PENTAIR plc (PNR)

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. All statements made about the Taco acquisition, including the anticipated time for completing the acquisition, and the anticipated benefits of the acquisition 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 our ability to close and fund the Taco acquisition on the expected terms and time schedule, including obtaining regulatory approvals and satisfying other closing conditions; our ability to integrate the Taco acquisition successfully; our ability to retain customers and employees of Taco; 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 sustainability 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, 2025. 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 help the world sustainably move, improve and enjoy water, life’s most essential resource. From our residential and commercial water solutions to industrial water management and everything in between, Pentair is an S&P 500 company focused on smart, sustainable water solutions that help our planet and people thrive.

We are comprised of three reportable segments: Flow, Water Solutions and Pool. Effective January 1, 2026, we reorganized the composition of our Flow and Water Solutions reportable segments to reflect how we are managing our business. As a result of this reorganization, our legacy residential and irrigation flow business moved from our Flow segment into our Water Solutions segment. The Pool segment remains unchanged. We believe the new alignment with our residential and irrigation flow business in our Water Solutions segment will help us accelerate our efforts to improve customer experiences, enhance operational efficiencies and deliver more comprehensive solutions. The applicable prior period amounts related to this change have been retrospectively reclassified to conform to the new composition. These changes have no impact on the Company’s historical consolidated financial performance or results of operations.

For the first six months of 2026, the Flow, Water Solutions and Pool reportable segments represented approximately 27%, 41% and 32% of total consolidated net sales, respectively. We classify our operations into reportable 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, specialty insertion valves, line stop fittings and installation equipment, turbine pumps and solid handling pumps, while serving the global 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, fire suppression and flood control.

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•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, point-of-entry and point-of-use water treatment systems, fluid transfer pumps, agricultural spray nozzles, as well as certain water disposal and water supply pumps. These water treatment products and systems are for use 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, circulation and transfer, agricultural irrigation and crop spray.

•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, chlorinators, 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.

In September 2025, as part of our Flow reportable segment, we completed the acquisition of Hydra-Stop, LLC (“Hydra-Stop”) for $292.1 million in cash, net of cash acquired, and subject to customary adjustments. Hydra-Stop manufactures specialty insertion valves, line stop fittings and installation equipment.

On July 27, 2026, as part of our Water Solutions reportable segment, we entered into a definitive agreement to acquire the issued and outstanding equity securities of Taco Group Holdings (“Taco”), for a purchase price of $1.425 billion, subject to customary adjustments contemplated by the definitive agreement. We expect to finance the acquisition with a combination of cash on hand and committed bridge financing, which we intend to refinance through a permanent debt issuance that we anticipate to be investment grade. We expect to close the acquisition of Taco in the fourth quarter of 2026, subject to customary closing conditions and necessary regulatory approvals.

Key trends and uncertainties regarding our existing business

The following trends and uncertainties affected our financial performance in the first six months of 2026 and are reasonably likely to impact our results in the future:

•We have a Transformation Program designed to accelerate growth and drive margin expansion through transformation of our business model to drive operational excellence, reduce complexity and streamline our processes. During 2025 and the first six months of 2026, we made strategic progress on our Transformation Program initiatives with a focus on our four key themes of pricing excellence, sourcing excellence, operational excellence and organizational effectiveness. We expect to continue to execute on our key Transformation Program initiatives to drive margin expansion and to incur transformation costs throughout the remainder of 2026 and beyond.

•During 2025 and the first six months of 2026, we implemented 80/20 guiding principles to enable our Transformation Program. As we continue to focus on 80/20 guiding principles in 2026, we expect to create value by increasing focus on key customers and products through quadrant-based strategies. We expect this approach to enable improved operating performance by driving margin growth with our highest value customers, reducing lower margin sales and removing complexity in the future.

•During 2025 and the first six months of 2026, 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 2026 and to drive margin expansion.

•During the second quarter of 2026, performance was negatively impacted by a decline in Pool sales largely attributed to a more pronounced inventory realignment with major channel partners than previously estimated and worsening business conditions, including higher interest rates and inflation. Destocking of inventory in the Pool channel is expected to negatively impact net sales for the twelve months ended 2026 by approximately $250 million. While we expect channel inventory levels to improve over time, the timing and pace of normalization remain uncertain and could negatively impact our results of operations.

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•During 2025 and the first six months of 2026, we experienced inflationary cost increases, including tariffs, for certain raw materials as well as logistics and transportation costs. Tariffs, along with potential retaliatory measures by other countries, have contributed to higher input costs and supply chain complexity. The ongoing volatility in the commodities market also has the potential to continue to drive price increases in our supply chain. To address these inflationary pressures, we have implemented pricing increases and taken other actions including inventory pre-buys and supply chain optimization. In addition, our Transformation Program initiatives are intended to improve productivity and offset cost increases. We anticipate that inflationary cost increases and supply chain pressures, including additional or increased tariffs in the future, as well as any related impacts on macroeconomic conditions and our business, will likely persist throughout the remainder of 2026.

•During 2025, the current U.S. administration implemented tariffs under the International Emergency Economic Powers Act (“IEEPA”). In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the IEEPA. While we have received refunds in the second quarter of 2026 of certain previously paid IEEPA tariffs, uncertainty remains regarding the timing and ultimate amount of any additional potential refunds, as well as the scope and impact of replacement tariffs or other trade policy actions. We will continue to monitor these dev

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ITEM 7. 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 sustainability goals and targets. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including this Annual Report on Form 10-K. 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

Pentair plc and its consolidated subsidiaries (“we,” “us,” “our,” “Pentair” or the “Company”) is a pure play water industrial manufacturing company comprised of three reportable segments: Flow, Water Solutions and Pool. We classify our operations into business segments based primarily on types of products offered and markets served. For the year ended December 31, 2025, the Flow, Water Solutions and Pool reportable segments represented approximately 37%, 25% and 38% of total consolidated net sales, respectively.

Effective January 1, 2026, we reorganized the composition of our Flow and Water Solutions reportable segments to move our residential and irrigation flow business from our Flow segment into our Water Solutions segment, reflecting how we expect to manage our business in 2026. The Pool segment remains unchanged. The discussions and figures below refer to the Company’s reportable segment composition as of and prior to December 31, 2025. Additional information regarding this revised segmentation is found under the section titled “2026 Revised Segmentation” in ITEM 1 of this Form 10-K.

Although our jurisdiction of organization is Ireland, we manage our affairs so that we are centrally managed and controlled in the United Kingdom (the “U.K.”) and therefore have our tax residency in the U.K.

On September 17, 2025, as part of our Flow reportable segment, we completed the acquisition of Hydra-Stop, LLC (“Hydra-Stop”) for $292.1 million in cash, net of cash acquired, and subject to customary adjustments. Hydra-Stop manufactures specialty insertion valves, line stop fittings and installation equipment.

In December 2024, as part of our Pool reportable segment, we completed the acquisition of G & F Manufacturing, LLC (“G & F Manufacturing”) for $116.0 million in cash, net of cash acquired. The net purchase price was comprised of an upfront cash payment of $108.0 million, and the estimated fair value at the acquisition date of a contingent earn-out liability based upon the achievement of certain defined operating results in the two years following the acquisition. G & F Manufacturing manufactures and services pool heat pumps.

Key trends and uncertainties regarding our existing business

The following trends and uncertainties affected our financial performance in 2025 and are reasonably likely to impact our results in the future:

•We have a Transformation Program designed to accelerate growth and drive margin expansion by driving operational excellence, reducing complexity and streamlining our processes. During 2025, we made strategic progress on our Transformation Program initiatives with a focus on our four key themes of pricing excellence, sourcing excellence, operations excellence and organizational effectiveness. We expect to continue executing on our key Transformation Program initiatives to drive margin expansion and to incur transformation costs in 2026 and beyond.

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•In 2025, we implemented 80/20 guiding principles to enable our Transformation Program. As we continue to focus on 80/20 principles in 2026, we expect to create value by increasing focus on key customers and products through quadrant-based strategies. This approach will enable improved operating performance by driving margin growth with our highest value customers, reducing lower margin sales and removing complexity in the future.

•In 2025, we executed certain business restructuring initiatives aimed at reducing our fixed cost structure and realigning our business. We expect these actions to continue into 2026 and to drive margin expansion.

•During 2025, we experienced inflationary cost increases for certain raw materials as well as logistics and transportation costs. The ongoing volatile market for commodities has the potential to continue to drive price increases in our supply chain. In addition, the current U.S. administration has implemented tariffs with an ongoing possibility of implementing additional, or increasing current, tariffs. We expect these actions and additional reactionary tariff adjustments by other countries to continue to impact our business and contribute to inflationary cost increases. As a result, we have taken actions to mitigate the impact of tariffs such as pricing increases, inventory pre-buys and supply chain optimization actions, which may continue going forward. In addition, our Transformation Program initiatives are intended to improve productivity and offset cost increases. We anticipate that supply chain pressures and inflationary cost increases resulting from these tariffs, as well as any related impacts on macroeconomic conditions and our business, will likely continue into 2026. In addition, on February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Powers Act. It is unclear at this time what impact this decision will have on our future financial results, including whether we will be able to obtain refunds of amounts previously collected for such tariffs or the level of replacement tariffs the current U.S. Administration imposes through other means.

•The Organization for Economic Co-operation and Development Pillar Two Model Rules (“Pillar Two”) for a global 15.0% minimum tax have been adopted by a number of jurisdictions in which we operate. Pillar Two has negatively impacted our effective tax rate in 2025 and is likely to continue to impact our effective tax rate in the future. We continue to evaluate the enacted legislative changes and new guidance as it 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 2026, 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 sustainability;

•Continuing to implement our Transformation Program initiatives to drive operational excellence, reduce complexity and improve our organizational structure, which includes a continued focus on 80/20 guiding principles to drive profitable growth; and

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

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CONSOLIDATED RESULTS OF OPERATIONS

The consolidated results of operations were as follows:

N.M. = Not Meaningful

Net sales

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

The 2.3 percent increase in consolidated net sales in 2025 from 2024 was primarily the result of:

•increased selling prices across all of our segments to mitigate inflationary cost increases;

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

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

This increase was par

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