Pentair(PNR) - 2025 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion, market risk, and controls ITEM 1. Financial Statements (Unaudited) This section presents Pentair's unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and equity changes Condensed Consolidated Statements of Operations and Comprehensive Income Pentair reported increased net sales and significant growth in operating income and net income for both the three and nine months ended September 30, 2025, compared to the same periods in 2024, driven by improved gross profit margins and reduced net interest expense | Metric (in millions, except per-share data) | Three months ended Sep 30, 2025 | Three months ended Sep 30, 2024 | Nine months ended Sep 30, 2025 | Nine months ended Sep 30, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $1,022.0 | $993.4 | $3,155.5 | $3,109.9 | | Gross profit | $418.6 | $393.2 | $1,278.5 | $1,221.2 | | Operating income | $231.7 | $179.9 | $652.5 | $608.7 | | Net income | $184.3 | $139.6 | $487.7 | $459.0 | | Basic earnings per ordinary share | $1.13 | $0.84 | $2.97 | $2.77 | | Diluted earnings per ordinary share | $1.12 | $0.84 | $2.94 | $2.75 | - Net sales increased by 2.9% for the three months ended September 30, 2025, and by 1.5% for the nine months ended September 30, 2025, compared to the prior year periods[8] - Operating income saw a substantial increase of 28.8% for the three months and 7.2% for the nine months ended September 30, 2025, reflecting improved operational efficiency[8] Condensed Consolidated Balance Sheets As of September 30, 2025, Pentair's total assets increased, primarily driven by higher goodwill and intangibles due to acquisitions, while total liabilities also rose, mainly in current liabilities and other non-current liabilities | Metric (in millions) | September 30, 2025 | December 31, 2024 | | :------------------- | :----------------- | :---------------- | | Total current assets | $1,445.1 | $1,436.1 | | Goodwill | $3,528.8 | $3,286.6 | | Intangibles, net | $1,088.0 | $1,033.8 | | Total assets | $6,759.6 | $6,446.5 | | Total current liabilities | $988.2 | $895.1 | | Long-term debt | $1,580.1 | $1,638.7 | | Total liabilities | $2,977.2 | $2,883.6 | | Total equity | $3,782.4 | $3,562.9 | - Goodwill increased by $242.2 million from December 31, 2024, to September 30, 2025, primarily due to the Hydra-Stop acquisition[10][34] - Total equity increased by $219.5 million, from $3,562.9 million at December 31, 2024, to $3,782.4 million at September 30, 2025[10] Condensed Consolidated Statements of Cash Flows Pentair generated significantly more cash from operating activities in the first nine months of 2025 compared to 2024, while cash used in investing activities increased substantially due to acquisitions | Cash Flow Activity (in millions) | Nine months ended Sep 30, 2025 | Nine months ended Sep 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $764.0 | $680.2 | | Net cash used for investing activities | $(354.3) | $(68.2) | | Net cash used for financing activities | $(370.8) | $(560.0) | - Net cash provided by operating activities increased by $83.8 million (12.3%) in the first nine months of 2025, primarily reflecting higher net income and favorable changes in working capital[12][109] - Net cash used for investing activities increased by $286.1 million, largely due to the $292.2 million acquisition of Hydra-Stop in 2025[12][111] Condensed Consolidated Statements of Changes in Equity Pentair's total equity increased from December 31, 2024, to September 30, 2025, primarily due to net income, partially offset by share repurchases and dividends declared | Equity Component (in millions) | Balance - Dec 31, 2024 | Balance - Sep 30, 2025 | | :----------------------------- | :--------------------- | :--------------------- | | Ordinary shares | $1.7 | $1.7 | | Additional paid-in capital | $1,501.7 | $1,351.8 | | Retained earnings | $2,336.1 | $2,700.6 | | Accumulated other comprehensive loss | $(276.6) | $(271.7) | | Total | $3,562.9 | $3,782.4 | - Net income contributed $487.7 million to retained earnings for the nine months ended September 30, 2025[8][14] - Share repurchases totaled $175.0 million for the nine months ended September 30, 2025, reducing additional paid-in capital[14][122] - Dividends declared amounted to $123.3 million ($0.75 per share) for the nine months ended September 30, 2025[14][124] Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering accounting policies, revenue, acquisitions, debt, and segment information Note 1. Basis of Presentation and Responsibility for Interim Financial Statements The unaudited condensed consolidated financial statements are prepared in accordance with SEC requirements for interim reporting, allowing for condensation or omission of certain GAAP footnotes - Financial statements are prepared following U.S. SEC requirements for interim reporting, allowing for condensed GAAP information[18] - Management is responsible for the fair presentation of these unaudited condensed consolidated financial statements[19] - Interim results and trends may not be indicative of a full year due to quarterly variations in revenues, expenses, cash flows, assets, and liabilities[20] Note 2. Revenue Pentair disaggregates revenue by reportable segment, geographic location, and vertical market, showing increased sales in the U.S. and Residential markets Geographic Net Sales (in millions) | Region | Three months ended Sep 30, 2025 | Three months ended Sep 30, 2024 | Nine months ended Sep 30, 2025 | Nine months ended Sep 30, 2024 | | :-------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | U.S. | $703.9 | $687.6 | $2,236.0 | $2,166.4 | | Western Europe | $126.7 | $117.0 | $371.8 | $375.8 | | Developing | $130.6 | $129.9 | $375.8 | $391.9 | | Other Developed | $60.8 | $58.9 | $171.9 | $175.8 | | Consolidated | $1,022.0 | $993.4 | $3,155.5 | $3,109.9 | Vertical Market Net Sales (in millions) | Market | Three months ended Sep 30, 202