Pentair Beats Q3 Estimates, Raises Profit Outlook As CEO Credits 'Strong Execution'

Pentair plc PNR shares are trading higher after the company reported that third-quarter 2024 net sales fell 2% year over year to $993 million, beating the consensus of $988.8 million.

Core sales declined by 1% in the third quarter, excluding currency translation, acquisitions, and divestitures.

Gross margin expanded to 39.6% from 36.9% a year ago in the quarter. Adjusted operating income rose 13% Y/Y at $239 million, with margin expanded 310 basis points Y/Y to 24.1%.

Flow sales decreased by 7% year over year to $372.2 million, Segment income was $82.8 million (+7% year over year), and the operating margin was 22.2%, an increase of 280 bps year over year.

Water Solutions sales were $289.5 million (-3% Y/Y), Segment income was $64.4 million (-6% Y/Y), and ROS was 22.2%, down 80 bps Y/Y.

Pool segment sales were $331.4 million (+7% Y/Y), Segment income was $112.7 million (+24% Y/Y), and ROS was 34.0%, up 470 bps Y/Y.

Adjusted EPS rose 16% Y/Y to $1.09, surpassing the consensus of $1.07. 

For the quarter, the operating cash flow of continuing operations was $249 million, and the free cash flow from continuing operations was $234 million.

Dividend: The company announced a quarterly dividend of $0.23 per share, payable on Nov. 1, to shareholders of record as of Oct. 18.

Buyback: In the quarter, Pentair repurchased 0.6 million shares for $50 million. As of Sept. 30, $500 million remained available under its share repurchase authorization.

FY24 Outlook: Pentair raised adjusted EPS to $4.27 (from $4.25) vs. consensus of $4.25.

Meanwhile, the company continues to see sales growth of roughly flat to down 1% on a reported basis.

Fourth quarter 2024 Outlook: Pentair sees an adjusted EPS of $1.02 versus a consensus of $1.02 and sales of around $965 million-$975 million vs. a consensus of $989.2 million.

CEO John L. Stauch said, "Our relentless dedication to strong execution, Transformation, and delivering value to our customers has driven yet another quarter of significant free cash flow and outstanding results, surpassing our expectations. Our balanced approach across our water portfolio continues to validate the effectiveness of our strategy. We have made substantial progress on 80/20 with the completion of training on a majority of our total revenue.”

”As a result, we are now implementing actions to drive more focused and profitable growth. Our disciplined and balanced capital allocation strategy included strengthening our balance sheet, continuing our share repurchase program, and paying a dividend," he added.

Investors can gain exposure to the stock via Invesco Global Water ETF PIO and Global X Clean Water ETF AQWA.

Price Action: PNR shares are up 1.49% at $99.83 premarket at the last check Tuesday.

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Image created using artificial intelligence via Midjourney.