Pentair — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 sales were $976 million, down 4% compared to the same period in 2025; core sales (excluding currency, acquisitions, and divestitures) declined 5%.
• Operating income was $196 million (down 15% year-over-year) with a return on sales (ROS) of 20.1%, a decrease of 260 basis points.
• Adjusted operating income was $242 million (down 8% year-over-year) with an adjusted ROS of 24.8%, a decrease of 90 basis points.
• GAAP diluted EPS was $0.91, down 19% from $1.12 in Q3 2025; adjusted diluted EPS was $1.18, down 5% from $1.24 in Q3 2025.
• Net cash provided by operating activities was $169 million for the quarter, compared to $196 million in Q3 2025.
• Free cash flow was $153 million for the quarter, compared to $179 million in Q3 2025.
• Results included approximately $8 million of International Emergency Economic Powers Act (IEEPA) refunds.
• Long-term debt was $1,484.1 million as of September 30, 2026, down from $1,638.6 million as of December 31, 2025.

Guidance and Future Outlook:

• Updated full year 2026 GAAP EPS guidance to approximately $3.76.
• Reaffirmed full year 2026 adjusted EPS midpoint of approximately $4.70.
• Updated full year 2026 sales guidance to be down approximately 3% on a reported basis.
• Introduced fourth quarter 2026 GAAP EPS guidance of approximately $1.07 and adjusted EPS of approximately $1.15.
• Expects fourth quarter 2026 sales to be up approximately 7% to 9% on a reported basis compared to Q4 2025.
• Full year guidance includes the right-sizing of channel inventory for the 2027 pool season and the acquisition of Taco Group Holdings.
• Management expressed confidence in the full-year outlook and positioned the company for significant growth in 2027.

Business Segments and Product Lines:

• Flow: Sales up 4% year-over-year; core sales grew 1%. Reportable segment income was $69 million, up 15% year-over-year, with an ROS of 26.2% (up 250 basis points).
• Water Solutions: Sales up 1% year-over-year; core sales grew 1%. Reportable segment income was $121 million, up 16% year-over-year, with an ROS of 28.7% (up 370 basis points).
• Pool: Sales down 18% year-over-year; core sales declined 18%. Reportable segment income was $72 million, down 38% year-over-year, with an ROS of 24.6% (down 820 basis points). Pool performance reflected the completion of inventory realignment with major channel partners.
• Segment reorganization effective January 1, 2026, moved legacy residential and irrigation flow business from Flow to Water Solutions; prior periods were retrospectively reclassified.

Market and Competitive Landscape:

• The company noted a challenging second quarter in the Pool segment which was addressed in the third quarter.
• Market conditions include the right-sizing of channel inventory in preparation for the 2027 pool season.
• The acquisition of Taco Group Holdings was completed on October 1, 2026.

Risks and Challenges:

• Forward-looking statements are subject to risks including global economic conditions, housing market strength, international hostilities, supply chain logistics, competition, pricing pressures, raw material and labor costs, currency volatility, and integration risks associated with the Taco acquisition.
• Specific risks include the ability to achieve benefits of restructuring plans, cost reduction initiatives, and the Transformation Program.

Management Commentary and Tone:

• John L. Stauch, President and CEO, stated the company delivered solid results across sales, income, and EPS, with teams executing well following a challenging second quarter.
• Management emphasized focus on serving customers, driving productivity, and managing the business with discipline.
• The tone was confident, with management stating they are encouraged by performance and believe actions are strengthening the company for 2027 growth.

Other Key Points:

• Pentair paid a regular cash dividend of $0.27 per share in Q3 2026.
• A regular quarterly cash dividend of $0.27 per share was announced for payment on November 6, 2026.
• This marks the 50th consecutive year Pentair has increased its dividend.
• During the nine months ended September 30, 2026, the company repurchased $350 million of ordinary shares.
• Net cash used for financing activities was $654.5 million for the nine months ended September 30, 2026.
• Capital expenditures were $54.2 million for the nine months ended September 30, 2026.