Pentair Q2: Earnings Beat, Raised Bottomline Guidance & More

Pentair PLC PNR reported second-quarter FY23 net sales growth of 1.7% year-over-year to $1.08 billion and a core sales decline of 7%, beating the consensus of $1.06 billion.

Adjusted EPS was $1.03 (+1% Y/Y), above the consensus of $0.95.

The gross margin expanded by 310 bps to 36.9%, operating income improved by 9.3% Y/Y to $208.5 million, and the margin expanded by 133 bps to 19.3%.

Industrial & Flow Technologies sales increased by 9% Y/Y to $411.6 million, Segment income of $74.8 million (+27% Y/Y), and ROS was 18.2%, an increase of 250 bps.

Water Solutions sales were $336.2 million (+51% Y/Y), Segment income was $74.8 million (+130% Y/Y), and ROS was 22.2%, up 760 bps.

Pool segment sales were $334.3 million (-28% Y/Y), Segment income was $105.1 million (-23% Y/Y), and ROS was 31.4%, up 190 bps.

Operating cash flow was $447 million compared to $308 million in 2Q22. Free cash flow was $431.1 million compared to $287.3 million.

“We are increasing our EPS guidance reflecting a strong first half of 2023 driven by the diversification of our smart, sustainable water business and long-term strategy while recognizing that we continue to operate in a challenging macroeconomic environment with higher interest rates and inflation. While we continue to expect 2023 to be a softer year for our Pool sales due to lower demand in new pools and channel inventory correction, we believe the power of our diversified portfolio demonstrates that we can drive sustained growth and profitability,” commented President and CEO John L. Stauch.

3Q23 Outlook: Pentair expects adjusted EPS of $0.84-$0.89, vs. the consensus of $0.89. It expects sales to be down ~7% Y/Y on a reported basis.

FY23 Outlook, raised: Pentair expects adjusted EPS of $3.65-$3.75 (prior $3.60-$3.70) vs. the consensus of $3.66. The company maintained its sales guidance to be down approximately 2% to flat on a reported basis.

Price Action: PNR shares are trading higher by 2.97% at $68.91 on the last check Thursday.