Pentair PLC (PNR) Reports Strong Q3 2023 Results Despite Sales Decline

Operating income and cash flow see significant increases, while sales experience a slight dip

Summary
  • Pentair PLC (PNR) reports Q3 2023 sales of $1.0 billion, a 4% decrease compared to the same period last year.
  • Operating income increased by 22% to $180 million, reflecting a Return on Sales (ROS) of 17.9%, a 400 basis point increase compared to Q3 2022.
  • Net cash provided by operating activities of continuing operations was $162 million, a $67 million increase compared to the same period last year.
  • The company updates its full year 2023 GAAP EPS guidance to approximately $3.25 to $3.30 and on an adjusted basis to approximately $3.70 to $3.75.
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On October 24, 2023, Pentair PLC (PNR, Financial), a global leader in water management solutions, announced its third quarter 2023 financial results. Despite a 4% decrease in sales compared to the same period last year, the company reported strong performance in operating income and cash flow.

Financial Performance Overview

Pentair's Q3 2023 sales were $1.0 billion, down 4% compared to the same period last year. However, operating income saw a significant increase of 22% to $180 million, reflecting a ROS of 17.9%, a 400 basis point increase compared to Q3 2022. The company's GAAP EPS from continuing operations increased 13% to $0.79 compared to the same period last year, while adjusted EPS decreased 5% to $0.94.

Strong Cash Flow and Dividend Payment

Net cash provided by operating activities of continuing operations was $162 million, an increase of $67 million compared to the same period last year. Free cash flow provided by continuing operations for the quarter was $143 million, an increase of $71 million compared to the same period last year. Furthermore, Pentair paid a regular cash dividend of $0.22 per share in the third quarter of 2023, marking the 47th consecutive year that the company has increased its dividend.

Segment Performance

Industrial & Flow Technologies sales were up 3% compared to sales for the same period last year, with a segment income of $78 million, up 18% compared to Q3 2022. Water Solutions sales were up 9% compared to sales for the same period last year, with a segment income of $69 million, up 40% compared to Q3 2022. Pool sales, however, were down 21% compared to sales for the same period last year, with a segment income of $91 million, down 17% compared to Q3 2022.

Outlook for 2023

Pentair updates its estimated 2023 GAAP EPS from continuing operations to approximately $3.25 to $3.30 and on an adjusted EPS basis to approximately $3.70 to $3.75. The company expects full year free cash flow to approximate 100% of net income.