Key Highlights

  • Sales fell 4% to USD 976 million, core sales declined 5%, and adjusted EPS was USD 1.18.
  • Adjusted return on sales was 24.8%, down 90 basis points, on adjusted operating income of USD 242 million.
  • Pool sales fell 18% as destocking ended, while Water Solutions segment margin expanded 370 basis points to 28.7%.
  • Full-year adjusted EPS guidance was reaffirmed at about USD 4.70, with fourth quarter adjusted EPS guided to USD 1.15.

Quarter Results

Pentair (NYSE:PNR) reported third quarter 2026 results on Tuesday. Sales were USD 976 million, down 4% from a year earlier, and core sales declined 5% excluding currency, acquisitions and divestitures. GAAP EPS from continuing operations was USD 0.91 versus USD 1.12, a 19% decline. Adjusted EPS was USD 1.18 versus USD 1.24, down 5%, and above the company's earlier guidance range of USD 1.05 to USD 1.08, per the call.

Operating income was USD 196 million, down 15%, with return on sales of 20.1%. Adjusted operating income was USD 242 million, down 8%, with adjusted return on sales of 24.8%. Results included about USD 8 million of IEEPA tariff refunds, bringing the year-to-date total to USD 43 million. Chief Executive John Stauch said the teams responded with urgency after a challenging second quarter in Pool and that the actions underway are positioning the company for significant growth in 2027.

Segment Performance

Flow sales rose 4% to USD 262 million, with core sales up 1%, and segment income rose 15% to USD 69 million for a 26.2% return on sales, up 250 basis points. Water Solutions sales rose 1% to USD 422 million, with commercial growth of 4% offsetting residential weakness, and segment income rose 16% to USD 121 million for a 28.7% return on sales. A finance executive noted that Flow sales were modestly below expectations because of delayed food and beverage spending.

Pool sales fell 18% to USD 291 million, with segment income down 38% to USD 72 million and a 24.6% return on sales, down 820 basis points. The company said the quarter reflected completion of the inventory realignment with major channel partners. Management guided full-year pool sell-through to about USD 1.45 billion, growth of 2% to 3%, and described a four-pillar strategy to regain share.

Cash, Dividend and Taco Acquisition

Operating cash flow was USD 169 million versus USD 196 million, and free cash flow was USD 153 million versus USD 179 million. Nine-month free cash flow was USD 620 million, and the company deployed USD 350 million on share repurchases. Net debt leverage was 1.4 times at quarter end, and management cited pro forma net leverage of 2.5 times after the Taco Group Holdings acquisition, which closed Oct. 1. Taco was financed with about USD 1.4 billion of term loans at an interest rate of about 5.25%. Management put Taco at USD 560 million of 2026 sales and USD 90 million of EBITDA.

Pentair paid a quarterly dividend of USD 0.27 per share, with the same amount payable on Nov. 6. This marks the 50th consecutive year of dividend increases.

Guidance

GAAP EPS guidance for 2026 was updated to approximately USD 3.76, with adjusted EPS of approximately USD 4.70. Full-year sales are guided down about 3% on a reported basis, including the channel inventory reset and Taco. For the fourth quarter, the company guided to GAAP EPS of approximately USD 1.07, adjusted EPS of approximately USD 1.15, and reported sales up approximately 7% to 9%, with core sales down 2% to 3%. Management flagged that about USD 43 million of 2026 tariff recoveries are not repeating in 2027, and put 2027 pool sell-through flat at USD 1.45 billion. The chief financial officer role is also changing, with an incoming executive joining the call.

Water Markets Markers to Follow

Tracking points include Pool sales as channel destocking ends, Flow and Water Solutions return on sales against 26.2% and 28.7%, and Taco integration against its USD 90 million EBITDA level. Further items are net leverage against 2.5 times pro forma, the fourth quarter core sales decline, and the absence of tariff refunds in 2027.