Pentair plc

Pentair reported Q2 sales of $933 million, adjusted operating income of $237 million, ROS of 25.4%, and adjusted EPS of $1.14. Core sales were down 17% year over year, mainly due to about $170 million of pool channel inventory destocking. Flow sales increased 5% to $264 million, with segment income up 27% and ROS up 470 basis points to 26.5%; Water Solutions sales declined 5% to $422 million, with segment income up 17% to $126 million and ROS up 560 basis points to 30%; Pool sales declined 42% to $247 million, with segment income down 62% and ROS at 23.4% versus 35.7% a year ago. For the full year, Pentair reaffirmed adjusted EPS of approximately $4.60 to $4.80, total sales down approximately 4% to 7% (midpoint about $3.95 billion), adjusted operating income down approximately 5% to 9%, Flow sales up mid-single digits to high-single digits, Water Solutions sales roughly flat with core sales up low-single digits, and Pool sales down 18% to 22%. For Q3, management expects sales down approximately 4% to 6% (midpoint about $970 million), adjusted operating income down approximately 14% to 16%, and adjusted EPS of $1.05 to $1.08. Taco is expected to close in Q4, was described as $1.4 billion, and is expected to be $0.10 to $0.15 accretive to adjusted EPS in fiscal 2027.

John Stauch framed the quarter as a pool-specific setback rather than a broad business issue, emphasizing that Flow and Water Solutions were strong and that pool issues were temporary. He said Pentair has a clear action plan to realign the pool sales organization, deepen dealer engagement, and increase customer-driven innovation, with confidence in a return to more normalized pool performance in 2027. On Taco, he called it a natural fit that broadens Pentair’s water-solutions platform and improves exposure to HVAC, data centers, and related infrastructure build-outs.

Bob Fishman walked through the numbers and noted that Q2 adjusted operating income included about $35 million of tariff refunds across the three reporting segments. He said the balance sheet remains strong with net debt leverage at 1.4x and that Pentair repurchased $150 million of shares in the quarter, while also highlighting the 8% dividend increase and the company’s 50th consecutive annual dividend increase. On Taco, he said the purchase price implies about 10.5x expected 2026 adjusted EBITDA after tax benefits and synergies, with roughly $30 million of run-rate cost synergies expected over the next few years, Q4 closing anticipated, and net leverage expected around 2.4x at close before moving below 1.5x within two years.

Analysts focused heavily on pool destocking, asking how regionalized and product-specific the reset was, how management could be confident in 2027 growth, and whether margins could return to the 30s or better. Management said the inventory reduction was broad across regions and products, not concentrated in one subset, and explained that 2027 could reach roughly a $1.45 billion pool ship-in level versus about $1.25 billion this year if inventories normalize as expected. They also acknowledged some share loss tied to implementation of 80/20 and dealer relationship disruptions, especially with smaller distributors and contractors, and said the company needs to rebuild dealer trust and make like-for-like replacement products easier to find and sell.