Pentair (PNR) investor relations material

Strategic progress, vision, and future direction

• Achieved most 2024 milestones with improved margins and profitability, focusing on organic growth, productivity, and operational efficiency for future value creation.

• Balanced portfolio and innovation-driven growth targeted from 2026 to 2028, with emphasis on helping customers move, improve, and enjoy water.

• Transformation and 80/20 initiatives, along with PBS, pricing, sourcing, and digital tools, have driven margin expansion, cash flow, and operational efficiency.

• Growth priorities include automation in pools, filtration and ice innovation, residential water solutions, and leveraging technology platforms.

• Commitment to shareholder value is underscored by 50 years of dividend increases, a strong investment-grade balance sheet, and disciplined capital allocation.

Financial guidance, segment performance, and capital allocation

• Targeting mid-single-digit organic revenue growth, robust ROS expansion to over 28%, and high-teens ROIC through 2028, with low double-digit EPS growth.

• 2025 sales reached $4.2B with 25.2% ROS and mid-teens ROIC; 2026-2028 base case expects ~$4.8B revenue, ~$1.4B adjusted operating income, and ~$2.7B cumulative FCF.

• Free cash flow conversion expected at ~100% of net income, supporting reinvestment, dividends, and opportunistic M&A or buybacks, while maintaining investment-grade leverage.

• Incremental margins in pool and commercial water expected to exceed 40% and 30% respectively as volumes recover, with upside from residential recovery and breakthrough innovation.

• Capital deployment prioritizes organic growth, shareholder returns, and strategic M&A, with strict ROIC hurdles and a focus on high-return platforms.

Innovation, digital transformation, and market opportunities

• Pipeline includes connected pool filtration, all-in-one home water appliances, modular commercial water solutions, and next-gen products like IntelliFlo3 and Hybrid Purifier.

• Digital and AI capabilities are being scaled, with connected equipment, predictive analytics, and new business models enhancing customer experience and operational efficiency.

• Sustainability remains a core focus, with new 2030 targets for water stewardship and emissions reduction, and innovation aimed at reducing energy, water, and material usage.

• Strategic partnerships and investments, such as with HOPE Hydration, open new markets and recurring revenue models.

• Growth in commercial, infrastructure, and residential markets is supported by demographic trends, aging infrastructure, and increasing demand for water quality and automation.