Pentair Q2 2026: sales fell 17% to $932.6M as Pool channel destocking cut Pool sales 42%; GAAP EPS $0.80 (-11%), adjusted EPS $1.14 (-18%), with a one-time $34.9M tariff refund flattering margins.
Revenue
$933M
-17.0% YoY
Net income
$129M
-13.4% YoY
Diluted EPS
$0.80
-11.1% YoY
Operating margin
17.9%
Overview
Pentair's second quarter of 2026 (April–June) was a sharp step down, and almost all of the damage came from one place: its Pool business. Sales fell 17% to $932.6 million, from $1,123.1 million a year earlier. Pool sales alone dropped $180.6 million, or 42%. The company estimates that about $170 million of that came from destocking: the distributors and dealers who sell Pentair's pool pumps, filters and heaters had built up more inventory than they could sell. So they cut their orders from Pentair and sold from the stock they already held.
Pentair warned about this on July 14, two weeks before the full results. That was when it cut its full-year guidance, and its CFO had left on July 10. The final numbers came in close to that warning: GAAP diluted EPS (profit per share under standard accounting rules) of $0.80, down from $0.90, and adjusted EPS of $1.14, down from $1.39. The adjusted figure is the company's own measure, which excludes restructuring, amortization of acquired intangibles and similar items.
Two things make the quarter look better on paper than it really was:
Tariff refunds. In February 2026 the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Pentair received $34.9 million of refunds of tariffs it had already paid, and it booked them in this quarter's results. That is a one-time benefit, not a sign that the business earned more.
A weak comparison on the GAAP line. Q2 2025 carried a $26.3 million loss on the sale of a business and $41.8 million of asset impairments and write-offs, which are accounting charges for assets that lost value. Without those in the base, GAAP EPS falls only 11% while adjusted EPS falls 18%. The adjusted decline is closer to how much the business actually weakened.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Read 0 community reports on Pentair, or write your own.Write a report
Operating margin is the share of sales left after running the business, before interest and tax. Free cash flow is cash from operations minus capital spending.
What drove the sales decline
Pentair splits every sales change into volume (how many units it sold), price, acquisitions/divestitures and currency. For the whole company in Q2:
Component
Q2 2026
First half 2026
Volume
-20.6%
-12.8%
Price
+3.3%
+4.2%
Core growth
-17.3%
-8.6%
Acquisitions / divestitures
-0.3%
-0.4%
Currency
+0.6%
+1.3%
Total
-17.0%
-7.7%
Price increases in all three segments were still adding about 3%. The problem was volume. In Pool, volume fell 46.3%, partly offset by 3.9% higher prices. The 10-Q attributes the decline to "a more pronounced inventory realignment with major channel partners than previously estimated and worsening business conditions, including higher interest rates and inflation." So it is not only destocking. Management also describes weaker underlying demand, which matters when judging how quickly Pool can recover.
Segment performance
Segment
Sales Q2 2026
Sales YoY
Segment income
Segment income YoY
Return on sales
Of which IEEPA refund
Flow
$263.7M
+5.1%
$69.8M
+27.4%
26.5% (from 21.8%)
$5.4M
Water Solutions
$422.0M
-5.1%
$126.4M
+16.5%
30.0% (from 24.4%)
$18.3M
Pool
$246.6M
-42.3%
$57.6M
-62.3%
23.4% (from 35.7%)
$11.2M
"Segment income" is Pentair's own measure of each segment's operating profit, excluding restructuring, amortization and other items. "Return on sales" is that profit as a share of the segment's sales.
The refund column changes how this table reads:
Water Solutions' profit rise of $17.9 million is almost exactly its $18.3 million tariff refund. Without the refund, segment income was about $108.1 million, flat against $108.5 million a year earlier. Sales fell 5.1%. Of that, 3.5 points came from exiting a commercial business in Q2 2025, and core sales fell 2.6% on lower volume. The 10-Q says the refund "more than offset inflationary cost increases" in this segment.
Flow improved even without its refund. Segment income would still have been about $64.4 million, up roughly 17%. Some of that came from Hydra-Stop, a valve maker acquired in September 2025 for $292.1 million, which added 4.9 points of sales growth. Core sales, which exclude that deal and currency, fell 0.8%.
Pool is worse than its reported figures suggest. Without its $11.2 million refund, segment income was about $46.4 million, down roughly 70%, and the segment's return on sales was about 19% instead of 35.7%. Pentair's bridge of the 12.3-point margin drop puts 11.5 points on volume/price, meaning a factory running well below capacity spreads its fixed costs over fewer sales. Inflation cost another 1.4 points, and productivity added back 0.9.
Margins, costs and one-offs
The gross margin rise, from 40.7% to 42.4%, is almost entirely the tariff refund. $34.9 million is about 3.7 points of Q2 sales, so without it gross margin would have been roughly 38.6%. That is below last year even after allowing for the $10.3 million of write-offs in Q2 2025's cost of goods sold. Price increases and productivity did not fully offset lower volume and raw-material inflation.
Selling, general and administrative expense (SG&A, the overhead of running the company) rose from 19.0% to 22.0% of sales. Two drivers explain it:
Restructuring costs of $34.6 million, up from $14.3 million.
Costs for Pentair's "Transformation Program", its effort to raise margins through pricing, sourcing and simplification, of $17.5 million, up from $12.7 million.
Both are excluded from adjusted figures. If they keep recurring at this size, adjusted operating income overstates what shareholders actually keep.
Adjusted operating income of $236.6 million includes the refunds, because Pentair does not exclude them. Without the $34.9 million, adjusted operating income would have been about $201.7 million, down about 32% from $296.7 million, not the reported 20%. The adjusted margin would have been about 21.6%, not 25.4%.
Below the operating line, net interest expense rose 8.4% to $19.4 million because of higher debt levels. The effective tax rate fell to 12.5% from 13.9%, which the 10-Q attributes to a more favorable mix of where profits were earned.
Cash flow and capital returns
Q2 is Pentair's strongest cash quarter because the pool season peaks and customers pay down receivables. Operating cash flow was $571.8 million and free cash flow $552.9 million, only 7% below last year even though sales fell 17%. The reason is that receivables fell as customers paid down balances. The 10-Q notes that H1 operating cash flow includes the $34.9 million tariff refund, and inventory rose $36.7 million in the first half as Pool volume dropped.
Pentair bought back 2.0 million shares for $150 million in Q2 ($348.2 million in the first half) and paid a $0.27 quarterly dividend, up from $0.25. The company says this is its 50th consecutive year of dividend increases. Diluted share count fell to 161.6 million from 165.7 million, which cushioned EPS by roughly 2.5%. Long-term debt was $1,606.0 million at June 30.
The Taco acquisition
On July 27, 2026 Pentair agreed to buy Taco Group Holdings for $1.425 billion. Taco will join the Water Solutions segment. Pentair plans to pay with cash on hand and new debt:
A $1.4 billion bridge loan commitment, which is short-term financing to be replaced by permanent borrowing.
A September 1 8-K describing $1.4 billion of term loan facilities, which Pentair intends to draw in full at closing.
Closing is expected in Q4 2026. The 10-Q warns that indebtedness is expected to "increase materially", roughly doubling from the June 30 level. The deal is not in the 2026 guidance.
This deal comes while Pool profit is sharply down. After closing, Pentair will carry about twice its current debt while its most profitable segment is in a downturn.
Takeaway: Q2 overstates the business in two ways. A one-time $34.9 million tariff refund inflated profit, and last year's write-offs make the GAAP comparison easier. Without the refund, adjusted operating income fell about 32%, not 20%. Water Solutions' profit growth was entirely the refund, and Pool's profit fell about 70%. The only clean improvement came from Flow.
Outlook
Pentair's guidance after Q2:
Q3 2026: sales down about 4–6%; GAAP EPS of about $0.97–$1.00 (down 11–13%); adjusted EPS of about $1.05–$1.08 (down 13–15%).
Full-year 2026: sales down about 4–7%, compared with its earlier forecast of growth of 2–4%. GAAP EPS of about $3.86–$4.06 (FY2025: $3.93) and adjusted EPS of about $4.60–$4.80, down from $4.92 in 2025. The guidance assumes about $250 million of Pool destocking for the year. With about $170 million already in Q2, that implies roughly $80 million still to come. The July 14 release said the guidance includes $35–50 million of tariff refunds.
Management calls the Pool downturn "a temporary channel reset" and expects "significant sales and EPS growth in 2027". There is support for that view: once distributors finish working through excess stock, their orders should move back toward what homeowners are actually buying.
Two things argue for caution. First, the 10-Q itself says "the timing and pace of normalization remain uncertain." Second, it cites higher interest rates and inflation as reasons demand weakened, and those are not inventory effects. A Q3 guide of sales down only 4–6% suggests the worst of the destock landed in Q2. What to watch in Q3:
Whether Pool volume stabilizes.
How much more refund money arrives. The low end of the full-year refund range is already booked.
Whether restructuring charges start to fall.
There is also a leadership change: Robert W. Hau, a former Fiserv and TE Connectivity CFO, becomes CFO on November 1, 2026 (8-K filed September 22). He takes over just as the Taco deal is expected to close.
Source: Pentair plc Form 10-Q for the quarter ended June 30, 2026 (filed July 28, 2026), with guidance from the Q2 2026 earnings release (Exhibit 99.1 to the 8-K of July 28, 2026) and the July 14, 2026 pre-announcement.