Pentair (PNR) Baird 55th Annual Global Industrial Conference summary

Transformation strategy and progress

• Transformation program focuses on standardizing processes, pricing, sourcing, and digitizing global support, with significant early gains in sourcing and pricing initiatives.

• 80/20 methodology is being applied to streamline product lines, improve pricing strategies, and focus on top customers, aiming for balanced organic growth and transformation benefits through 2026–2028.

• Internal adoption of transformation tools is solid but varies by business unit, with leadership encouraging tailored implementation based on operational or digital opportunities.

• Realized standard margin and rule-of-40 benchmarks are used to incentivize profitable growth across 12 business units.

• Transformation has led to nearly 600 basis points of ROS improvement over three years.

Segment performance and growth opportunities

• Flow segment ($1B revenue) is stabilizing in residential and growing in commercial/infrastructure, with momentum from the Hydra-Stop acquisition and expansion into adjacencies like data centers.

• Hydra-Stop acquisition enhances municipal repair capabilities and creates cross-selling opportunities for pump products.

• Pool segment faces a flattish market due to high interest rates but is positioned for growth through innovation, automation, and targeted dealer support.

• Pool business is highly profitable (34% ROS), with 60% aftermarket, and is focusing on automation and AI to drive future growth.

• Water solutions segment is de-emphasizing commoditized residential products, focusing on commercial water (Everpure, Manitowoc Ice) and cross-selling through distribution.

Channel strategy and pricing

• 75% of revenue is through distribution, with a focus on break/fix and aftermarket sales, providing resilience in uncertain times.

• Dealer segmentation (quadrant approach) allows for differentiated service and support, especially in pool and flow segments.

• Pricing strategies are conscious of inflation and replacement cycles, aiming to avoid excessive price increases that could encourage repairs over replacements.

• No plans for ongoing automation service fees; focus is on integrating automation and AI to enhance product value and dealer support.