added: 101.4] | | | | N.M. | | [removed: N.M] [added: N.M.] | |

| Net interest expense | [removed: 32.6] [added: 30.1] | | | [removed: 87.3] [added: 32.6] | | | [removed: 140.1] [added: 87.3] | | | | [removed: (62.7] [added: (7.7] | )% | [removed: (37.7] [added: (62.7] | )% |

| Other (income) expense | [removed: (0.1] [added: (2.9] | | ) | [removed: 12.6] [added: (0.1] | | [added: )] | [removed: (10.5] [added: 12.6] | | [removed: )] | | N.M. | | [removed: N.M] [added: N.M.] | |

| Income from continuing operations before income taxes | [removed: 379.8] [added: 407.5] | | | [removed: 172.8] [added: 379.8] | | | [removed: 220.9] [added: 172.8] | | | | N.M. | | [removed: (21.8] [added: N.M.] | [removed: )%] |

| Provision for income taxes | [removed: 58.1] [added: 45.8] | | | [removed: 58.7] [added: 58.1] | | | [removed: 42.7] [added: 58.7] | | | | [removed: (1.0] [added: (21.2] | )% | [removed: 37.5] [added: (1.0] | [added: )] % |

| [removed: Effective] [added: *Effective] tax [removed: rate] [added: rate*] | [removed: 15.3] [added: *11.2*] | | [removed: %] [added: *%*] | [removed: 34.0] [added: *15.3*] | | [removed: %] [added: *%*] | [removed: 19.3] [added: *34.0*] | | [removed: %] [added: *%*] | | [removed: (18.7] [added: *(4.1*] | [removed: ) pts] [added: *) pts*] | [removed: 14.7] [added: *(18.7*] | [removed: pts] [added: *) pts*] |

[removed: Net sales][added: Net sales]

| | [removed: 2018] [added: 2019] vs [removed: 2017] [added: 2018] | | | [removed: 2017] [added: 2018] vs [removed: 2016] [added: 2017] | |

| Volume | [removed: 3.6] [added: (3.9] | [removed: %] [added: )%] | | [removed: —] [added: 3.6] | % |

| Price | [removed: 1.2] [added: 2.6] | | | [removed: 0.8] [added: 1.2] | |

| Core growth | [removed: 4.8] [added: (1.3] | [added: )] | | [removed: 0.8] [added: 4.8] | |

| Acquisition (divestiture) | [removed: (1.2] [added: 2.5] | [removed: )] | | [removed: 1.1] [added: (1.2] | [added: )] |

| Currency | [removed: 0.6] [added: (1.5] | [added: )] | | [removed: 0.4] [added: 0.6] | |

Commencing with the first quarter of 2020, we revised our segments, going from three segments to two with the two revised segments named Consumer Solutions and Industrial & Flow Technologies.

The discussions below reporting on prior periods reflect the previous segmentation, but the descriptions of our businesses below continue to apply in their re-segmented form.

Additional information regarding this re-segmentation is found under the section titled “New Segmentation” in ITEM 1 of this Form 10-K.

In February 2019, as part of Filtration Solutions, we completed the acquisitions of Aquion and Pelican for $163.4 million and $121.1 million, respectively, in cash, net of cash acquired.

| • | Our businesses utilize a global supply chain including materials, components and products sourced directly or indirectly from China and from other countries and geographic regions potentially impacted by the coronavirus outbreak, and 3-4% of our total revenues are generated from sales to customers in China. Our overall business could be negatively impacted by the coronavirus outbreak, but the significance of the impact of the coronavirus outbreak on our business and the duration for which it may have an impact cannot be determined at this time. |

| *% of net sales* | *2.7* | | *%* | *2.6* | | *%* | *2.6* | | *%* | | *0.1* | *pts* | *—* | |

| *•* | volume declines across all three reportable segments; and |

*This* *increase* *was partially offset by:*

| • | unfavorable mix as a result of a core sales growth decrease in the higher margin Aquatic Systems segment; and |

*This* *increase* *was partially offset by:*

| • | decreased sales volumes, which resulted in decreased leverage on fixed operating expenses; |

| • | asset impairments of $21.2 million in 2019, compared to $12.0 million in 2018. |

*This* *increase* *was partially offset by:*

| • | restructuring and other costs of $21.0 million in 2019, compared to $31.8 million in 2018; |

| • | duplicative corporate costs of $11.0 million in 2018 resulting from the Separation of nVent that did not recur in 2019; and |

| • | lower annual performance based cash incentive awards in 2019 compared to 2018. |

*This* *decrease* *was partially offset by:*

| • | the impact of lower nondeductible interest expense allocated to continuing operations in 2019 compared to 2018; |

| • | a decrease in valuation allowances during 2019. |

| | Years ended December 31 | | | | | | | | | | % / point change | | | |

| • | sales volume declines due to cold, wet weather during the first half of 2019 in key markets; |

| • | higher than anticipated inventory levels in some of our key distribution channels impacting our residential and commercial businesses during the first nine months of 2019; |

| • | divestitures in our aquaculture and residential pool businesses; and |

| • | unfavorable foreign currency effects compared to the same periods of the prior year. |

*This* *decrease* *was partially offset by:*

*This* *increase* *was partially offset by*

| | 2019 | | 2018 | |

*This* *increase* *was partially offset by:*

| • | increased investment in both research and development and sales and marketing to drive growth; and |

*This* *increase* *was partially offset by:*

| | Years ended December 31 | | | | | | | | | | % / point change | | | |

| *In millions* | 2019 | | | 2018 | | | 2017 | | | | 2019 vs 2018 | | 2018 vs 2017 | |

Net sales

| | 2019 vs 2018 | | | 2018 vs 2017 | |

| • | increased sales due to the acquisitions of Aquion and Pelican in the first quarter of 2019; and |

*This* *increase* *was partially offset by:*

| • | decreased core sales volume in our residential and commercial businesses, partially due to lower component sales as Aquion sales are now considered intercompany; and |

| • | unfavorable foreign currency effects. |

*This* *increase* *was partially offset by:*

Segment income

In January 2019, as part of Filtration Solutions, we entered into definitive agreements to acquire Aquion and Pelican for $160.0 million and $120.0 million in cash, respectively, and subject to certain customary adjustments.

| • | increased sales in our industrial and residential & commercial businesses primarily in the U.S.; |

| • | increased sales related to business acquisitions that occurred in the fourth quarter of 2016 and the first quarter of 2017; and |

| • | favorable foreign currency effects during the year ended December 31, 2017. |

| • | sales declines in our industrial business due to customer delays in capital spending; and |

| • | large job adjustments to net sales of $9.7 million in 2017. |

| • | favorable material savings for certain raw materials and product mix offsetting inflation; |

| • | a benefit from the reversal of a $13.3 million indemnification liability in 2017; and |

| • | savings generated from back-office consolidation, reduction in personnel and other lean initiatives. |

| • | restructuring costs of $28.2 million in 2017, compared to $12.2 million in 2016; |

| • | non-cash charges of $15.6 million in 2017 related to trade names and other impairments; and |

| • | increased overall interest rates in effect on our outstanding variable rate debt during 2018 compared to 2017. |

| • | increased overall interest rates in effect on our variable rate outstanding debt during 2017 compared to 2016. |

In May 2017, we repurchased aggregate principal of certain series of outstanding fixed rate debt totaling $1,659.3 million.

Total costs of $101.4 million associated with the repurchases were recorded as Loss on early extinguishment of debt.

| • | core sales increases in the residential & commercial business primarily in the U.S.; |

| • | increased sales related to a business acquisition that occurred in the first quarter of 2017; |

| • | sales increases in the U.S., China and Southeast Asia; and |

| • | sales volume declines. |

| • | cost savings generated from back-office consolidation, reduction in personnel and other lean initiatives. |

| • | volume declines in our commercial business; and |

The 0.1 point increase in segment income for Flow Technologies as a percentage of sales in 2017 from 2016 was primarily the result of:

| • | cost control and savings generated from back-office consolidation, reduction in personnel and other lean initiatives. |

| • | sales volume declines from our commercial business; and |

The $379.9 million in net cash provided by operating activities of continuing operations in 2016 primarily reflects net income from continuing operations of $266.6 million, net of non-cash depreciation and amortization and a positive impact of $192.4 million as a result of changes in net working capital.

Net cash used for investing activities of continuing operations in 2016 primarily reflects capital expenditures of $43.3 million and cash paid of $25.0 million to acquire a business as part of Aquatic Systems.

In 2017, net cash used for financing activities primarily relates to the utilization of proceeds from the sale of the Valves & Controls business to repay our commercial paper and revolving long-term debt and for the early extinguishment of certain series of fixed rate debt.

On April 25, 2018, Pentair, Pentair Investments Switzerland GmbH (“PISG”), Pentair Finance S.à r.l.

The Senior Credit Facility replaced PFSA’s existing credit facility under that certain Amended and Restated Credit Agreement, dated as of October 3, 2014.

Additionally, the Board of Directors approved a plan to increase the 2019 annual cash dividend to $0.72 from $0.70, adjusted for the Separation.

The 2019 dividend is intended to be paid in four quarterly installments.

| Interest obligations on fixed-rate debt | 21.9 | | | 11.5 | | | 6.3 | | | 3.7 | | | 0.9 | | | 1.8 | | | 46.1 | | |

| Operating lease obligations, net of sublease rentals | 22.5 | | | 17.0 | | | 12.7 | | | 10.5 | | | 8.9 | | | 13.2 | | | 84.8 | | |

| Purchase and marketing obligations | 20.6 | | | 4.6 | | | 3.0 | | | 3.2 | | | 2.4 | | | 4.8 | | | 38.6 | | |

| Pension and other post-retirement plan contributions | 31.6 | | | 8.8 | | | 8.7 | | | 8.7 | | | 8.2 | | | 41.6 | | | 107.6 | | |

| Total contractual obligations, net | $ | 501.7 | | $ | 115.9 | | $ | 134.5 | | $ | 114.4 | | $ | 122.5 | | $ | 80.8 | | $ | 1,069.8 | |

In disposing of assets or businesses, we often provide representations, warranties and indemnities to cover various risks including unknown damage to the assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities and unidentified tax liabilities and legal fees related to periods prior to disposition.

We do not have the ability to reasonably estimate the potential liability due to the inchoate and unknown nature of these potential liabilities.

However, we have no reason to believe that these uncertainties would have a material adverse effect on our financial position, results of operations or cash flows.

We complete our annual goodwill impairment evaluation as of the first day of the fourth quarter.

[removed: Interest] [added: Interest] rate [removed: risk][added: risk]

Our debt portfolio as of December 31, [removed: 2018,] [added: 2019,] was comprised of debt predominantly denominated in U.S. dollars.

This debt portfolio is comprised of [removed: 88%] [added: 66%] fixed-rate debt and [removed: 12%] [added: 34%] variable-rate debt.

Based on the fixed-rate debt included in our debt portfolio, as of December 31, [removed: 2018,] [added: 2019,] a 100 basis point increase or decrease in interest rates would result in [removed: an $11.6] [added: a $39.8] million decrease or [removed: a $12.0] [added: $43.4] million increase in fair value, respectively.

Based on the variable-rate debt included in our debt portfolio as of December 31, [removed: 2018,] [added: 2019,] a 100 basis point increase or decrease in interest rates would result in a [removed: $1.0] [added: $3.5] million increase or decrease in interest incurred.

[removed: Foreign] [added: Foreign] currency [removed: risk][added: risk]

At December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] we had outstanding foreign currency derivative contracts with gross notional U.S. dollar equivalent amounts of [removed: $331.4] [added: $17.0] million and [removed: $481.4] [added: $47.6] million, respectively.

Gains and losses related to a hedge are deferred and recorded in the Consolidated Balance Sheets as a component of [removed: Accumulated] [added: *Accumulated] other comprehensive [removed: loss] [added: loss*] and subsequently recognized in the Consolidated Statements of Operations and Comprehensive Income when the hedged item affects earnings.

The currency risk related to the [removed: net investment hedge] [added: cross currency swap agreements] is measured by estimating the potential impact of a 10% change in the value of the U.S. dollar relative to the Euro.

A 10% appreciation of the U.S. dollar relative to the Euro would result in a [removed: $14.1] [added: $57.9] million net increase in [removed: Accumulated] [added: *Accumulated] other comprehensive [removed: loss.][added: loss*.]

Conversely, a 10% depreciation of the U.S. dollar relative to the Euro would result in a [removed: $17.2] [added: $55.2] million net decrease in [removed: Accumulated] [added: *Accumulated] other comprehensive [removed: loss.][added: loss*.]

[added: However,] these increases and decreases in Other comprehensive income would be offset by decreases or increases in the hedged [removed: net investments] [added: items] on our balance [removed: sheet due to currency translation.][added: sheet.]

At December 31, 2019, we had outstanding cross currency swap agreements with a combined notional amount of $777.0 million.

The cross currency swap 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.

At December 31, 2018, we had €136.6 million 2.45% Senior Notes due 2019 (the “2019 Euro Notes”) designated as a net investment hedge of our investments in certain international subsidiaries that use the Euro as their functional currency.

The hedge is intended to reduce, but will not eliminate, the impact on our financial results of changes in the exchange rate between the Euro and the U.S. dollar.

The rates used to perform this analysis were based on the market exchange rates in effect on December 31, 2018.

However,

[removed: GENERAL][added: GENERAL]

At Pentair plc, we believe the health of our world depends on reliable access to [removed: clean] [added: clean, safe] water.

[added: In 2019,] Pentair plc [removed: is] [added: was] comprised of three reportable business segments: Aquatic Systems, Filtration Solutions and Flow Technologies.

[removed: Pentair strategy][added: Pentair strategy]

[removed: HISTORY] [added: HISTORY] AND [removed: DEVELOPMENT][added: DEVELOPMENT]

[removed: BUSINESS] [added: BUSINESS] AND [removed: PRODUCTS][added: PRODUCTS]

The following is a brief description of each of the Company’s [added: 2019] reportable segments and business activities.

[removed: Aquatic Systems][added: Aquatic Systems]

Applications for our Aquatic Systems products include residential and commercial pool maintenance, pool repair, renovation, service and construction [removed: and aquaculture] solutions.

Brand names for Aquatic Systems include Kreepy Krauly, [removed: Pentair,] Pentair [removed: Aquatic Eco-Systems,] and Sta-Rite.

[removed: Customers][added: Customers]

One customer of the Aquatic Systems segment, Pool Corporation, represented approximately 15% of our consolidated net sales in [removed: 2018.][added: 2019, 2018 and 2017.]

[removed: Seasonality][added: Seasonality]

[removed: Competition][added: Competition]

[removed: Filtration Solutions][added: Filtration Solutions]

Our equipment and solutions are found in water purification and sanitation systems, [removed: foodservice] [added: food service] operations, food & beverage processing plants and in other applications across the globe.

Brand names for Filtration Solutions offerings include Codeline, Everpure, Haffmans, [added: Pelican, RainSoft,] Südmo and X-Flow.

[removed: Flow Technologies][added: Flow Technologies]

[removed: INFORMATION] [added: INFORMATION] REGARDING ALL REPORTABLE [removed: SEGMENTS][added: SEGMENTS]

[removed: Backlog] [added: Backlog] of orders by [removed: segment][added: segment]

| | [removed: December 31 | |] [added: December 31] | | | | | | | | |

| [removed: In millions | 2018 |] [added: *In millions*] | [added: 2019] | [removed: 2017] | | [added: 2018] | [removed: $ change] | | [added: 2017] | [removed: % change] | |

We expect the majority of our backlog at December 31, [removed: 2018] [added: 2019] will be shipped in [removed: 2019.][added: 2020.]

[removed: Research] [added: Research] and [removed: development][added: development]

[removed: Raw materials][added: Raw materials]

We purchase the materials we use in various manufacturing processes on the open [removed: market] [added: market,] and the majority is available through multiple sources which are in adequate supply.

Alternate sources of supply at competitive prices are available for most materials for which long-term commitments [removed: exist] [added: exist,] and we believe that the termination of any of these commitments would not have a material adverse effect on our financial position, results of operations or cash flows.

[removed: Intellectual property][added: Intellectual property]

[removed: Employees][added: Employees]

As of December 31, [removed: 2018,] [added: 2019,] we employed approximately [removed: 10,000] [added: 9,500] people worldwide.

[removed: Captive] [added: Captive] insurance [removed: subsidiary][added: subsidiary]

[removed: We insure certain general and product liability, property, workers’ compensation] [added: A portion of our property] and [removed: automobile liability risks] [added: casualty insurance program is insured] through our regulated wholly-owned captive insurance subsidiary, Penwald Insurance Company (“Penwald”).

[removed: Available information][added: Available information]

Commencing with the first quarter of 2020 we revised our segments, going from three segments to two with the two revised segments named Consumer Solutions and Industrial & Flow Technologies.

The discussions below that speak to historical periods refer to the prior segments, while statements about present and future periods refer to the businesses underlying those segments and carry forward with those businesses (including our customers, seasonality and competition) in their re-segmented form.

Additional information regarding this re-segmentation is found below under the section titled “New Segmentation.”

Customers

Seasonality

Competition

Customers

Seasonality

Competition

NEW SEGMENTATION

During the first quarter of 2020, we reorganized our business segments to better align our organization with our strategies and to better align with our customer base, resulting in a change to our reporting segments in 2020.

We believe the new alignment into a business-to-consumer focused segment, Consumer Solutions, and primarily business-to-business driven segment, Industrial & Flow Technologies, better positions our teams to build upon our core strengths, more aggressively pursue our growth opportunities, increase productivity, and enhance profitability.

As part of this reorganization, the legacy Aquatic Systems reporting segment was combined with the Residential and Commercial Systems and Components businesses of the legacy Filtrations Solutions reporting segment to form the Consumer Solutions reporting segment.

In addition, the Industrial Filtration and Food and Beverage businesses of the legacy Filtration Solutions reporting segment were combined with the legacy Flow Technologies reporting segment to form the Industrial & Flow Technologies reporting segment.

All segment information presented throughout this Annual Report on Form 10-K, with exception of the table below, was prepared based on the reporting segments in place during 2019.

The below table presents net sales and segment income under the revised reporting segments (Consumer Solutions and Industrial & Flow Technologies) for the years ended December 31, 2019, 2018 and 2017.

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| Net Sales | | | | | | | | | |

| Consumer Solutions | $ | 1,611.7 | | $ | 1,578.4 | | $ | 1,489.5 | |

| Industrial & Flow Technologies | 1,344.1 | | | 1,385.4 | | | 1,354.9 | | |

| Other | 1.4 | | | 1.3 | | | 1.3 | | |

| Consolidated | $ | 2,957.2 | | $ | 2,965.1 | | $ | 2,845.7 | |

| Segment income (loss) | | | | | | | | | |

| Consumer Solutions | $ | 379.6 | | $ | 392.9 | | $ | 372.0 | |

| Industrial & Flow Technologies | 199.0 | | | 198.8 | | | 177.2 | | |

| Other | (62.3 | | ) | (54.9 | | ) | (52.7 | | ) |

| Consolidated | $ | 516.3 | | $ | 536.8 | | $ | 496.5 | |

| | December 31 | | | | | | | | | | |

| *In millions* | 2019 | | | 2018 | | | $ change | | | % change | |

| Aquatic Systems | $ | 93.6 | | $ | 80.3 | | $ | 13.3 | | 16.6 | % |

| Filtration Solutions | 76.1 | | | 96.2 | | | (20.1 | | ) | (20.9 | )% |

| Flow Technologies | 155.3 | | | 156.0 | | | (0.7 | | ) | (0.4 | )% |

| Total | $ | 325.0 | | $ | 332.5 | | $ | (7.5 | ) | (2.3 | )% |

Our industry leading and proven portfolio of solutions enables our customers to access clean, safe water.

In connection with the Distribution of nVent, the Company and nVent entered into several agreements covering administrative and tax matters to provide or obtain services on a transitional basis, as needed, for varying periods after the Distribution.

The administrative agreements cover various services such as information technology, human resources and finance.

The Company expects all services to be substantially complete within one year after the Distribution.

| Aquatic Systems | $ | 80.3 | | $ | 110.1 | | $ | (29.8 | ) | (27.1 | )% |

| Filtration Solutions | 96.2 | | | 145.7 | | | (49.5 | | ) | (34.0 | )% |

| Flow Technologies | 156.0 | | | 151.1 | | | 4.9 | | | 3.2 | % |

| Total | $ | 332.5 | | $ | 406.9 | | $ | (74.4 | ) | (18.3 | )% |

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 [added: future adverse ruling or unfavorable development could result in future charges that could have a material adverse impact.]

[removed: Asbestos matters][added: Asbestos matters]

As of December 31, [removed: 2018,] [added: 2019,] there were approximately [removed: 600] [added: 730] claims outstanding against our subsidiaries.

[removed: Environmental matters][added: Environmental matters]

As of December 31, [removed: 2018,] [added: 2019,] our recorded reserves for environmental matters were not material.

[removed: Product] [added: Product] liability [removed: claims][added: claims]

future adverse ruling or unfavorable development could result in future charges that could have a material adverse impact.

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: þ] [added: ☑] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: For] [added: For] the Fiscal Year [removed: Ended December] [added: Ended December] 31, [removed: 2018][added: 2019]

| [removed: ¨] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

[removed: Commission] [added: Commission] file [removed: number 001-11625][added: number 001-11625]

[removed: Pentair plc][added: Pentair plc]

[removed: (Exact] [added: *(Exact] name of Registrant as specified in its [removed: charter)][added: charter)*]

| [removed: Ireland] [added: Ireland] | | [removed: 98-1141328] [added: 98-1141328] |

| [removed: (State] [added: (State] or other jurisdiction [removed: of incorporation] [added: of incorporation] or [removed: organization)] [added: organization)] | | [removed: (I.R.S. Employer Identification number)] [added: (I.R.S. Employer Identification number)] |

| [removed: Regal] [added: | Regal] House, 70 London [removed: Road, Twickenham, London, TW13QS United Kingdom] [added: Road,] | | [added: Twickenham,] | [added: London, | TW13QS | United Kingdom | |]

| (Address of principal executive offices) | | | [added: | | | | |]

[removed: Registrant’s] [added: Registrant’s] telephone number, including area [removed: code: 44-74-9421-6154][added: code: 44\-74\-9421-6154]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | [added: Trading Symbol(s)] | [removed: Name] [added: Name] of each exchange on which [removed: registered] [added: registered] |

| Ordinary Shares, nominal value $0.01 per share | [added: PNR] | New York Stock Exchange |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes [removed: þ No ¨][added: ☑]

Yes [removed: ¨ No þ][added: ☐]

| Large accelerated filer [removed: þ] | [added: ☑] | Accelerated filer [removed: o] | [added: ☐] | Non-accelerated filer [removed: o] | [added: ☐] | Smaller reporting company [removed: o] | [added: ☐] | Emerging growth company [removed: o] | [added: ☐ |]

Aggregate market value of voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of [removed: $42.08] [added: $37.20] per share as reported on the New York Stock Exchange on June [removed: 29, 2018] [added: 28, 2019] (the last business day of Registrant’s most recently completed second quarter): [removed: $6,703,824,353.][added: $6,191,407,033.]

The number of shares outstanding of Registrant’s only class of common stock on December 31, [removed: 2018] [added: 2019] was [removed: 171,363,615.][added: 168,293,375.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Parts of the Registrant’s definitive proxy statement for its annual general meeting to be held on May [removed: 7, 2019,] [added: 5, 2020,] are incorporated by reference in this Form 10-K in response to Part III, ITEM 10, 11, 12, 13 and 14.

[removed: Annual] [added: Annual] Report on Form [removed: 10-K][added: 10-K]

[removed: For] [added: For] the Year [removed: Ended December] [added: Ended December] 31, [removed: 2018][added: 2019]

| | | | | [removed: Page] [added: Page] |

| [removed: PART I] [added: PART I] | | | | |

| ITEM 1. | | [removed: [Business](#s701442EE434D553C86432E033E498738)] [added: [Business](#s84102035C51651F5B010E89AD9C24F47)] | | [removed: [1](#s701442EE434D553C86432E033E498738)] [added: [1](#s84102035C51651F5B010E89AD9C24F47)] |

| ITEM 1A. | | [Risk [removed: Factors](#sA22179D0510B5E4885ACA9C4CEE1E5AA)] [added: Factors](#s8E20265540A75939A6CFAFE0D7D61BC7)] | | [removed: [4](#sA22179D0510B5E4885ACA9C4CEE1E5AA)] [added: [5](#s8E20265540A75939A6CFAFE0D7D61BC7)] |

| ITEM 1B. | | [Unresolved Staff [removed: Comments](#sE8B688DA6B585495A92816A8F238CC8B)] [added: Comments](#sC6E94D33AB415F04B3596271033B8055)] | | [removed: [14](#sE8B688DA6B585495A92816A8F238CC8B)] [added: [15](#sC6E94D33AB415F04B3596271033B8055)] |

| ITEM 2. | | [removed: [Properties](#s7443FC466A9C5145B4D2FA4186171FA2)] [added: [Properties](#sE23EA57B95265A2FBE1024AF5F0A40DD)] | | [removed: [14](#s7443FC466A9C5145B4D2FA4186171FA2)] [added: [15](#sE23EA57B95265A2FBE1024AF5F0A40DD)] |

| ITEM 3. | | [Legal [removed: Proceedings](#sEEBE5E0AF62151AF8C349A085F5668CA)] [added: Proceedings](#s76AA9BF6257256CEB8D97785AF56357F)] | | [removed: [14](#sEEBE5E0AF62151AF8C349A085F5668CA)] [added: [16](#s76AA9BF6257256CEB8D97785AF56357F)] |

| ITEM 4. | | [Mine Safety [removed: Disclosures](#s2C3135AA2DB95382806813288CC4ACDA)] [added: Disclosures](#s89600D6752F057D990CAA0321D511A9E)] | | [removed: [15](#s4F279C0BEE64560093DF5BF3EB043C4D)] [added: [17](#sB22BF7937F82514EB43CEE320331CE2A)] |

| [removed: PART II] [added: PART II] | | | | |

| ITEM 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s72649C67CC9E5545AE3A7D69F712B01D)] [added: Securities](#s78DD442AB07E5B818FF7F2B3CFF08F72)] | | [removed: [17](#s72649C67CC9E5545AE3A7D69F712B01D)] [added: [20](#s78DD442AB07E5B818FF7F2B3CFF08F72)] |

| ITEM 6. | | [Selected Financial [removed: Data](#s3D84F933C9CA5916A7881ADFC4FDB189)] [added: Data](#sDCAD3E031D4D5B838F3E372BEAE93E1C)] | | [removed: [19](#s3D84F933C9CA5916A7881ADFC4FDB189)] [added: [22](#sDCAD3E031D4D5B838F3E372BEAE93E1C)] |

| ITEM 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s775C6B4E0D8351A4A58A60BBA6849C75)] [added: Operations](#sC9263C6E4DB959F889BF5E761000602D)] | | [removed: [20](#s775C6B4E0D8351A4A58A60BBA6849C75)] [added: [23](#sC9263C6E4DB959F889BF5E761000602D)] |

| ITEM 7A. | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#s112293E83D4751C38ACDBD818304507B)] [added: Risk](#sECD5971AF3F558BCAE5EA2A11D7DF8E5)] | | [removed: [36](#s112293E83D4751C38ACDBD818304507B)] [added: [38](#sECD5971AF3F558BCAE5EA2A11D7DF8E5)] |

OR

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

No ☐

No ☑

Yes ☑ No ☐

Yes ☑ No ☐

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

Yes ☐ No ☑

Pentair plc

| | | [Signatures](#sFFC062F82B6252B29AE28E2B6BAA3968) | | [97](#sFFC062F82B6252B29AE28E2B6BAA3968) |

10-K 1 a2018pnr-10k.htm 10-K

OR

| | | |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | [Signatures](#s91A5BEB7ACC252A096EA9ED6D263E165) | | [94](#s91A5BEB7ACC252A096EA9ED6D263E165) |

The following is a summary of our principal [removed: properties,] [added: properties as of December 31, 2019,] including manufacturing, distribution, sales offices and service centers:

| | | [removed: No.] [added: No.] of [removed: Facilities] [added: Facilities] | | | | | | | [added: |]

| | [removed: Location] [added: Location] | [removed: Manufacturing] [added: Manufacturing] | | [removed: Distribution] [added: Distribution] | | [removed: Sales] [added: Sales] and Corporate [removed: Offices] [added: Offices] | [removed: Service Centers] | [added: Service Centers] | [added: |]

| Aquatic Systems | [removed: 22] U.S. [removed: cities] and [removed: 12] [added: 4] foreign countries | [removed: 9] [added: 4] | | [removed: 11] [added: 7] | | [removed: 13] [added: 9] | [removed: 1] | [added: —] | [added: |]

| Filtration Solutions | [removed: 14] U.S. [removed: cities] and [removed: 40] [added: 19] foreign countries | [removed: 19] [added: 23] | | [removed: 9] [added: 7] | | [removed: 26] [added: 27] | [added: |] — | |

| Flow Technologies | [removed: 15] U.S. [removed: cities] and [removed: 35] [added: 10] foreign countries | [removed: 20] [added: 10] | | [removed: 12] [added: 10] | | [removed: 8] [added: 4] | [added: |] 10 | |

| Corporate | [removed: 3] U.S. [removed: cities] and [removed: 4] [added: 3] foreign countries | — | | — | | [removed: 7] [added: 5] | [added: |] — | |

| Total | | [removed: 48] [added: 37] | | [removed: 32] [added: 24] | | [removed: 54] [added: 45] | [removed: 11] | [added: 10] | [added: |]

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| [removed: Name] [added: Name] | | [removed: Age] [added: Age] | | | [removed: Current] [added: Current] Position and Business [removed: Experience] [added: Experience] |

| John L. Stauch | | [removed: 54] [added: 55] | | | President and Chief Executive Officer since 2018; Executive Vice President and Chief Financial Officer 2007 [removed: —] [added: -] 2018; Chief Financial Officer of the Automation and Control Systems unit of Honeywell International [removed: Inc.,] [added: Inc.] 2005 [removed: —] [added: -] 2007; Vice President, Finance and Chief Financial Officer of the Sensing and Controls unit of Honeywell International [removed: Inc.,] [added: Inc.] 2004 [removed: —] [added: -] 2005; Vice President, Finance and Chief Financial Officer of the Automation & Control Products unit of Honeywell International [removed: Inc.,] [added: Inc.] 2002 [removed: —] [added: -] 2004; Chief Financial Officer and IT Director of PerkinElmer Optoelectronics, a unit of PerkinElmer, Inc., 2000 [removed: —] [added: -] 2002; Various executive, investor relations and managerial finance positions with Honeywell International Inc. and its predecessor AlliedSignal [removed: Inc.,] [added: Inc.] 1994 [removed: —] [added: -] 2000. |

| Kelly A. Baker | | [removed: 49] [added: 50] | | | Executive Vice President and Chief Human Resources Officer since [removed: 2017;] [added: 2018;] Chief Human Resources [added: Officer, Water segment, 2017 - 2018; Chief Human Resources] Officer of Patterson Companies, Inc. [added: (a dental and animal health industry product and technology distributor)] 2016 [removed: —] [added: -] 2017; Vice President of Human Resources, [removed: U.S.] [added: North America] Retail [removed: Organization] and Marketing Function of General Mills [added: (a multinational manufacturer and marketer of branded consumer foods)] 2014 [removed: —] [added: -] 2016; Vice President of Human Resources, Corporate & Global Business Solutions of General Mills 2009 [removed: —] [added: -] 2014; Vice President of Diversity & Inclusion of General Mills 2005 [removed: —] [added: -] 2009; Various Human Resources leadership positions at General Mills 1995 [removed: —] [added: -] 2005. |

| Mark C. Borin | | [removed: 51] [added: 52] | | | Executive Vice President and Chief Financial Officer since [removed: 2018;] [added: 2018 and Chief Accounting Officer since 2019. As previously announced, Mr. Borin intends to resign from Pentair in connection with accepting an operational leadership opportunity at a private, employee-owned company, and he plans to remain in his role with Pentair through the search process and to assist with an orderly transition.] Senior Vice President and Chief Accounting Officer 2008 [removed: —] [added: -] 2018 and Treasurer 2015 [removed: —] [added: -] 2018; Partner in the audit practice of the public accounting firm KPMG [removed: LLP,] [added: LLP] 2000 [removed: —] [added: -] 2008; Various positions in the audit practice of KPMG [removed: LLP,] [added: LLP] 1989 [removed: —] [added: -] 2000. |

| Karl R. Frykman | | [removed: 58] [added: 59] | | | Executive Vice President and Chief Operating Officer since 2018; Senior Vice President and President, Water segment 2017 [removed: —] [added: -] 2018; President, Water Quality Systems Global [removed: Business Unit,] [added: business unit] 2007 [removed: —] [added: -] 2016; [removed: President of Aquatic Systems’] [added: President,] National Pool Tile [removed: group, 1998—] [added: group 1998-] 2007; Vice President of [removed: Operations for] [added: Operations,] American [removed: Products,] [added: Products group] 1995 [removed: —] [added: -] 1998; Vice President of Anthony Pools, 1990 [removed: —] [added: -] 1995; Vice President of Poolsaver, 1988 [removed: —] [added: -] 1990. |

| John H. Jacko | | [removed: 61] [added: 62] | | | Executive Vice President and Chief Growth Officer since 2018; Senior Vice President and Chief Marketing Officer 2017 [removed: —] [added: -] 2018; Vice President and Chief Marketing Officer of Kennametal [removed: Corporation,] [added: Inc. (a global supplier of tooling, engineered components and advanced materials)] 2007 [removed: —] [added: -] 2016; Senior Vice President and Chief Marketing Officer of Flowserve Corporation, 2002 [removed: —] [added: -] 2007; Vice President of Marketing and Customer Management of Flowserve [removed: Corporation,] [added: Corporation] 2001 [removed: —] [added: -] 2002; Various business leadership positions of Honeywell [removed: Aerospace,] [added: Aerospace] 1995 [removed: —] [added: -] 2001. |

| Karla C. Robertson | | [removed: 48] [added: 49] | | | Executive Vice President, General Counsel and Secretary since 2018; General Counsel, [removed: Pentair plc] Water segment 2017 [removed: —] [added: -] 2018; Executive Vice President, General Counsel and Corporate Secretary of SUPERVALU Inc. [added: (a wholesaler and retailer of grocery products)] 2013 [removed: —] [added: -] 2017; Vice President, Employment, Compensation and Benefits Law of SUPERVALU Inc. 2012 [removed: —] [added: -] 2013; Director, Employment Law of SUPERVALU Inc. 2011 [removed: —] [added: -] 2012; Senior Counsel, Employment Law of SUPERVALU Inc. 2009 [removed: —] [added: -] 2011; Senior Employee Relations Counsel of Target Corporation 2006 [removed: —] [added: -] 2008; Associate, Faegre & Benson LLP 2000 [removed: —] [added: -] 2005; Judicial Clerk, United States District Court for the Southern District of [removed: Iowa,] [added: Iowa] 1998 [removed: — 2000] [added: - 2000.] |

| Philip M. [removed: Rolchigo, Ph.D.] [added: Rolchigo] | | [removed: 57] [added: 58] | | | Executive Vice President and Chief Technology Officer since [added: 2018; Chief Technology Officer 2017 - 2018; Vice President of Technology 2015 -] 2017; Vice President of Engineering [removed: and Technology Innovation] 2007 [removed: — 2017;] [added: - 2015;] Business Development Director of [added: Water Technologies business of] GE Global Research Center 2006 [removed: —] [added: -] 2007; Director of Technology of GE Water & Process Technologies 2003 [removed: —] [added: -] 2006; Chief Technology Officer of Osmonics 2000 [removed: —] [added: -] 2003; Vice President of Research & Development of Osmonics 1998 [removed: —] [added: -] 2000; Chief Technology Officer of Membrex [removed: 1988 —] [added: 1991 -] 1998. |

[removed: PART II][added: PART II]

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| Name | | Age | | | Current Position and Business Experience |

| James P. Wamsley | | 43 | | | Executive Vice President and Chief Supply Chain Officer since 2019. Mr. Wamsley informed Pentair of his intention to resign from Pentair as of February 26, 2020. Executive Vice President Global Operations of the Power Tools group of Milwaukee Tool (a manufacturer and marketer of professional power tools, hand tools and accessories) 2008 - 2019; Sourcing Manager of Industrial Accessories division of Black & Decker Corporation 2007 - 2008; Operations Manager of the Linear Edge business of Black & Decker Corporation 2005 - 2007; Engineering Manager of the Linear Edge business of Black & Decker Corporation 2004 - 2006. |

EXECUTIVE OFFICERS OF THE REGISTRANT

Our ordinary shares are listed for trading on the New York Stock Exchange (“NYSE”) under the symbol “PNR.” As of December 31, [removed: 2018,] [added: 2019,] there were [removed: 15,032] [added: 14,468] shareholders of record.

Pentair has paid [removed: 172] [added: 176] consecutive quarterly cash dividends, including most recently a dividend of [removed: $0.175] [added: $0.18] per share in the fourth quarter of [removed: 2018.][added: 2019.]

[removed: Share] [added: Share] Performance [removed: Graph][added: Graph]

The following graph sets forth the cumulative total shareholder return on our ordinary shares for the last five years, assuming the investment of $100 on December 31, [removed: 2013] [added: 2014] and the reinvestment of all dividends since that date to December 31, [removed: 2018.][added: 2019.]

[removed: ][added: ]

| | [removed: Base Period December] [added: Base Period December] | | | | [removed: INDEXED RETURNS Years] [added: INDEXED RETURNS Years] ended December [removed: 31] [added: 31] | | | | | | | | | | | | | | |

| [removed: Company] [added: Company] / [removed: Index] [added: Index] | [removed: 2013] [added: 2014] | | | [removed: 2014] [added: 2015] | | | [removed: 2015] [added: 2016] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] [added: 2019] | | | |

[removed: Purchases] [added: Purchases] of Equity [removed: Securities][added: Securities]

The following table provides information with respect to purchases we made of our ordinary shares during the fourth quarter of [removed: 2018:][added: 2019:]

| | [removed: Total] [added: Total] number [removed: of shares purchased] [added: of shares purchased] | | [removed: Average price paid] [added: Average price paid] per [removed: share] [added: share] | | | [removed: Total] [added: Total] number [removed: of shares purchased as part] [added: of shares purchased as part] of [removed: publicly announced plans or programs] [added: publicly announced plans or programs] | | [removed: Dollar value of shares] [added: Dollar value of shares] that [removed: may yet] [added: may yet] be [removed: purchased under] [added: purchased under] the plans [removed: or programs] [added: or programs] | | |

| (a) | The purchases in this column include [removed: 632] [added: 2,106] shares for the period October 1 – October [removed: 27, 184,710] [added: 26, 867] shares for the period October [removed: 28] [added: 27] – November [removed: 24,] [added: 23,] and [removed: 1,106] [added: 142] shares for the period November [removed: 25] [added: 24] – December 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 shares. |

| (d) | [removed: On] [added: In] May [removed: 8,] 2018, [removed: our] [added: 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. We have [removed: $400.0] [added: $250.0] million remaining availability for repurchases under [removed: the 2018] [added: 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. |

On December 9, 2019, Pentair’s Board of Directors approved a 6 percent increase in the company’s regular quarterly cash dividend rate (from $0.18 per share to $0.19 per share) that was paid on February 7, 2020 to shareholders of record at the close of business on January 24, 2020.

2020 will mark the 44th consecutive year that Pentair has increased its dividend.

| Pentair plc | $ | 100 | | | $ | 76.19 | | $ | 88.37 | | $ | 113.71 | | $ | 92.26 | | $ | 114.11 | |

| S&P 500 Index | 100 | | | | 101.38 | | | 113.51 | | | 138.29 | | | 132.23 | | | 173.86 | | |

| S&P 500 Industrials Index | 100 | | | | 102.90 | | | 113.31 | | | 138.88 | | | 134.65 | | | 177.70 | | |

| | (a) | | (b) | | | (c) | | (d) | | |

| October 1 – October 26 | 2,106 | | $ | 36.72 | | — | | $ | 250,000,187 | |

| October 27 – November 23 | 867 | | 38.83 | | | — | | 250,000,187 | | |

| November 24 – December 31 | 142 | | 44.76 | | | — | | 250,000,187 | | |

| Total | 3,115 | | | | | — | | | | |

In addition, the Board of Directors approved a plan to increase the dividend for 2019, which will mark the 43rd consecutive year we have increased dividends, as adjusted for the spin-off of nVent.

| Pentair plc | $ | 100 | | | $ | 86.84 | | $ | 66.16 | | $ | 76.74 | | $ | 98.74 | | $ | 80.12 | |

| S&P 500 Index | 100 | | | | 113.69 | | | 115.26 | | | 129.05 | | | 157.22 | | | 150.33 | | |

| S&P 500 Industrials Index | 100 | | | | 112.36 | | | 115.62 | | | 127.31 | | | 156.04 | | | 151.29 | | |

| | (a) | | (b) | | | (c) | | (d) | | |

| October 1 – October 27 | 632 | | $ | 41.29 | | — | | $ | 500,000,101 | |

| October 28 – November 24 | 809,872 | | 39.90 | | | 625,162 | | 473,603,480 | | |

| November 25 – December 31 | 1,833,155 | | 40.15 | | | 1,832,049 | | 400,000,120 | | |

| Total | 2,643,659 | | | | | 2,457,211 | | | | |

The following table sets forth our selected historical financial data for the five years ended December 31, [removed: 2018.][added: 2019.]

| | [removed: Years] [added: Years] ended December [removed: 31] [added: 31] | | | | | | | | | | | | | | |

| [removed: In] [added: *In] millions, except per-share [removed: amounts] [added: amounts*] | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | |

| [removed: Consolidated] [added: Consolidated] statements of operations and comprehensive [removed: income] [added: income] | | | | | | | | | | | | | | | |

| Net sales | $ | [removed: 2,965.1] [added: 2,957.2] | | $ | [removed: 2,845.7] [added: 2,965.1] | | $ | [removed: 2,780.6] [added: 2,845.7] | | $ | [removed: 2,812.4] [added: 2,780.6] | | $ | [removed: 2,942.1] [added: 2,812.4] | |

| Operating income | [added: 432.5 | | |] 436.7 | | | 378.3 | | | 354.4 | | | 304.7 | | | [removed: 226.8 | | |]

| Net income from continuing operations [removed: attributable to Pentair] | [added: 361.7 | | |] 321.7 | | | 114.1 | | | 178.2 | | | 170.9 | | | [removed: 122.3 | | |]

| [removed: Per] [added: Per] ordinary [removed: share] [added: share] | | | | | | | | | | | | | | | |

| [removed: Basic] [added: Basic] | | | | | | | | | | | | | | | |

| Earnings per ordinary share from continuing operations [removed: attributable to Pentair] | $ | [removed: 1.83] [added: 2.14] | | $ | [removed: 0.63] [added: 1.83] | | $ | [removed: 0.98] [added: 0.63] | | $ | [removed: 0.95] [added: 0.98] | | $ | [removed: 0.64] [added: 0.95] | |

| Weighted average ordinary shares | [added: 169.4 | | |] 175.8 | | | 181.7 | | | 181.3 | | | 180.3 | | | [removed: 190.6 | | |]

| [removed: Diluted] [added: Diluted] | | | | | | | | | | | | | | | |

| Earnings per ordinary share from continuing operations [removed: attributable to Pentair] | $ | [removed: 1.81] [added: 2.12] | | $ | [removed: 0.62] [added: 1.81] | | $ | [removed: 0.97] [added: 0.62] | | $ | [removed: 0.94] [added: 0.97] | | $ | [removed: 0.63] [added: 0.94] | |

| Weighted average ordinary shares | [added: 170.4 | | |] 177.3 | | | 183.7 | | | 183.1 | | | 182.6 | | | [removed: 193.7 | | |]

| Cash dividends declared and paid per ordinary share | $ | [removed: 1.05] [added: 0.72] | | $ | [removed: 1.38] [added: 1.05] | | $ | [removed: 1.34] [added: 1.38] | | $ | [removed: 1.28] [added: 1.34] | | $ | [removed: 1.10] [added: 1.28] | |

| Cash dividends declared and unpaid per ordinary share | [added: 0.19 | | |] 0.18 | | | 0.35 | | | 0.345 | | | 0.33 | | | [removed: 0.32 | | |]

| [removed: Consolidated] [added: Consolidated] balance [removed: sheets] [added: sheets] | | | | | | | | | | | | | | | |

| Total assets | $ | [removed: 3,806.5] [added: 4,139.5] | | $ | [removed: 8,633.7] [added: 3,806.5] | | $ | [removed: 11,534.8] [added: 8,633.7] | | $ | [removed: 11,833.4] [added: 11,534.8] | | $ | [removed: 10,643.8] [added: 11,833.4] | |

| Total debt | [added: 1,029.1 | | |] 787.6 | | | 1,440.7 | | | 4,279.2 | | | 4,685.8 | | | [removed: 2,988.4 | | |]

| Total equity | [added: 1,953.9 | | |] 1,836.1 | | | 5,037.8 | | | 4,254.4 | | | 4,008.8 | | | [removed: 4,663.8 | | |]

[removed: MANAGEMENT’S] [added: MANAGEMENT’S] REPORT ON INTERNAL CONTROL OVER FINANCIAL [removed: REPORTING][added: REPORTING]

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]

In making this assessment, management used the criteria for effective internal control over financial reporting described in [removed: Internal] [added: *Internal] Control-Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management believes that, as of December 31, [removed: 2018,] [added: 2019,] the Company’s internal control over financial reporting was effective based on those criteria.

Our independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report on the Company’s internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]

| [removed: President] [added: *President] and Chief Executive [removed: Officer] [added: Officer*] | | [removed: Executive] [added: *Executive] Vice [removed: President and] [added: President,] Chief Financial Officer [added: and Chief Accounting Officer*] |

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

To the [added: shareholders and the] Board of Directors [removed: and Shareholders] of [added: Pentair plc]

[removed: Pentair] [added: Pentair] plc [added: and Subsidiaries]

[removed: Opinion] [added: Opinion] on Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited the internal control over financial reporting of Pentair plc and subsidiaries (the “Company”) as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal Control — Integrated] [added: *Internal Control—Integrated] Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on the criteria established in [removed: Internal Control - Integrated] [added: *Internal Control—Integrated] Framework [removed: (2013)] [added: (2013)*] issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements [removed: and financial statement schedule listed in the Index at Item 15] as of and for the year ended December 31, [removed: 2018,] [added: 2019,] of the Company and our report dated February [removed: 19, 2019] [added: 25, 2020] expressed an unqualified opinion on those financial [removed: statements and financial statement schedule.][added: statements.]

[removed: Basis] [added: Basis] for [removed: Opinion][added: Opinion]

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

[removed: Opinion] [added: Opinion] on the Financial [removed: Statements][added: Statements]

We have audited the accompanying consolidated balance sheets of Pentair plc and subsidiaries (the “Company”) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related [removed: Consolidated Statements] [added: consolidated statements] of [removed: Operations] [added: operations] and [removed: Comprehensive Income, Changes in Equity,] [added: comprehensive income, cash flows,] and [removed: Cash Flows] [added: changes in equity,] for each of the three years in the period ended December 31, [removed: 2018, the related notes,] [added: 2019,] and the [removed: schedule listed in the Index at Item 15] [added: related notes] (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal Control-Integrated Framework (2013)] [added: *Internal Control—Integrated Framework* *(2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February [removed: 19, 2019] [added: 25, 2020] expressed an unqualified opinion on the Company’s internal control over financial reporting.

Our responsibility is to express an opinion on the [added: Company’s] financial statements based on our audits.

[removed: We] [added: *We] have served as the Company’s auditor since [removed: 1977.][added: 1977.*]

[removed: Pentair] [added: Pentair] plc and [removed: Subsidiaries][added: Subsidiaries]

[removed: Consolidated] [added: Consolidated] Statements of Operations and Comprehensive [removed: Income][added: Income]

| | [removed: Years] [added: Years] ended December [removed: 31] [added: 31] | | | | | | | | |

| [removed: In] [added: *In] millions, except per-share [removed: data] [added: data*] | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | |

| Net sales | $ | [removed: 2,965.1] [added: 2,957.2] | | $ | [removed: 2,845.7] [added: 2,965.1] | | $ | [removed: 2,780.6] [added: 2,845.7] | |

| Cost of goods sold | [removed: 1,917.4] [added: 1,905.7] | | | [removed: 1,858.2] [added: 1,917.4] | | | [removed: 1,821.5] [added: 1,858.2] | | |

| Gross profit | [removed: 1,047.7] [added: 1,051.5] | | | [removed: 987.5] [added: 1,047.7] | | | [removed: 959.1] [added: 987.5] | | |

| Selling, general and administrative | [removed: 534.3] [added: 540.1] | | | [removed: 536.0] [added: 534.3] | | | [removed: 531.4] [added: 536.0] | | |

| Research and development | [removed: 76.7] [added: 78.9] | | | [removed: 73.2] [added: 76.7] | | | [removed: 73.3] [added: 73.2] | | |