Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking Statements

This report contains statements that we believe to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “targets,” “plans,” “believes,” “expects,” “intends,” “will,” “likely,” “may,” “anticipates,” “estimates,” “projects,” “should,” “would,” “could,” “positioned,” “strategy,” or “future” or words, phrases, or terms of similar substance or the negative thereof are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond our control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the overall global economic and business conditions impacting our business, including the strength of housing and related markets and conditions relating to international hostilities; supply, demand, logistics, competition and pricing pressures related to and in the markets we serve; the ability to achieve the benefits of our restructuring plans, cost reduction initiatives and Transformation Program; the impact of raw material, logistics and labor costs and other inflation; volatility in currency exchange rates and interest rates; failure of markets to accept new product introductions and enhancements; the ability to successfully identify, finance, complete and integrate acquisitions; risks associated with operating foreign businesses; 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; and the ability to achieve our long-term strategic operating and environmental, social and governance (“ESG”) goals and targets. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023. All forward-looking statements speak only as of the date of this report. Pentair assumes no obligation, and disclaims any obligation, to update the information contained in this report.

Overview

The terms “us,” “we,” “our” or “Pentair” refer to Pentair plc and its consolidated subsidiaries. At Pentair, we believe the health of our world depends on reliable access to clean water. We deliver a comprehensive range of smart, sustainable water solutions to homes, businesses and industries around the world. Our industry-leading and proven portfolio of solutions enables our customers to access clean, safe water; reduce water consumption; and recover and reuse water. Whether it’s moving, improving or helping people enjoy water, we help manage life’s most essential resource. We are composed of three reporting segments: Flow, Water Solutions and Pool. For the first six months of 2024, the Flow, Water Solutions and Pool segments represented approximately 37%, 28% and 35% of total revenues, respectively. We classify our operations into reporting segments based primarily on types of products offered and markets served:

• Flow — The focus of this segment is to deliver water where it is needed, when it is needed, more efficiently and to transform waste into value. This segment designs, manufactures and sells a variety of fluid treatment and pump products and systems, including pressure vessels, gas recovery solutions, membrane bioreactors, wastewater reuse systems and advanced membrane filtration, separation systems, water disposal pumps, water supply pumps, fluid transfer pumps, turbine pumps, solid handling pumps and agricultural spray nozzles, while serving the global residential, commercial and industrial markets. These products and systems are used in a range of applications, including fluid delivery, ion exchange, desalination, food and beverage, separation technologies for the oil and gas industry, residential and municipal wells, water treatment, wastewater solids handling, pressure boosting, circulation and transfer, fire suppression, flood control, agricultural irrigation and crop spray.

• Water Solutions — The focus of this segment is to provide great-tasting, higher-quality water and ice while helping people use water more productively. This segment designs, manufactures and sells commercial and residential water treatment products and systems including pressure tanks, control valves, activated carbon products, commercial ice machines, conventional filtration products, and point-of-entry and point-of-use water treatment systems. These water treatment products and systems are used in residential whole home water filtration, drinking water filtration and water softening solutions in addition to commercial total water management and filtration in foodservice operations. In addition, our water solutions business also provides installation and preventative services for water management solutions for commercial operators.

• Pool — The focus of this segment is to provide innovative, energy-efficient pool solutions to help people more sustainably enjoy water. This segment designs, manufactures and sells a complete line of energy-efficient residential and commercial pool equipment and accessories including pumps, filters, heaters, lights, automatic controls, automatic cleaners, maintenance equipment and pool accessories. Applications for our pool products include residential and commercial pool maintenance, pool repair, renovation, service, construction and aquaculture solutions.

Key Trends and Uncertainties Regarding Our Existing Business

The following trends and uncertainties affected our financial performance in the first six months of 2024 and are reasonably likely to impact our results in the future:

• In 2021, we created a transformation office and launched and committed resources to the Transformation Program designed to accelerate growth and drive margin expansion by driving operational excellence, reducing complexity and streamlining our processes. During 2023 and the first six months of 2024, we made strategic progress on our Transformation Program initiatives with a focus on our four key themes of pricing excellence, strategic sourcing, operations excellence and organizational effectiveness. We expect to continue to execute on our key Transformation Program initiatives to drive margin expansion and to continue to incur transformation costs throughout the remainder of 2024 and beyond.

• In 2024, we began using 80/20 guiding principles to enable our Transformation Program. This 80/20 analysis is expected to create value by focusing on the right customers and products through quadrant based strategies. We expect the analysis to result in actions to improve operating performance by reducing lower margin sales and removing complexity in the future.

• During 2023 and the first six months of 2024, we executed certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business. We expect these actions to continue throughout the remainder of 2024 and to drive margin growth.

• During 2023 and the first six months of 2024, we experienced inflationary cost increases for certain raw materials as well as logistics and transportation costs. The current volatile market for commodities has the potential to continue to drive price increases in our supply chain. While we have taken pricing actions and implemented transformation initiatives that we expect to improve productivity and offset cost increases, we anticipate supply chain pressures and inflationary cost increases to continue for the remainder of 2024.

• The Organization for Economic Co-operation and Development Pillar Two Model Rules (“Pillar Two”) for a global 15.0% minimum tax are in the process of being adopted by a number of jurisdictions in which we operate. Pillar Two has negatively impacted our effective tax rate in 2024. That impact could change in the future as we continue to evaluate the enacted legislative changes and as new guidance becomes available.

• We have identified specific product and geographic market opportunities that we find attractive and continue to pursue, both within and outside the U.S. We expect to continue investing in our businesses to drive these opportunities through research and development and additional sales and marketing resources. Unless we successfully penetrate these markets, our core sales growth will likely be limited or may decline.

In 2024, our operating objectives focus on delivering our core and building our future. We expect to execute these objectives by:

• Delivering profitable revenue growth and productivity for customers and shareholders;

• Continuing to focus on capital allocation through:

◦Committing to maintain our investment grade rating;

◦Focusing on reducing our long-term debt;

◦Returning cash to shareholders through dividends and share repurchases; and

◦Accelerating our performance with strategically aligned mergers and acquisitions;

• Focusing growth initiatives that accelerate our investments in digital, innovation, technology and ESG;

• Continuing to implement our Transformation Program initiatives that will drive operational excellence, reduce complexity and improve our organizational structure, which includes the focus on 80/20 actions to drive profitable growth; and

• Building a high performance growth culture and delivering on our commitments while living our Win Right values.

CONSOLIDATED RESULTS OF OPERATIONS

The consolidated results of operations for the three months ended June 30, 2024 and 2023 were as follows:

			Three months ended
In millions			June 30, 2024			June 30, 2023			$ Change			% / Point Change
Net sales			$	1,099.3		$	1,082.5		$	16.8		1.6		%
Cost of goods sold			661.4			683.0			(21.6)			(3.2)		%
Gross profit			437.9			399.5			38.4			9.6		%
% of net sales			39.8		%	36.9		%				2.9		pts
Selling, general and administrative			165.1			165.1			—			—		%
% of net sales			15.0		%	15.3		%				(0.3)		pts
Research and development			24.8			25.9			(1.1)			(4.2)		%
% of net sales			2.3		%	2.4		%				(0.1)		pts
Operating income			248.0			208.5			39.5			18.9		%
% of net sales			22.6		%	19.3		%				3.3		pts
Other expense (income)			0.8			(4.8)			5.6			N.M.
Net interest expense			26.3			31.8			(5.5)			(17.3)		%
Income from continuing operations before income taxes			220.9			181.5			39.4			21.7		%
Provision for income taxes			34.8			27.3			7.5			27.5		%
Effective tax rate			15.8		%	15.0		%				0.8		pts

N.M. Not Meaningful

The consolidated results of operations for the six months ended June 30, 2024 and 2023 were as follows:

			Six months ended
In millions			June 30, 2024			June 30, 2023			$ Change			% / Point Change
Net sales			$	2,116.5		$	2,111.1		$	5.4		0.3		%
Cost of goods sold			1,288.5			1,329.8			(41.3)			(3.1)		%
Gross profit			828.0			781.3			46.7			6.0		%
% of net sales			39.1		%	37.0		%				2.1		pts
Selling, general and administrative expenses			350.3			338.4			11.9			3.5		%
% of net sales			16.6		%	16.0		%				0.6		pts
Research and development expenses			48.9			50.8			(1.9)			(3.7)		%
% of net sales			2.3		%	2.4		%				(0.1)		pts
Operating income			428.8			392.1			36.7			9.4		%
% of net sales			20.3		%	18.6		%				1.7		pts
Other expense (income)			0.9			(4.1)			5.0			N.M.
Net interest expense			53.6			64.2			(10.6)			(16.5)		%
Income from continuing operations before income taxes			374.3			332.0			42.3			12.7		%
Provision for income taxes			54.7			49.3			5.4			11.0		%
Effective tax rate			14.6		%	14.8		%				(0.2)		pts

N.M. Not Meaningful

Net sales

The components of the consolidated net sales change from the prior period were as follows:

			Three months ended June 30, 2024			Six months ended June 30, 2024
			over the prior year period			over the prior year period
Volume			1.1		%	(1.3)		%
Price			1.1			1.9
Core growth			2.2			0.6
Acquisition/Divestitures			(0.2)			(0.1)
Currency			(0.4)			(0.2)
Total			1.6		%	0.3		%

The 1.6 and 0.3 percent increases in net sales in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• increased sales volume within our Pool segment due to higher demand compared to the prior year;

• increased sales volume in our commercial flow business within our Flow segment in the first half of 2024 compared to the prior year; and

• increased selling prices in our commercial flow and industrial solutions businesses within our Flow segment, in our commercial business within our Water Solutions segment and in our Pool segment to mitigate inflationary cost increases.

These increases were partially offset by:

• decreased sales volume in our residential flow and industrial solutions businesses within our Flow segment compared to the prior year;

• decreased sales volume within our commercial and residential businesses in our Water Solutions segment compared to the prior year, in addition to the completion of a large project in 2023 within our commercial business that did not recur in the first half of 2024;

• unfavorable foreign currency effects compared to the prior year; and

• a product line exit in our Pool segment that occurred in the first half of 2024.

Gross profit

The 2.9 and 2.1 percentage point increases in gross profit as a percentage of net sales in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• increases in selling prices to mitigate impacts of inflationary costs;

• increased productivity mainly driven by manufacturing leverage within our Pool segment and transformation initiatives; and

• asset impairment and write-offs of $0.8 million recorded in the first half of 2024, compared to $3.9 million in the first half of 2023.

These increases were partially offset by:

• inflationary cost increases related to labor costs and certain raw materials.

Selling, general and administrative expenses (“SG&A”)

The 0.3 percentage point decrease in SG&A as a percentage of net sales in the second quarter of 2024 from 2023 was primarily driven by:

• a reduction in our legal accrual of $7.9 million in the second quarter of 2024, compared to an increase in our legal accrual of $4.1 million in the second quarter of 2023.

This decrease was partially offset by:

• transformation costs of $11.8 million in the second quarter of 2024, compared to $6.0 million in the second quarter of 2023; and

• restructuring and other costs of $5.9 million in the second quarter of 2024, compared to $0.6 million in the second quarter of 2023.

The 0.6 percentage point increase in SG&A as a percentage of net sales in the first half of 2024 from 2023 was primarily driven by:

• transformation costs of $28.8 million in the first half of 2024, compared to $14.5 million in the first half of 2023; and

• restructuring and other costs of $10.5 million in the first half of 2024, compared to $3.5 million in the first half of 2023.

This increase was partially offset by:

• a reduction in our legal accrual of $8.2 million in the first half of 2024, compared to an increase in our legal accrual of $2.2 million in the first half of 2023.

Net interest expense

The 17.3 and 16.5 percent decreases in net interest expense in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• lower variable debt compared to the same period of the prior year.

Provision for income taxes

The 0.8 percentage point increase in the effective tax rate in the second quarter of 2024 from 2023 was primarily driven by:

• the unfavorable mix of global earnings.

The 0.2 percentage point decrease in the effective tax rate in the first half of 2024 from 2023 was primarily driven by:

• the favorable impact of discrete items that occurred during the first half of 2024 that did not occur in the same period of the prior year.

This decrease was partially offset by:

• the unfavorable mix of global earnings.

SEGMENT RESULTS OF OPERATIONS

The summary that follows provides a discussion of the results of operations of our three reportable segments (Flow, Water Solutions and Pool). Each of these segments comprises various product offerings that serve multiple end users.

We evaluate performance based on net sales and reportable segment income (“segment income”) and use a variety of ratios to measure performance of our reporting segments. Segment income represents operating income of each reportable segment inclusive of equity income of unconsolidated subsidiaries and exclusive of intangible amortization, costs of restructuring and transformation activities, impairments, legal accrual adjustments and settlements and other unusual non-operating items.

Flow

The net sales and segment income for Flow were as follows:

			Three months ended															Six months ended
In millions			June 30, 2024			June 30, 2023						% / Point Change						June 30, 2024			June 30, 2023						% / Point Change
Net sales			$	396.8		$	411.6					(3.6)%						$	781.1		$	803.4					(2.8)%
Segment income			84.4			74.8						12.8%						161.7			139.8						15.7%
% of net sales			21.3		%	18.2		%				3.1		pts				20.7		%	17.4		%				3.3		pts

Net sales

The components of the change in Flow net sales from the prior period were as follows:

			Three months ended June 30, 2024			Six months ended June 30, 2024
			over the prior year period			over the prior year period
Volume			(4.3)		%	(4.3)		%
Price			1.2			1.7
Core growth			(3.1)			(2.6)
Currency			(0.5)			(0.2)
Total			(3.6)		%	(2.8)		%

The 3.6 and 2.8 percent decreases in net sales for Flow in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• decreased sales volume in our residential flow and industrial solutions businesses compared to the prior year; and

• unfavorable foreign currency effects compared to the prior year.

These decreases were partially offset by:

• increased sales volume in our commercial flow business in the first half of 2024 compared to the prior year; and

• increased selling prices in our commercial flow and industrial solutions businesses to mitigate inflationary cost increases.

Segment income

The components of the change in Flow segment income as a percentage of net sales from the prior period were as follows:

			Three months ended June 30, 2024			Six months ended June 30, 2024
			over the prior year period			over the prior year period
Growth/Price			1.0		pts	2.1		pts
Inflation			(2.3)			(2.3)
Productivity			4.4			3.5
Total			3.1		pts	3.3		pts

The 3.1 and 3.3 percentage point increases in segment income for Flow as a percentage of net sales in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• increased selling prices in our commercial flow and industrial solutions businesses to mitigate impacts of inflation; and

• increased productivity mainly driven by transformation initiatives.

These increases were partially offset by:

• inflationary cost increases related to labor costs and certain raw materials.

Water Solutions

The net sales and segment income for Water Solutions were as follows:

			Three months ended															Six months ended
In millions			June 30, 2024			June 30, 2023						% / Point Change						June 30, 2024			June 30, 2023						% / Point Change
Net sales			$	310.5		$	336.2					(7.6)%						$	583.6		$	608.2					(4.0)%
Segment income			72.9			74.8						(2.5)%						128.5			127.2						1.0%
% of net sales			23.5		%	22.2		%				1.3		pts				22.0		%	20.9		%				1.1		pts

Net sales

The components of the change in Water Solutions net sales from the prior period were as follows:

			Three months ended June 30, 2024			Six months ended June 30, 2024
			over the prior year period			over the prior year period
Volume			(8.1)		%	(4.8)		%
Price			1.1			1.3
Core growth			(7.0)			(3.5)
Currency			(0.6)			(0.5)
Total			(7.6)		%	(4.0)		%

The 7.6 and 4.0 percent decreases in net sales for Water Solutions in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• decreased sales volume in our commercial and residential businesses compared to the prior year, in addition to the completion of a large project in 2023 within our commercial business that did not recur in the first half of 2024; and

• unfavorable foreign currency effects compared to the prior year.

These decreases were partially offset by:

• increased selling prices in our commercial business to mitigate inflationary cost increases.

Segment income

The components of the change in Water Solutions segment income as a percentage of net sales from the prior period were as follows:

			Three months ended June 30, 2024			Six months ended June 30, 2024
			over the prior year period			over the prior year period
Growth/Price			1.4		pts	1.9		pts
Currency			(0.1)			(0.3)
Inflation			(2.0)			(2.3)
Productivity			2.0			1.8
Total			1.3		pts	1.1		pts

The 1.3 and 1.1 percentage point increases in segment income for Water Solutions as a percentage of net sales in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• increased productivity mainly driven by transformation initiatives; and

• increased selling prices in our commercial business to mitigate impacts of inflation and favorable mix.

These increases were partially offset by:

• inflationary cost increases related to labor costs and certain raw materials; and

• unfavorable foreign currency effects compared to the prior year.

Pool

The net sales and segment income for Pool were as follows:

			Three months ended															Six months ended
In millions			June 30, 2024			June 30, 2023						% / Point Change						June 30, 2024			June 30, 2023						% / Point Change
Net sales			$	391.5		$	334.3					17.1%						$	751.0		$	698.6					7.5%
Segment income			133.6			105.1						27.1%						244.4			221.3						10.4%
% of net sales			34.1		%	31.4		%				2.7		pts				32.5		%	31.7		%				0.8		pts

Net sales

The components of the change in Pool net sales from the prior period were as follows:

			Three months ended June 30, 2024			Six months ended June 30, 2024
			over the prior year period			over the prior year period
Volume			17.1		%	5.2		%
Price			0.8			2.7
Core growth			17.9			7.9
Acquisition/Divestiture			(0.7)			(0.3)
Currency			(0.1)			(0.1)
Total			17.1		%	7.5		%

The 17.1 and 7.5 percent increases in net sales for Pool in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• increased sales volume due to higher demand compared to the prior year; and

• increased selling prices to mitigate inflationary cost increases.

These increases were partially offset by:

• a product line exit that occurred in the first half of 2024.

Segment income

The components of the change in Pool segment income as a percentage of net sales from the prior period were as follows:

			Three months ended June 30, 2024			Six months ended June 30, 2024
			over the prior year period			over the prior year period
Growth/Price/Divestiture			1.6		pts	2.3		pts
Inflation			(2.1)			(1.9)
Productivity			3.2			0.4
Total			2.7		pts	0.8		pts

The 2.7 and 0.8 percentage point increases in segment income for Pool as a percentage of net sales in the second quarter and first half, respectively, of 2024 from 2023 were primarily driven by:

• increased productivity driven by manufacturing leverage and transformation initiatives; and

• increased selling prices to mitigate impacts of inflation.

These increases were partially offset by:

• inflationary cost increases related to labor costs and certain raw materials.

BACKLOG OF ORDERS BY SEGMENT

In millions			June 30, 2024			December 31, 2023			$ Change			% Change
Flow			$	333.2		$	390.1		$	(56.9)		(14.6)		%
Water Solutions			89.5			108.5			(19.0)			(17.5)		%
Pool			68.2			239.7			(171.5)			(71.5)		%
Total backlog			$	490.9		$	738.3		$	(247.4)		(33.5)		%

The majority of our backlog is short cycle in nature with shipments within one year from when a customer places an order and a substantial portion of our revenues has historically resulted from orders received and products delivered in the same month. A portion of our backlog, particularly from orders for major capital projects, can take more than one year from order to delivery depending on the size and type of order. We record, as part of our backlog, all orders from external customers, which represent firm commitments, and are supported by a purchase order or other legitimate contract. Our backlog of orders is dependent upon when customers place orders and is not necessarily an indicator of our expected results for our 2024 net sales. The decrease in our overall backlog from December 31, 2023 was primarily driven by our backlog trending down to more historical levels as a result of increased manufacturing capacity and improved lead times within each of our reportable segments as well as delivery of orders associated with certain advance sale (“early buy”) programs within our Pool segment.

LIQUIDITY AND CAPITAL RESOURCES

We generally fund cash requirements for working capital, capital expenditures, equity investments, acquisitions, debt repayments, dividend payments and share repurchases from cash generated from operations, availability under existing committed revolving credit facilities and in certain instances, public and private debt and equity offerings. Our primary revolving credit facility has generally been adequate for these purposes, although we have negotiated additional credit facilities or completed debt and equity offerings as needed to allow us to complete acquisitions.

We experience seasonal cash flows primarily due to seasonal demand in a number of markets. Consistent with historical trends, we experienced seasonal cash usage in the first quarter of 2024 and drew on our revolving credit facility to fund our operations. This cash usage reversed in the second quarter as the seasonality of our businesses peaked and generated significant cash to fund our operations.

End-user 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 from April to September. The magnitude of the sales spike is partially mitigated by employing some advance sale “early buy” programs (generally including extended payment terms and/or additional discounts). Demand for residential and agricultural water systems is also impacted by weather patterns, particularly by temperature, heavy flooding and droughts.

We expect to continue to have sufficient cash and borrowing capacity to support working capital needs and capital expenditures, to pay interest and service debt and to pay dividends to shareholders quarterly. We believe our existing liquidity position, coupled with our currently anticipated operating cash flows, will be sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months.

Summary of cash flows

			Six months ended
In millions			June 30, 2024			June 30, 2023
Net cash provided by (used for):
Operating activities of continuing operations			$	431.8		$	340.1
Investing activities			(36.8)			(26.1)
Financing activities			(351.1)			(276.0)

Operating activities

Net cash provided by operating activities of continuing operations in the first six months of 2024 primarily reflects net income from continuing operations, net of non-cash depreciation, definite-lived intangible amortization, share-based compensation and asset impairment, of $394.0 million. Additionally, we had a cash inflow of $15.4 million as a result of changes in net working capital, primarily due to lower inventory and increased accounts payable balances. The decrease in inventory was primarily related to supply chain efficiencies and improved lead times. The higher accounts payable balance was attributable to inventory purchases for our peak sales season.

Net cash provided by operating activities of continuing operations in the first six months of 2023 primarily reflects net income from continuing operations, net of non-cash depreciation, definite-lived intangible amortization and asset impairment, of $344.2 million.

Investing activities

Net cash used for investing activities in the first six months of 2024 primarily reflects capital expenditures of $36.3 million.

Net cash used for investing activities in the first six months of 2023 primarily reflects capital expenditures of $35.4 million, partially offset by proceeds from the sale of property and equipment of $5.0 million.

Financing activities

Net cash used for financing activities in the first six months of 2024 primarily relates to the repayment of $200.0 million term loans under the Senior Credit Facility, $37.5 million Term Loan Facility principal payments, dividend payments of $76.2 million and share repurchases of $50.0 million.

Net cash used for financing activities in the first six months of 2023 primarily relates to net repayments of revolving long-term debt of $204.3 million and dividend payments of $72.5 million.

Free cash flow

In addition to measuring our cash flow generation or usage based upon operating, investing and financing classifications included in the Condensed Consolidated Statements of Cash Flows, we also measure our free cash flow. We have a long-term goal to consistently generate free cash flow that is equal to 100 percent conversion of net income. Free cash flow is a non-U.S. GAAP financial measure that we use to assess our cash flow performance. We believe free cash flow is an important measure of liquidity because it provides us and our investors a measurement of cash generated from operations that is available to pay dividends, repurchase shares and repay debt. In addition, free cash flow is used as a criterion to measure and pay compensation-based incentives. Our measure of free cash flow may not be comparable to similarly titled measures reported by other companies.

The following table is a reconciliation of free cash flow:

									Six months ended
In millions												June 30, 2024			June 30, 2023
Net cash provided by operating activities of continuing operations												$	431.8		$	340.1
Capital expenditures of continuing operations												(36.3)			(35.4)
Proceeds from sale of property and equipment of continuing operations												—			5.0
Free cash flow from continuing operations												395.5			309.7
Net cash used for operating activities of discontinued operations												(0.2)			(1.6)
Free cash flow												$	395.3		$	308.1

Debt and capital

Pentair, Pentair Finance S.à r.l (“PFSA”) and Pentair, Inc. are parties to a credit agreement (the “Senior Credit Facility”), with Pentair as guarantor and PFSA and Pentair, Inc. as borrowers, providing for a $900.0 million senior unsecured revolving credit facility. During the second quarter of 2024, PFSA repaid $200.0 million of term loans under the Senior Credit Facility. The revolving credit facility has a maturity date of December 16, 2026. Borrowings under the Senior Credit Facility bear interest at a rate equal to an alternate base rate, adjusted term secured overnight financing rate, adjusted euro interbank offered rate, adjusted daily simple secured overnight financing rate or central bank rate, plus, in each case, an applicable margin. The applicable margin is based on, at PFSA’s election, Pentair’s leverage level or PFSA’s public credit rating.

As of June 30, 2024, total availability under the Senior Credit Facility was $900.0 million. In addition, PFSA has the option to request to increase the revolving credit facility and/or to enter into one or more tranches of term loans in an aggregate amount of up to $300.0 million, subject to customary conditions, including the commitment of the participating lenders.

In addition, Pentair and PFSA are parties to a senior unsecured term loan facility (the “Term Loan Facility”), with PFSA, as borrower, Pentair, as guarantor, providing for an aggregate principal amount of $1.0 billion. The Term Loan Facility has a maturity date of July 28, 2027, with required quarterly installment payments of $6.3 million which began on the last day of the third quarter of 2023 and increase to $12.5 million beginning with the last day of the third quarter of 2024. The Term Loan Facility bears interest at a rate equal to an alternate base rate, adjusted term secured overnight financing rate, or adjusted daily simple secured overnight financing rate, plus, in each case, an applicable margin. The applicable margin is based on, at PFSA’s election, Pentair’s leverage level or PFSA’s public credit rating.

Our debt agreements contain various financial covenants, but the most restrictive covenants are contained in the Senior Credit Facility and the Term Loan Facility. The Senior Credit Facility and the Term Loan Facility contain covenants requiring us not to permit (i) the ratio of our consolidated debt (net of our consolidated unrestricted cash and cash equivalents in excess of $5.0 million but not to exceed $250.0 million) to our consolidated net income (excluding, among other things, non-cash gains and losses) before interest, taxes, depreciation, amortization and non-cash share-based compensation expense (“EBITDA”) on the last day of any period of four consecutive fiscal quarters (each, a “testing period”) to exceed 3.75 to 1.00 (or, at PFSA’s election and subject to certain conditions, 4.25 to 1.00 for four testing periods in connection with certain material acquisitions) (the “Leverage Ratio”) and (ii) the ratio of our EBITDA to our consolidated interest expense, for the same period to be less than 3.00 to 1.00 as of the end of each fiscal quarter. For purposes of the Leverage Ratio, the Senior Credit Facility and the Term Loan Facility provide for the calculation of EBITDA giving pro forma effect to certain acquisitions, divestitures and liquidations during the period to which such calculation relates.

In addition to the Senior Credit Facility and the Term Loan Facility, we have various other credit facilities with an aggregate availability of $20.8 million, of which there were no outstanding borrowings at June 30, 2024. Borrowings under these credit facilities bear interest at variable rates.

We have $25.0 million of Term Loan Facility payments due in the next twelve months. We classified this debt as long-term as of June 30, 2024 as we have the intent and ability to refinance such obligation on a long-term basis under the revolving credit facility under the Senior Credit Facility.

As of June 30, 2024, we had $105.5 million of cash held in certain countries in which the ability to repatriate is limited due to local regulations or significant potential tax consequences.

Share repurchases

In December 2020, the Board of Directors authorized the repurchase of our ordinary shares up to a maximum dollar limit of $750.0 million. This authorization expires on December 31, 2025. During the three and six months ended June 30, 2024, we repurchased 0.6 million of our ordinary shares for $50.0 million. As of June 30, 2024, we had $550.0 million available for share repurchases under this authorization.

Dividends payable

On May 6, 2024, the Board of Directors declared a quarterly cash dividend of $0.23 per share, payable on August 2, 2024 to shareholders of record at the close of business on July 19, 2024. As a result, the balance of dividends payable included in Other current liabilities on our Condensed Consolidated Balance Sheets was $38.1 million at June 30, 2024, compared to $38.0 million at December 31, 2023.

We paid dividends in the first six months of 2024 of $76.2 million, or $0.46 per ordinary share compared with $72.5 million, or $0.44 per ordinary share, in the prior year period.

Under Irish law, the payment of future cash dividends and repurchases of shares may be paid only out of Pentair plc’s “distributable reserves” on its statutory balance sheet. Pentair plc is not permitted to pay dividends out of share capital, which includes share premiums. Distributable reserves may be created through the earnings of the Irish parent company and through a reduction in share capital approved by the Irish High Court. Distributable reserves are not linked to a U.S. generally accepted accounting principles (“GAAP”) reported amount (e.g., retained earnings). Our distributable reserve balance was $6.9 billion as of December 31, 2023.

Supplemental guarantor information

Pentair plc (the “Parent Company Guarantor”), fully and unconditionally, guarantees the senior notes of PFSA (the “Subsidiary Issuer”). The Subsidiary Issuer is a Luxembourg private limited liability company and 100 percent-owned subsidiary of the Parent Company Guarantor.

The Parent Company Guarantor is a holding company established to own directly and indirectly substantially all of its operating and other subsidiaries. The Subsidiary Issuer is a holding company formed to own directly and indirectly substantially all of its operating and other subsidiaries and to issue debt securities, including the senior notes. The Parent Company Guarantor’s principal source of cash flow, including cash flow to make payments on the senior notes pursuant to the guarantees, is dividends from its subsidiaries. The Subsidiary Issuer’s principal source of cash flow is interest income from its subsidiaries. None of the subsidiaries of the Parent Company Guarantor or the Subsidiary Issuer is under any direct obligation to pay or otherwise fund amounts due on the senior notes or the guarantees, whether in the form of dividends, distributions, loans or other payments. In addition, there may be statutory and regulatory limitations on the payment of dividends from certain subsidiaries of the Parent Company Guarantor or the Subsidiary Issuer. If such subsidiaries are unable to transfer funds to the Parent Company Guarantor or the Subsidiary Issuer and sufficient cash or liquidity is not otherwise available, the Parent Company Guarantor or the Subsidiary Issuer may not be able to make principal and interest payments on their outstanding debt, including the senior notes or the guarantees.

The following table presents summarized financial information as of June 30, 2024 and December 31, 2023 for the Parent Company Guarantor and Subsidiary Issuer on a combined basis after elimination of (i) intercompany transactions and balances among the guarantors and issuer and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor or issuer.

In millions			June 30, 2024			December 31, 2023
Current assets (1)			$	93.9		$	71.7
Noncurrent assets (2)			2,580.1			2,686.9
Current liabilities (3)			1,680.5			1,659.0
Noncurrent liabilities (4)			1,966.5			2,331.4
(1) No assets due from non-guarantor subsidiaries were included as of June 30, 2024 and December 31, 2023, respectively.
(2) Includes assets due from non-guarantor subsidiaries of $2,554.2 million and $2,673.3 million as of June 30, 2024 and December 31, 2023, respectively.
(3) Includes liabilities due to non-guarantor subsidiaries of $1,606.3 million and $1,583.6 million as of June 30, 2024 and December 31, 2023, respectively.
(4) Includes liabilities due to non-guarantor subsidiaries of $155.8 million and $268.4 million as of June 30, 2024 and December 31, 2023, respectively.

The Parent Company Guarantor and Subsidiary Issuer do not have material results of operations on a combined basis.

CRITICAL ACCOUNTING POLICIES

We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. In our Annual Report on Form 10-K for the year ended December 31, 2023, we identified the critical accounting policies that affect our more significant estimates and assumptions used in preparing our consolidated financial statements. There have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.