Pentair Reports Mixed Q3 Results, Gross Profit and Operating Income Up Despite Sales Decline

Pentair plc reported its financial results for the three and nine months ended September 30, 2024, showing a mixed performance in net sales and profitability compared to the previous fiscal period. For the third quarter of 2024, net sales were $993.4 million, a decrease of $15.4 million or 1.5% from $1,008.8 million in the same period of 2023. For the nine months ended September 30, 2024, net sales totaled $3,109.9 million, down slightly by $10.0 million or 0.3% from $3,119.9 million in the prior year.

Despite the decline in sales, gross profit for the third quarter increased to $393.2 million, up 5.8% from $371.8 million in Q3 2023. This growth was attributed to increased selling prices, productivity improvements, and reduced asset impairment charges. The gross profit margin improved to 39.6%, compared to 36.9% in the previous year. For the nine-month period, gross profit rose to $1,221.2 million, reflecting a 5.9% increase from $1,153.1 million.

Operating income for the third quarter was $179.9 million, slightly down from $180.1 million in Q3 2023, while for the nine months, it increased to $608.7 million from $572.2 million, marking a 6.4% rise. Income from continuing operations before income taxes for the third quarter was $160.2 million, up from $152.9 million in the prior year, and for the nine months, it rose to $534.5 million from $484.9 million.

Pentair's net income for the third quarter remained stable at $139.6 million, with earnings per share (EPS) for continuing operations at $0.84. For the nine months, net income was $459.0 million, with an EPS of $2.77.

The company undertook significant strategic initiatives, including a transformation program launched in 2021 aimed at accelerating growth and driving margin expansion. During the nine months ended September 30, 2024, Pentair laid off approximately 475 employees and incurred restructuring and transformation costs totaling $82.8 million. The company also repurchased 1.2 million ordinary shares for $100.0 million during this period.

Pentair's financial position showed improvements, with cash and cash equivalents increasing to $218.1 million from $170.3 million at the end of 2023. Long-term debt was reduced to $1,628.4 million from $1,988.3 million, and total liabilities decreased to $2,973.8 million from $3,346.2 million. Retained earnings rose to $2,210.9 million, up from $1,866.2 million.

The company continues to face inflationary pressures affecting raw materials and logistics, but it has implemented price increases across its segments to mitigate these costs. The effective tax rate for the nine months ended September 30, 2024, was 14.1%, a slight decrease from 14.5% in the previous year.