News Summary

  • Water treatment company Pentair CEO John Stauch said on Tuesday's second-quarter earnings call that the company is focused on adjusting pool inventory levels and leveraging key acquisitions to expand into new markets, targeting "strong" growth by 2027.
  • The London-based company also announced Tuesday that it plans to acquire Taco Group for $1.4 billion—a company focused on hydronic and water-based solutions. According to another press release, the acquisition will enhance Pentair's exposure to "high-growth end markets," primarily in North America.
  • "This acquisition will create a new growth engine, enhancing our presence in energy efficiency, comfort cooling and HVAC, and data center infrastructure construction," interim CFO Bob Fishman said on the earnings call. "While the real opportunity lies in revenue growth, we expect to achieve approximately $30 million in annual cost synergies over the next few years through Pentair's procurement scale and economies of effect."

In-Depth Analysis

Taco's acquisition price is approximately 10.5 times Pentair's expected 2026 adjusted EBITDA, including about $165 million in tax benefits. Pentair said Taco is expected to generate approximately $540 million in revenue in fiscal 2026.

Pentair said the transaction is expected to close in the fourth quarter of 2026, subject to regulatory approval.

The acquisition comes as the company continues to navigate economic headwinds, including tariff impacts and declining performance in its pool products segment. Pentair provides home pool, spa, and water treatment products.

For the quarter ended June 30, Pentair's core sales fell 17% to $933 million, which Fishman said was primarily driven by pool channel inventory destocking, impacting results by $170 million.

Fishman took over as interim CFO in mid-July after the company's finance chief, Nicholas Brazis, abruptly departed after only five months in the role to become CFO of cable manufacturer Southwire. Fishman previously served as Pentair's CFO for six years before Brazis took over.

According to the earnings presentation, pool segment sales fell 42% year over year. However, Fishman said: "Despite recent challenges in the pool business, we continue to invest in growth initiatives that support our long-term strategy."

This includes a "comprehensive" review of the pool business, which showed the company needs to take measures to "deepen dealer partnerships and accelerate customer-driven innovation" to improve performance, Stauch said.

"We believe the challenges in the pool business are temporary, and we remain confident in the segment's attractiveness and our position as a market leader," Stauch said.

Fishman said pool sales are expected to decline 23% to 25% in the third quarter as Pentair continues inventory destocking into 2027 quarters.

The company's second-quarter adjusted operating income also fell 20% to $237 million, including a $35 million negative impact from tariff rebates.

Fishman said full-year total sales are expected to decline approximately 4% to 7% year over year, with a midpoint of about $4 billion, consistent with prior guidance issued on July 14.