ITEM 2.02 Results of Operations and Financial Condition
On April 22, 2021, Pentair plc (the "Company") issued a press release announcing
its earnings for the first quarter of 2021 and a conference call in connection
therewith. A copy of the release is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
This press release refers to certain non-generally accepted accounting
principles ("GAAP") financial measures (core sales, segment income, return on
sales, adjusted net income from continuing operations, adjusted diluted earnings
per share from continuing operations and free cash flow) and a reconciliation of
those non-GAAP financial measures to the corresponding financial measures
contained in the Company's financial statements prepared in accordance with
GAAP.
The 2021 segment income, return on sales, adjusted net income from continuing
operations and adjusted diluted earnings per share from continuing operations
("EPS") include equity income of unconsolidated subsidiaries and eliminate
intangible amortization, certain targeted restructuring and other activities,
novel coronavirus 2019 ("COVID-19") related costs and expenses, deal-related
costs and expenses, certain legal accrual adjustments and certain tax items. The
2020 segment income, return on sales, adjusted net income from continuing
operations and adjusted diluted EPS include equity income (loss) of
unconsolidated subsidiaries and eliminate intangible amortization, certain
targeted restructuring and other activities, COVID-19 related costs and
expenses, deal-related costs and expenses, loss on sale of businesses, pension
and other post-retirement mark-to-market loss, other income and certain tax
items.
We use the term "core sales" to refer to GAAP net sales from continuing
operations excluding (1) the impact of currency translation and (2) the impact
of revenue from acquired businesses recorded prior to the first anniversary of
the acquisition less the amount of sales attributable to divested product lines
not considered discontinued operations ("acquisition sales"). The portion of
GAAP net sales attributable to currency translation is calculated as the
difference between (a) the period-to-period change in net sales (excluding
acquisition sales) and (b) the period-to-period change in net sales (excluding
acquisition sales) after applying current period foreign exchange rates to the
prior year period. We use the term "core sales growth" to refer to the measure
of comparing current period core net sales with the corresponding period of the
prior year.
Management utilizes these adjusted financial measures to assess the run-rate of
its continuing operations against those of prior periods without the distortion
of these factors. The Company believes that these non-GAAP financial measures
will be useful to investors as well to assess the continuing strength of the
Company's underlying operations. In addition, adjusted EPS is used as a
criterion to measure and pay long-term incentive compensation and segment income
is used as a criterion to measure and pay annual incentive compensation. These
non-GAAP measures may not be comparable to similarly titled measures reported by
other companies.
The Company uses free cash flow to assess its cash flow performance. The Company
believes free cash flow is an important measure of liquidity because it provides
the Company and its 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 annual
incentive compensation. The Company's measure of free cash flow may not be
comparable to similarly titled measures reported by other companies.
ITEM 9.01 Financial Statements and Exhibits
(a)Financial Statements of Businesses Acquired
Not applicable.
(b)Pro Forma Financial Information
Not applicable.
(c)Shell Company Transactions
Not applicable.
(d)Exhibits
                                 EXHIBIT INDEX
   Exhibit          Description
                    Pentair plc press release dated April 22, 2021 announcing earnings for the
    99.1            first quarter of 2021
     104            Cover Page Interactive Data File (embedded within the Inline XBRL document)

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