Pentair plc (NYSE:PNR) stock rose Tuesday after the water treatment company announced a $1.4 billion acquisition of Taco Group Holdings alongside its second-quarter results.
Earnings Miss Estimates
Pentair reported adjusted earnings of $1.14 per share, missing the analyst consensus estimate of $1.22.
Revenue declined 17% year over year to $932.6 million, below the consensus estimate of $958.1 million. The company said the decline was primarily driven by an approximately $170 million impact from inventory destocking in its Pool distribution channel.
Adjusted operating income fell 20% to $236.6 million, while adjusted operating margin narrowed 100 basis points to 25.4%.
Segment Results
Flow segment sales increased 5% to $263.7 million. Core sales declined 1%, excluding currency, acquisitions and divestitures. Segment income rose 27% to $70 million, and margin expanded 470 basis points to 26.5%.
Water Solutions sales declined 5% to $422 million, with core sales down 3%. Segment income increased 17% to $126 million, while margin improved 560 basis points to 30%, driven by disciplined pricing and productivity.
Pool segment sales dropped 42% to $246.6 million as channel partners continued to reduce inventory and demand remained pressured by higher interest rates and inflation. Segment income fell 62% to $58 million, while return on sales declined 1,230 basis points to 23.4%.
Cash Flow And Shareholder Returns
Pentair generated operating cash flow of $572 million and free cash flow of $553 million during the quarter.
Pentair paid a quarterly cash dividend of 27 cents per share in the second quarter. The company also previously announced a 27-cent dividend payable Aug. 7 to shareholders of record as of July 24. Pentair has increased its dividend for 50 consecutive years.
At the end of the second quarter, Pentair had cash and cash equivalents of $91.8 million.
The company repurchased 2 million shares for $150 million during the quarter. As of June 30, Pentair had $650 million remaining under its share repurchase authorization.
Pentair To Acquire Taco Group
In a separate announcement, Pentair agreed to acquire Taco Group Holdings for approximately $1.4 billion.
The transaction values Taco at about 10.5 times estimated 2026 EBITDA, including roughly $165 million in tax benefits and approximately $30 million of expected run-rate cost synergies.
Pentair said the acquisition will expand its portfolio of smart and sustainable water solutions and strengthen its position in North American growth markets.
Taco is expected to generate about $540 million in fiscal 2026 revenue, with adjusted EBITDA margins exceeding 20%, including expected synergies. Pentair expects the acquisition to add 10 cents to 15 cents to adjusted earnings per share in fiscal 2027.
Outlook
Pentair lowered its fiscal 2026 GAAP earnings outlook to a range of $3.86 to $4.06 per share from its prior forecast of $3.90 to $4.10. The new guidance remains below the analyst consensus estimate of $4.69.
The company reaffirmed its adjusted EPS outlook of $4.60 to $4.80, compared with the consensus estimate of $4.88. It also maintained its sales guidance of $3.884 billion to $4.009 billion, versus analysts’ estimate of $4.012 billion.
For the third quarter, Pentair expects adjusted EPS of $1.05 to $1.08, below the consensus estimate of $1.20. It forecast revenue of $960.7 million to $981.1 million, compared with analysts’ estimate of $980.9 million.
PNR Price Action: Pentair shares were up 3.26% at $65.23 at the time of publication on Tuesday, according to Benzinga Pro data.
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