Pentair (NYSE:PNR) FY Conference February 19, 2026 09:50 AM ET Company ParticipantsBob Fishman - CFODe'Mon Wiggins - EVP and PresidentNick Brazis - Incoming-CFOConference Call ParticipantsJulian Mitchell - Equity Research AnalystJulian MitchellThanks everyone for being here. It's my pleasure to have up next, Pentair. You know, we've got Bob Fishman that many of you know, who'll be retiring soon. Nick Brazis, the new CFO, so congratulations.Nick BrazisThank you.Julian MitchellLook forward to working with you ...

Financial Data and Key Metrics Changes - The company achieved record sales, operating margin, and earnings per share for both Q4 and the full year 2025, with organic sales rising 8% and reported sales up 16% in Q4 [3] - Adjusted operating margin climbed 220 basis points to 19% in Q4, while for the full year, adjusted operating margin improved by 190 basis points to 19.6% [3][14] - Free cash flow reached a record $356 million for 2025, up 7%, with a conversion rate of 105% [4][16] Business Line Data and Key Metrics Changes - In the Americas, organic sales grew by 10% and reported growth was 17%, driven by favorable pricing and volume [11] - Europe saw organic sales rise by 1% and reported sales increase by 10%, benefiting from favorable pricing and positive foreign exchange effects [11] - APMEA experienced organic sales growth of 9%, with acquisitions contributing an additional 6% for a total reported sales growth of 15% [12] Market Data and Key Metrics Changes - The Americas region showed strong performance, while Europe faced challenges with a 5% decline in organic sales for the full year [14] - The company anticipates a mixed outlook for non-residential new construction in the Americas, with indicators suggesting subdued market conditions [7] - In Europe, new residential and non-residential construction is expected to remain sluggish due to uncertainties surrounding inflation and trade policies [7] Company Strategy and Development Direction - The company continues to focus on strategic M&A, high-return organic investments, competitive dividends, and steady share buybacks [4] - The data center initiative is a key growth area, with an addressable market exceeding $1 billion and sales from this sector growing at a double-digit rate [9] - The company plans to phase out underperforming products, identifying $10-15 million of European sales and $25-30 million in the Americas to eliminate during 2026 [6] Management's Comments on Operating Environment and Future Outlook - Management expects reported sales growth of 8%-12% and organic sales growth of 2%-6% for 2026, with pricing and repair/replacement activity driving growth [17] - The company anticipates challenges in Europe, projecting organic sales to range from a 4% decline to flat [18] - Management remains cautious about the operating environment, particularly in Europe, while expressing confidence in the company's ability to leverage its strengths for growth [62] Other Important Information - The company completed two acquisitions, Superior Boiler and Saudi Cast, which are expected to be accretive to adjusted EPS in 2026 [4][5] - The company returned $83 million to shareholders through dividends and share repurchases, increasing the annual dividend payout by approximately 20% [16] Q&A Session Summary Question: M&A Strategy and Revenue Contribution - Management emphasized that M&A is a key part of the strategy, with a focus on targets that fit the company's culture and financial criteria [27][28] Question: Data Center Growth - Management indicated that the data center market is a key focus, with expectations for high growth driven by ongoing construction [30][31] Question: Organic Growth Guidance - Management confirmed that the 80/20 revenue is included in the organic growth guidance, with expectations for price to be low single digits and volume to be muted [39][41] Question: Product Rationalization - Management clarified that the product rationalization efforts are focused on underperforming channels, not divestitures [88][89] Question: Capacity to Meet Data Center Demand - Management stated that they are leveraging global supply chains and facilities to meet demand from the data center market [100]