Pentair Navigates Economic Headwinds, Posts Q2 Earnings Beat, Updates Outlook & More - Pentair (NYSE:PNR)

　　Pentair plcPNR reported a second-quarter 2024 net sales rose 2% Y/Y to $1.099 billion, marginally beating the consensus of $1.095 billion.

　　Excluding currency translation, acquisitions and divestitures, core sales grew 2% in the second quarter. The gross margin expanded to 39.8% from 36.9% a year ago.

　　Operating income rose 19% YoY to $248 million, and the operating margin expanded 330 basis points Y/Y to 22.6%. On an adjusted basis, the operating margin increased by 310 basis points to 24.7% in the quarter.

　　Flow sales decreased by 4% YoY to $396.8 million, Segment income of $84.4 million (+13% Y/Y), and the operating margin was 21.3%, an increase of 310 bps Y/Y.

　　Water Solutions sales were $310.5 million (-8% Y/Y), Segment income was $72.9 million (-3% Y/Y), and ROS was 23.5%, up 130 bps Y/Y.

　　Pool segment sales were $391.5 million (+17% Y/Y), Segment income was $133.6 million (+27% Y/Y), and ROS was 34.1%, up 270 bps Y/Y.

　　Adjusted EPS rose 18% Y/Y to $1.22, surpassing the consensus of $1.14.

　　For the quarter, net cash provided by operating activities of continuing operations was $539 million, and free cash flow from continuing operations was $522 million.

　　Dividend: The company announced a quarterly dividend of $0.23 per share, payable on August 2, to shareholders of record as of July 19.

　　In the second quarter, Pentair repurchased 0.6 million shares for $50 million. As of June 30, 2024, $550 million remained available under its share repurchase authorization.

　　FY24 Outlook:Pentair revised adjusted EPS to $4.25 (from $4.15-$4.25) vs. consensus of $4.18; sees sales growth to be roughly flat to down 1% (vs. an increase of 2%-3% earlier) on a reported basis.

　　Third quarter 2024 Outlook:Pentair sees an adjusted EPS of $1.06 – $1.08 versus a consensus of $1.07. It expects sales to be down about 2%-3% on a reported basis.

　　Pentair CEO John L. Stauch said, “We expect stronger margin expansion than we previously guided despite continued global macroeconomic and geopolitical uncertainty which is pressuring sales in the second half of 2024. We are confident in our Transformation and 80/20 initiatives and expect them to drive strategic decisions and operational efficiencies across our balanced water portfolio.”

　　Investors can gain exposure to the stock via Invesco Global Water ETF PIO and Global X Clean Water ETFAQWA.

　　Price Action:PNR shares are up 6.7% at $85.35 at the last check Tuesday.