Pentair Q3 2026: Pool sales fell 18% as destocking ended; adjusted EPS $1.18 beat guidance

Pentair's third quarter of 2026 (July–September) brought sales down 4.5% to $976.4 million, and nearly all of the decline came from its Pool segment, where sales fell 17.7% to $291.5 million. GAAP diluted EPS (profit per share under standard accounting rules) fell 19% to $0.91, while the company's adjusted EPS, which strips out restructuring, a cost-cutting program, acquisition costs and amortization, fell only 5% to $1.18. The gap between the two is wider than usual because Pentair is paying to restructure itself and to buy Taco Group Holdings, a deal that closed on October 1.

This analysis is based on the earnings release (Exhibit 99.1 to the 8-K filed October 27, 2026). The full 10-Q for the quarter has not been filed yet, so the release's segment table and reconciliations are all we have: there is no management discussion of why each segment moved beyond a single sentence on Pool, and no split of the tariff refund by segment.

The numbers

"Operating margin" is the share of sales left after running the business, before interest and tax. "Core" sales growth removes the effect of currency moves and of businesses bought or sold, so it shows how the existing business did on its own.

Segment by segment

Pool is still the swing factor. It lost $62.8 million of sales and $44.5 million of profit compared with a year ago, which more than accounts for the company's whole decline. Its margin dropped 8.2 points to 24.6%, because the factories and overhead behind pool pumps, filters and heaters cost about the same whatever the volume. The release attributes the quarter to finishing the "inventory realignment with our major channel partners." It gives no figure for how much of the Q3 drop was destocking and how much was weaker homeowner demand. That split, and any comment on residential pool construction or repair spending, will have to wait for the 10-Q and the call.

There is one encouraging sign. Pool sales rose from $246.6 million in Q2 to $291.5 million in Q3. In 2025 they fell over the same stretch, from $427.2 million to $354.3 million, as the summer season ended. A segment that grows into the off-season is consistent with distributors ordering again after clearing their shelves.

Flow grew 4.4%, but only 1.0% of that was core growth. The other 3.9 points came from an acquisition. Its profit rose 15% and its margin widened 2.5 points to 26.2%.

Water Solutions grew 1.4%, with segment income up 16% and the margin up 3.7 points to 28.7%. Some of that gain likely includes the roughly $8 million of tariff refunds booked in the quarter, but the release does not say which segment received them, so we can't tell how much.

What the headline numbers hide

• GAAP EPS looks worse than the business. Pentair excluded $46.0 million of costs from adjusted operating income this quarter, up from $30.5 million a year ago. Restructuring rose to $11.4 million (from $0.2 million), "transformation" program costs to $16.1 million (from $10.8 million), and $3.4 million of Taco deal costs were added. Below operating income, a further $4.9 million of bridge-loan fees for the Taco financing were also excluded. That is why GAAP EPS fell 19% while adjusted EPS fell 5%.
• But not every excluded cost is a one-off. Restructuring and transformation charges have been taken every quarter. They total $69.2 million and $45.1 million for the first nine months of 2026, and $31.3 million and $40.8 million for full-year 2025. A reader should treat part of the adjusted figure's advantage as recurring spending.
• The adjusted figure is helped too. The quarter includes about $8 million of refunds of tariffs paid under the International Emergency Economic Powers Act (IEEPA), which the Supreme Court struck down in February. That is a one-time gain, and it is not excluded from adjusted results. Without it, adjusted operating income would be about $234 million, down about 11% rather than 8%. This quarter's refund is far smaller than Q2's $34.9 million.
• Buybacks did some of the work. Diluted shares fell 2.9%, so EPS fell less than net income (−18.8% vs −21.3%). That cushion will shrink: Q3 repurchases were only $1.8 million, against $50.0 million a year earlier and $348.2 million in the first half.
• Interest and tax both worked against EPS. Net interest expense rose to $21.7 million from $14.4 million, including the $4.9 million of bridge fees, and the tax rate rose to 16.3% from 15.0%.
• Cash conversion was fine. Operating cash flow of $169.3 million was 117% of net income, and free cash flow was $152.7 million. For the nine months, operating cash flow of $673.7 million was well above the $434.5 million of continuing-operations profit, mostly because receivables fell $169.2 million as customers paid down balances.
• Inventory is going the other way. Inventory was $655.0 million at September 30, up 3.5% from December. Nine-month sales were down 6.6% over the same period. That is worth watching if Pool orders don't pick up next season.

On balance the quarter is understated: GAAP EPS fell 19% largely because of higher restructuring, transformation and Taco deal charges. The underlying decline was closer to 10%. That figure starts from the 5% fall in adjusted EPS and adds back the roughly $8 million tariff refund and the help from a smaller share count.

Takeaway: The Pool destock that wrecked Q2 appears to be over: Pool sales fell 18% instead of 42%, and grew from Q2 into the off-season. Adjusted EPS beat Pentair's own guide by about 10 cents. But the $1.425 billion Taco purchase ends the buybacks that had been propping up EPS, and adds interest costs. From here, EPS growth has to come from Pool volume and from Taco itself.

Did last time's read hold up?

Our Q2 report said the Q3 guide of sales down 4–6% implied that "the worst of the destock landed in Q2," and named Pool volume stabilization as the thing to watch. That held up. Sales fell 4.5%, inside the range. The Pool decline narrowed from 42% to 18%, and the company now says the realignment is complete. Adjusted EPS of $1.18 beat the $1.05–$1.08 guide. GAAP EPS of $0.91 fell short of the $0.97–$1.00 guide, because the charges we flagged as clouding GAAP results grew with the Taco deal. We also flagged that Taco would roughly double debt. Long-term debt was $1,484.1 million at September 30, just before the deal closed on October 1. That figure does not yet include whatever Pentair borrowed to pay for Taco.

Outlook

Pentair's updated guidance now includes Taco:

• Q4 2026: sales up about 7–9% on a reported basis, GAAP EPS of about $1.07 (Q4 2025: $0.98), and adjusted EPS of about $1.15 (Q4 2025: $1.18).
• Full year 2026: sales down about 3%, compared with down 4–7% before. GAAP EPS is now about $3.76, below the previous $3.86–$4.06 range. Adjusted EPS of about $4.70 keeps the midpoint of the previous $4.60–$4.80 range (FY2025: $4.92).

Read the sales "raise" carefully. Our Q2 report noted the earlier guide excluded Taco. Now Taco's sales from October 1 are in, so the better full-year sales figure doesn't by itself show that the existing business improved. The Q4 guide makes the same point a different way: sales are expected up 7–9%, yet adjusted EPS is expected to fall slightly, from $1.18 to about $1.15. Taco adds revenue, but in its first quarter it does not yet add to per-share profit after the interest on the money borrowed to buy it.

CEO John Stauch says the company is "positioning us for significant growth in 2027," and that full-year guidance "includes the right-sizing of channel inventory in preparation for the 2027 pool season." That view now has support: if distributors have finished destocking, 2027 Pool orders should track what homeowners actually buy, against a weak 2026 comparison. What to watch: (1) the 10-Q's explanation of Pool demand separate from destocking, (2) Taco's revenue and margin once it is reported, and how Pentair refinances the bridge loan, and (3) whether buybacks resume or stay paused while debt is paid down. A new CFO, Robert W. Hau, starts November 1.

Source: Pentair plc Q3 2026 earnings release (Exhibit 99.1 to Form 8-K, filed October 27, 2026). First-half buyback figures are from the Q2 2026 Form 10-Q. The Q3 2026 Form 10-Q had not been filed at the time of writing.