tapebrief
PNR · Q3 2025

PNR · Q4 2025 Earnings

Cautious

Pentair

Reported February 3, 2026

30-second summary

Pentair closed 2025 with Q4 adjusted EPS of $1.18 beating its own $1.11–$1.16 guide and Q4 revenue +5% YoY against a +3–4% guide, with Pool (+11.2%) and Flow (+9.3%) carrying the quarter against Water Solutions' -9.9%. The 2026 setup is the story: adjusted EPS guide of $5.25–$5.40 implies +6.7–9.8% YoY, sales growth of just 3–4%, and adjusted operating income growth of 5–8% — all below 2025's delivered cadence, with management explicitly excluding any residential recovery and flagging new inflation in metals as a watch item. The 26% ROS target committed to last quarter is reaffirmed, but the volume side of the 2026 algorithm came in softer than the Q3 tone suggested.

Headline numbers

EPS

Q4 FY2025

$1.18

Revenue

Q4 FY2025

$1.02B

+5.0% YoY

Gross margin

Q4 FY2025

40.4%

Operating margin

Q4 FY2025

20.1%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$1.02B+5.0%$1.02B-0.1%
EPS$1.18—$1.24-4.8%
Gross margin40.4%—41.0%-60bps
Operating margin20.1%—22.7%-260bps

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Adjusted EPSQ4 FY2025$1.11 to $1.16$1.18+$0.02 above guideBeat
GAAP EPSQ4 FY2025~$1.07 to $1.10 (derived from range guidance)$0.98-$0.09 below guideBeat
Adjusted EPSFY2025$4.85 to $4.90$4.92+$0.02 above guideBeat
Sales GrowthQ4 FY2025approximately 3% to 4%5%+1 to +2 pts above guideBeat
Sales GrowthFY2025approximately 2%2.3%+0.3 pts above guideBeat
Adjusted Operating Income GrowthFY2025approximately 9% to 10%9%at the low end of guideBeat

New guidance

MetricPeriodGuideYoY
Adjusted EPSFY2026$5.25 to $5.40+6.5–9.8% YoY
GAAP EPSFY2026$4.94 to $5.09+26–30% YoY
Sales GrowthFY2026approximately 3% to 4%—
Adjusted Operating Income GrowthFY2026approximately 5% to 8%—
Adjusted EPSQ1 FY2026$1.15 to $1.18—
Sales GrowthQ1 FY2026approximately 1% to 2%—

Segment KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Flow$0.394B+9.3%
Water Solutions$0.232B-9.9%
Pool$0.393B+11.2%

Other KPIs

Q4 FY2025
SegmentQ4 FY2025
Flow Adjusted ROS22.8%
Water Solutions Adjusted ROS23.5%
Pool Adjusted ROS33.6%
Adjusted Operating Income Growth9%
Adjusted ROS24.7%
Core Sales Growth Q44%
Full Year Core Sales Growth2%
Operating Cash Flow (continuing operations)$815M

Management tone

Narrative arc: Q2 tariff relief funds a guide raise → Q3 flywheel converts to top-line with hard 2026 ROS commitment → Q4 margin commitment holds but volume framing turns conservative and inflation re-enters the script.

The 26% ROS target survived intact, but the volume side of the 2026 algorithm came in softer than Q3's flywheel narrative implied. Q3 management was narrating 80/20 as a top-line unlock, with Q3 revenue +2.9% beating a flat-to-+1% guide and Q4 guided to +3–4%. This quarter's 2026 sales guide of just 3–4% — combined with a Q1 sales guide of +1–2% and management acknowledging Q1 volume slightly negative YoY — is a quieter posture on the growth side of the flywheel. "We have not included a residential recovery in our guide, which we believe would be upside" is doing the work of resetting expectations: the margin clock is set, the volume clock has been deferred again.

Inflation re-entered the discussion as an active concern, not a managed line item. Q3's tone treated tariffs and inflation as resolved — "expected to be immaterial for this year." This quarter the language shifted to "we also experienced higher than expected inflation, primarily from certain metals. If this inflation persists, we will review pricing and other mitigation efforts to offset this impact." The 2026 bridge of ~$80M price offsetting ~$80M inflation, plus $30M incremental tariffs, is a meaningful change from Q3's framing that pricing was being held in reserve. The pricing-as-optionality story has become pricing-as-defence.

Transformation savings stepped down from $80M to $70M net. Q2 and Q3 both anchored on $80M; the 2026 guide moves to $70M net of investments, with management noting in Q&A that investments in digital and innovation are offsetting productivity gains. Q3 tone described transformation as a self-reinforcing flywheel with multi-year runway; Q4 introduces the first explicit acknowledgement that incremental savings impact is concentrating in specific segments rather than broadening.

Management is positioning defensively in a way that contrasts with Q3's confidence. "We remain vigilant in responding to macro volatility... regardless of the external environment" reads as a posture of risk mitigation rather than growth conviction — notable from a team that one quarter ago was committing to numerical 2026 targets. The Q&A reinforced this: 2027 recovery is explicitly absent from the guide, pool is positioned as upside rather than base case, and Julian Mitchell's question about volume phasing got an answer that depends on back-half investment execution.

Capital allocation got more explicit and more incremental. Q3 narrated balanced deployment with the $292M Hydra-Stop acquisition; Q4 framed it as "selective bolt-on M&A" (Hydra-Stop, Gulfstream-type), continued dividend increases toward Dividend King status, and "nibble at stock if acquisitions unavailable" — measured and unhurried language. No major capital event signalled.

Recurring themes management leaned on this quarter:

Portfolio optimization and organizational realignment for efficiencyTransformation and 80-20 approach driving consistent margin expansionPricing power offset by persistent inflation and tariff headwindsInnovation and customer obsession as competitive differentiatorsFree cash flow strength enabling balanced capital allocationSegment performance divergence (flow/pool outperforming water solutions)

Risks management surfaced:

Persistent inflation in metals and other commoditiesTariff impacts ($30 million incremental expected in 2026)Macro volatility and broader operating environment uncertaintyWater solutions segment weakness and commercial sales declinesFX headwinds affecting reportable segment income

Q&A highlights

Andy Kaplowitz · Citigroup

Color on commercial water solutions business performance, visibility into improvement from flat Q1 core to low single digits for the year, and differences between Man Ice and Everpure

CWS expected to return to growth in 2026. North American market remained relatively strong in 2025; volatility primarily in international and China sales. Combined residential flow and water quality management business forms approximately $1 billion entity with channel alignment opportunities and substantial margin improvement potential over several years

CWS expected to return to growth in 2026~$1 billion water quality management business being formedSubstantial margin improvement expected in combined business over several yearsNorth American market remained relatively strong throughout 2025

Mike Halloran · Baird

Pool guidance drivers including price-volume dynamics, inventory levels, and confidence in normalization; capital allocation priorities including dividend, buyback, and M&A appetite

Pool expected to be flattish in 2026 with no residential recovery assumed and no 2027 recovery in guidance. Management positioning pool as upside. Sell-in slightly up in Q4 relative to sell-out, balancing in Q1; volume expected up Q2-Q4. Capital priorities: continue dividend increases toward Dividend King status, selective M&A bolt-ons (hydro stops, golf streams), nibble at stock if acquisitions unavailable

Pool guidance assumes no residential recovery in 2026No indication of 2027 recovery in guidanceFlattish pool volume expected for full year 2026Moving into 50th year of raising dividends

Sari Boroditsky · Jefferies

Headwinds embedded in guidance offsetting $70 million cost outs and ~$10-15 million Hydra deal contribution; expectations for COVID-era pool equipment replacement cycle benefit and cold weather impact

Investments in digital, innovation, and strategic priorities offset cost saves. Modest volume contribution and year-over-year price roughly equal to cost inflation in guidance. COVID replacement cycle and cold weather impacts are significant tailwinds but difficult to time precisely; both captured in current guide with limited visibility to incremental upside

$70 million cost outs in 2026 plus ~$10-15 million from Hydra dealInvestments in digital and innovation offsetting productivity gainsYear-over-year pricing roughly equals cost inflation~$80 million price contribution offsetting ~$80 million company-wide expected inflation

Andrew Krill · Deutsche Bank

Rule of 40 framework application across segments and potential portfolio reshaping; contingency embedded in 2026 guide versus prior year guidance approach

Pool checks rule of 40 box; other segments further away but all have value creation ability. Strategy is to grow high-margin food service and pool businesses faster while improving operational efficiencies in underperforming businesses. No portfolio reshaping plans; M&A focused on bolt-ons and adjacencies. 2026 guide is pragmatic with no residential recovery assumed, investments in businesses, and balanced three-segment contribution with contingency built in for back-half flexibility

Pool meets rule of 40 criteriaMargin goals combine growing high-margin businesses faster with improving underperformersGuide assumes no residential recoveryBalanced contribution expected across all three segments

Julian Mitchell · Barclays

Organic volume guidance assumptions with pricing starting strong in Q1 and fading, implying volumes down early then bouncing back; confidence in volume reversal to positive in back half

Volume dynamics driven by year-over-year comps and absence of residential recovery buy-in assumptions. Q1 expected to be slightly negative year-over-year volume due to no residential recovery speculation in inventory builds. Back half expected to show incremental growth from investments in pool and commercial water businesses. Q1 EPS and revenue percentages align with historical delivery patterns

Flat full-year volume expected with decremental volume first half, incremental volume back halfQ1 volume slightly negative year-over-year due to lack of residential recovery buy-inInvestments in businesses expected to drive back-half volume growthQ1 percentage of full-year EPS and revenue in line with historical patterns

Answers to last quarter's watch list

Whether Q4 Flow growth landed in the high single digits as guided — Flow delivered +9.3%, hitting the top end of the "up high single digits" Q4 guide and marking the second consecutive quarter of acceleration. Hydra-Stop is contributing as expected and now sits in the run rate for 2026.
Resolved positively
Whether Pool ROS hit the ~34% year-end target — Pool ROS came in at 33.6%, fractionally below the explicit ~34% commitment, while Pool revenue beat at +11.2%. The shortfall is narrow but real and means the 2026 26% company-wide ROS target has slightly less cushion than the Q3 tone implied.
Continue monitoring
Water Solutions core growth trajectory — Q4 came in at -9.9%, materially worse than Q3's -5.6% and well below the "down low single digits" core trajectory. The 2026 guide of flat sales (core up low single digits) embeds a sharp inflection that requires CWS recovery and a return to international/China growth.
Resolved negatively
First explicit 2026 sales growth framing — Management guided 2026 sales +3–4% and operating income +5–8%, both below 2025's delivered cadence, with residential recovery explicitly excluded. The volume framing is more conservative than Q3's flywheel narrative implied.
Resolved negatively
Carryover pricing realization — Management quantified ~$80M of 2026 price offsetting ~$80M of inflation, with new metals inflation flagged as a watch item. Price is now in defence rather than reserve; the 1–2 points of carryover pricing flagged in Q3 is being absorbed by cost.
Resolved negatively
Capital deployment cadence post-Hydra-Stop — No major M&A announced; management framed 2026 deployment as selective bolt-ons (Hydra-Stop/Gulfstream archetype), continued dividend growth toward Dividend King status, and opportunistic buybacks. Leverage at 1.3x leaves capacity but management is signalling patience, not aggression.
Continue monitoring

What to watch into next quarter

Whether Water Solutions actually inflects in Q1 toward the "flat sales / core low single digits up" path management guided — Q4's -9.9% sets a low bar but the 2026 algorithm depends on CWS turning, and Q1 sales guidance of +1–2% company-wide implies the segment is no longer dragging.

Whether metals inflation persists and forces a mid-cycle pricing action — management's explicit "if this inflation persists, we will review pricing" caveat is a contingency that, if triggered, complicates the $80M price = $80M cost bridge underpinning 2026 EBIT.

Pool ROS in Q1 — Q4 came in at 33.6% vs the 34% Q3 commitment; whether Pool ROS continues to expand or flattens determines how much margin headroom the company-wide 26% 2026 target actually has.

Q1 volume vs the "slightly negative YoY" framing management gave Julian Mitchell — any further deterioration would put the back-half-loaded 2026 algorithm under early pressure.

Whether residential recovery signals (lower rates, pool build leading indicators, dealer commentary) emerge in the Q1 call — management has explicitly called this out as upside; the first sign of activity would re-rate the 2026 guide as conservative.

Capital deployment posture — with leverage at 1.3x and FY25 operating cash flow of $815M, whether Pentair leans further into bolt-on M&A in Q1 or shifts toward buybacks signals where management sees the better risk-adjusted return.

Sources

  1. Pentair Q4 2025 Press Release, filed February 3, 2026 — https://www.sec.gov/Archives/edgar/data/77360/000007736026000003/a2025q4pressrelease.htm
  2. Pentair Q4 2025 Earnings Call Transcript (Q&A extraction)

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