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PENTAIR plc (PNR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered record adjusted metrics: sales $1.12B (+2% YoY), adjusted operating income $296.7M (+9% YoY), adjusted ROS 26.4% (+170 bps), and adjusted EPS $1.39 (+14% YoY) . Versus consensus, adjusted EPS beat by ~$0.05 and revenue by ~$5.5M* [GetEstimates Q2 2025].
  • GAAP optics were mixed: GAAP EPS fell to $0.90 (−19% YoY) and GAAP ROS contracted 320 bps due to a $26.3M loss on sale and higher SG&A .
  • Guidance raised: FY25 adjusted EPS to $4.75–$4.85 (from $4.65–$4.80) and sales growth to ~1–2%; Q3 2025 adjusted EPS $1.16–$1.20 with flat to +1% sales . Segment FY25 outlook: Flow up low-single digits, Water Solutions down mid-single digits (core ~flat), Pool up ~6–7% .
  • Tariff headwind revised down to ~$75M for FY25 (from ~$140M previously), with mitigation via price and transformation savings; ~$15M net benefit reflected in raised guidance . Record free cash flow ($596M) and share repurchases ($75M) bolster capital deployment flexibility .

What Went Well and What Went Wrong

What Went Well

  • Record quarter across adjusted metrics; transformation savings and pricing drove margin expansion: adjusted ROS up 170 bps to 26.4% and adjusted operating income up 9% . “We delivered a record quarter across all four metrics... adjusted EPS rose 14% to $1.39” .
  • Pool momentum: sales +9%, core +7%, segment income $153M (+14%), ROS 35.7% (+160 bps), driven by price, volume, and Gulfstream acquisition contribution .
  • Strong liquidity and capital returns: free cash flow $596M (+$74M YoY), net cash from ops $607M (+$68M YoY); $75M buybacks and $0.25 dividend (49th consecutive annual increase) .

What Went Wrong

  • GAAP compression: EPS $0.90 (−19% YoY) and ROS down 320 bps on $26.3M loss on sale and higher SG&A; operating income down 12% YoY .
  • Water Solutions softness: sales −4% and core −3%, with weak food service and strategic divestiture of lower-margin commercial services (KBI), reducing H2 revenue by ~$20M/quarter .
  • Residential end-market sluggishness; in Pool, volumes flattish to slightly down with price sensitivity and deferred remodels; management noted ~15% trailing-12-month price increase impacting demand .

Financial Results

Core Financials vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$0.973 $1.010 $1.123
Gross Margin %38.8% 39.9% 40.7%
Operating Income ($USD Millions, GAAP)$195.1 $203.1 $217.7
ROS % (GAAP)20.1% 20.1% 19.4%
Adjusted Operating Income ($USD Millions)$231.3 $242.5 $296.7
Adjusted ROS %23.8% 24.0% 26.4%
Diluted EPS (GAAP, $)$0.99 $0.93 $0.90
Diluted EPS (Adjusted, $)$1.08 $1.11 $1.39

Q2 Performance vs YoY and Consensus

MetricQ2 2024Q2 2025 ActualConsensus Q2 2025Surprise
Revenue ($USD Millions)$1,099.3 $1,123.1 $1,117.8*+$5.3
Adjusted EPS ($)$1.22 $1.39 $1.3364*+$0.05
GAAP EPS ($)$1.11 $0.90 n/an/a

Values marked with * retrieved from S&P Global.

Segment Breakdown

SegmentQ4 2024 Sales ($M)Q1 2025 Sales ($M)Q2 2025 Sales ($M)Q4 2024 ROSQ1 2025 ROSQ2 2025 ROS
Flow$360.7 $367.9 $397.3 20.4% 22.7% 23.4%
Water Solutions$257.9 $258.2 $298.3 24.1% 23.5% 23.5%
Pool$353.7 $383.9 $427.2 33.8% 32.8% 35.7%

KPIs

KPIQ2 2024Q2 2025
Net Cash from Operating Activities ($M)$539.2 $607.0
Free Cash Flow ($M)$522.2 $596.0
Share Repurchases ($M)$50.0 (Q2 2024 six-month ref) $75.0
Dividend per Share ($)$0.23 $0.25
Net Debt Leverage (x)1.6 (year-ago) 1.2

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
GAAP EPSFY 2025$4.27–$4.42 $3.95–$4.05 Lowered (reflects divestiture loss and mix)
Adjusted EPSFY 2025$4.65–$4.80 $4.75–$4.85 Raised
Sales Growth (reported)FY 2025Flat to +2% ~+1% to +2% Narrowed upward
GAAP EPSQ3 2025n/a$1.09–$1.13 Introduced
Adjusted EPSQ3 2025n/a$1.16–$1.20 Introduced
Sales Growth (reported)Q3 2025n/aFlat to +1% Introduced
Adjusted Operating Income GrowthFY 2025Up ~6–9% (implied from Q4 outlook) Up ~7–9% Maintained/Specified
Tariff ImpactFY 2025~$140M (Q1 estimate) ~$75M; +$15M net benefit vs pricing Improved
Transformation Savings (net)FY 2025~$80M target ~$80M (on track) Maintained
Segment SalesFY 2025Not specifiedFlow up LSD; Water Solutions down MSD (core ~flat); Pool up ~6–7% Introduced detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Tariffs & PricingQ1: Implemented price increases, pre-buying, capped orders to mitigate enacted tariffs FY25 tariff impact revised to ~$75M; staggered pricing in Q2, $50M less price than originally planned; potential Aug 1 risk ($10M) Improving (lower tariff rates), vigilant
Transformation Savings“Another transformative year” with ROS expansion; continued initiatives and 80/20 $44M H1 savings; targeting $80M in FY25; ROS target 26% by YE 2026 Sustained execution
Residential Housing & Pool DemandHigher rates pressuring residential markets ; Q1: residential pressure noted Pool volumes flattish; remodels deferred; ~15% TTM price impacting demand; hoping for rate relief Stable-to-soft
Water Solutions Portfolio ActionsN/ADivested lower-margin KBI services; refocus on filtration and ice; H2 revenue impact ~$20M/quarter Portfolio upgrade
Flow Orders/BacklogQ1: Industrial softness Sequential pickup; commercial growth 12th consecutive quarter; guiding mid-single-digit Q3 growth Improving
Capital AllocationDividend increased (49th consecutive year) ; buybacks Strong FCF; leverage 1.2x; balanced buybacks, dividend, bolt-ons Healthy

Management Commentary

  • “We delivered a record quarter across all four metrics: sales, adjusted operating income, return on sales, and adjusted EPS... We also delivered record free cash flow and repurchased $75 million of shares in Q2.”
  • “We are increasing our sales growth outlook and estimated adjusted EPS range for the full year... Transformation initiatives are on track to deliver expected savings this year and our 80/20 actions are showing early signs of success.”
  • “We’ve updated our 2025 tariff impact to be approximately $75 million... The reduction in the China tariff rates from 145% to 30% in Q2 was the primary driver.”
  • “Pool sales increased 9%... segment income was $153 million, up 14%, and ROS increased 160 basis points to 35.7%, driven by price and transformation.”
  • On Water Solutions: “We strategically divested our small commercial services business... allowing us to focus on higher-margin filtration and ice.”

Q&A Highlights

  • Pool pricing and volumes: Price realization strong; volumes flattish-to-slightly down; remodels deferred; industry-wide ~15% TTM price increases affecting demand; channel inventories normal with improved sell-through visibility .
  • Tariff/pricing bridge: FY25 tariff lowered by ~$65M vs Q1; ~$50M less price taken, net ~$15M benefit; cautious on possible Aug 1 tariffs (copper/EU) and mitigation actions .
  • Water Solutions divestiture (KBI): Fixed-price service contract under labor inflation and low-density routes; strategic exit avoids future cash outlays; refocus on filtration/ice; maintains channel relationships; H2 revenue −$20M/quarter .
  • Flow outlook: Sequential improvement; commercial up; guiding flow mid-single-digit growth in Q3; configured/standard orders convert within 1–2 quarters .
  • Free cash flow/working capital: Record FCF aided by strong sales/income and improved DSO/inventory days; leverage reduced to 1.2x .

Estimates Context

  • Q2 2025 vs S&P Global consensus: Adjusted EPS $1.39 vs $1.3364* (beat ~$3.9%); Revenue $1,123.1M vs $1,117.8M* (beat ~0.5%). 18 estimates for both EPS and revenue* [GetEstimates Q2 2025].
  • Drivers of beat: Price realization and transformation savings expanded adjusted margins; Pool outperformed (+9% sales) while Flow/Water Solutions mix and pricing offset inflation/tariffs .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Mix and margin story intact: Adjusted ROS expanded to 26.4% on transformation and pricing, with Pool a high-ROS outperformer; expect continued margin productivity through FY25 .
  • Guidance quality improved: FY25 adjusted EPS raised and tariff headwind halved to ~$75M; Q3 guide suggests continued adjusted earnings growth despite macro/tariff noise .
  • Portfolio sharpening: Water Solutions divestiture should be margin accretive longer term, refocusing on filtration/ice; H2 top-line impact (~$20M/quarter) embedded in guidance .
  • Demand watch: Residential remains soft; Pool volume sensitivity to price persists; catalysts include rate cuts and continued automation/NPI to lift “content per pad” .
  • Cash optionality: Record FCF and lower leverage (1.2x) support buybacks, dividend, and disciplined bolt-ons; near-term pricing actions remain agile to macro/tariff shifts .
  • Segment trajectory: Flow improving (commercial strength, sequential momentum); Water Solutions stabilizing post Q3 portfolio actions; Pool growth driven by price and aftermarket, with Q3 normalization of price vs cost on full-quarter tariffs .
  • Trading frame: Modest top-line beats with clear margin execution and lowered tariff risk are supportive; monitor August tariff developments and Q3 price/inflation normalization for trajectory inflection .

Appendix: Additional Data Points

  • Core sales growth (Q2 2025): Total +1.3%; Flow −1.3%; Water Solutions −3.0%; Pool +7.3% .
  • Segment YoY commentary (Q2 2025): Flow flat (core −1%); Water Solutions −4% (core −3%); Pool +9% (core +7%) .
  • Q3 2025 expectations: Flow up mid-single digits; Water Solutions down mid-to-high single digits (core ~flat; commercial water up LSD–MSD); Pool up ~3–4%; adjusted OI +4–7%; adjusted EPS $1.16–$1.20 .

Citations: Q2 2025 8-K and press release – –; Q2 2025 earnings call transcript –; Q1 2025 8-K –; Q4 2024 8-K –; Other relevant Q2 2025 press releases .