Pentair Q4 2025 Pentair PLC Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Pentair PLC Earnings Call
Speaker #1: Welcome to
Operator: Welcome to the Pentair Q4 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw the question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Shelly Hubbard, Vice President, Investor Relations. Please go ahead.
Speaker #1: the PENTAIR fourth quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad.
Speaker #1: To withdraw the question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Shelly Hubbard, Vice President, Investor Relations.
Speaker #1: Please go ahead.
Speaker #2: Thank you, Operator, and welcome to Pentair's fourth quarter 2025 earnings conference call. On the call with me are John Stauch, our President and Chief Executive Officer; Bob Fishman, our outgoing Chief Financial Officer; and Nick Brazis, our incoming Chief Financial Officer.
Shelly Hubbard: Thank you, operator, and welcome to Pentair's Q4 2025 Earnings Conference Call. On the call with me are John Stauch, our President and Chief Executive Officer, Bob Fishman, our outgoing Chief Financial Officer, and Nick Brazas, our incoming Chief Financial Officer. On today's call, we will provide details on our Q4 and full year performance as outlined in this morning's press release. On the Pentair Investor Relations website, you can find our earnings release and slide deck, which is intended to supplement our prepared remarks during today's call and provide a reconciliation of differences between GAAP and non-GAAP financial measures that we will reference. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. They are included as additional clarifying items to aid investors in further understanding the company's performance.
Shelly Hubbard: Thank you, operator, and welcome to Pentair's Q4 2025 Earnings Conference Call. On the call with me are John Stauch, our President and Chief Executive Officer, Bob Fishman, our outgoing Chief Financial Officer, and Nick Brazas, our incoming Chief Financial Officer. On today's call, we will provide details on our Q4 and full year performance as outlined in this morning's press release. On the Pentair Investor Relations website, you can find our earnings release and slide deck, which is intended to supplement our prepared remarks during today's call and provide a reconciliation of differences between GAAP and non-GAAP financial measures that we will reference. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. They are included as additional clarifying items to aid investors in further understanding the company's performance.
Speaker #2: On today's call, we will provide details on our fourth quarter and full year performance, as outlined in this morning's press release. On the PENTAIR investor relations website, you can find our earnings release and slide deck, which is intended to supplement our prepared remarks during today's call and provide a reconciliation of differences between GAAP and non-GAAP financial measures that we will reference.
Speaker #2: The non-GAAP financial measures provided should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Speaker #2: They are included as additional clarifying items to aid investors in further understanding the company's performance. In addition to the impact these items and events have on the financial results.
Shelly Hubbard: In addition to the impact these items and events have on the financial results. Before we begin, let me remind you that during our presentation today, we will make forward-looking statements which are predictions, projections, or other statements about future events. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Pentair. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to carefully review the risk factors in our most recent Form 10-Q and Form 10-K. Please note that during the presentation today, we will be making references to record financial results. These references reflect the time period post the nVent separation in 2018, unless otherwise noted. Following our prepared remarks, we will open the call up for questions.
In addition to the impact these items and events have on the financial results. Before we begin, let me remind you that during our presentation today, we will make forward-looking statements which are predictions, projections, or other statements about future events. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Pentair. These risks and uncertainties can cause actual results to differ materially from our current expectations.
Speaker #2: Before we begin, let me remind you that during our presentation today, we will make forward-looking statements, which are predictions, projections, or other statements about future events.
Speaker #2: Listeners are cautioned that these statements are subject to certain risks and uncertainties. Many of which are difficult to predict and generally beyond the control of PENTAIR.
Speaker #2: These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to carefully review the risk factors in our most recent Form 10Q and Form 10K.
We advise listeners to carefully review the risk factors in our most recent Form 10-Q and Form 10-K. Please note that during the presentation today, we will be making references to record financial results. These references reflect the time period post the nVent separation in 2018, unless otherwise noted. Following our prepared remarks, we will open the call up for questions. Please limit your questions to two and reenter the queue to allow everyone an opportunity to participate. I will now turn the call over to John.
Speaker #2: Please note that during the presentation today, we will be making references to record financial results. These references reflect the time period post the Invent separation in 2018, unless otherwise noted.
Speaker #2: Following our prepared remarks, we will open the call up for questions. Please limit your questions to two and re-enter enter the queue to allow everyone an opportunity to participate.
Shelly Hubbard: Please limit your questions to two and reenter the queue to allow everyone an opportunity to participate. I will now turn the call over to John.
Speaker #2: I will now turn the call over to
Speaker #2: John. Thank you,
John Stauch: Thank you, Shelly, and good morning, everyone. Thank you for joining us today. As we celebrate our 60th anniversary year and approach Dividend King status, Pentair stands at the forefront of solving the world's most pressing water challenges. Our focus on customer obsession, innovation, operational excellence, and sustainability positions us for strong growth in 2026 and beyond. To capitalize on our opportunities, I'm pleased to introduce Nick Brazas, our incoming CFO. Nick brings a deep track record of operational rigor and financial acumen, and I'm confident he will help us extend our legacy of disciplined execution. I also wanna thank Bob for his 6 years and 24 quarters of outstanding service. Bob's leadership has been instrumental in positioning us for our next phase of growth. He leaves behind a very strong financial organization that partners with our businesses to drive excellence in their respective industries.
John Stauch: Thank you, Shelly, and good morning, everyone. Thank you for joining us today. As we celebrate our 60th anniversary year and approach Dividend King status, Pentair stands at the forefront of solving the world's most pressing water challenges. Our focus on customer obsession, innovation, operational excellence, and sustainability positions us for strong growth in 2026 and beyond. To capitalize on our opportunities, I'm pleased to introduce Nick Brazas, our incoming CFO. Nick brings a deep track record of operational rigor and financial acumen, and I'm confident he will help us extend our legacy of disciplined execution. I also wanna thank Bob for his 6 years and 24 quarters of outstanding service. Bob's leadership has been instrumental in positioning us for our next phase of growth. He leaves behind a very strong financial organization that partners with our businesses to drive excellence in their respective industries.
Speaker #3: Shelly: And good morning, everyone. Thank you for joining us today. As we celebrate our 60th anniversary year and approach Dividend King status, Pentair stands at the forefront of solving the world's most pressing water challenges. Our focus on customer obsession, innovation, operational excellence, and sustainability positions us for strong growth in 2026 and beyond.
Speaker #3: To capitalize on our opportunities, I am pleased to introduce Nick Brazis, our incoming CFO, Nick brings a deep track record of operational rigor and financial acumen, and I'm confident he will help us extend our legacy of disciplined execution.
Speaker #3: I also want to thank Bob for six years and 24 quarters of outstanding service. Bob's leadership has been instrumental in positioning us for our next phase of growth.
Speaker #3: He leaves behind a very strong financial organization that partners with our businesses to drive excellence in their respective industries. I would like to acknowledge that Demon Wiggins and Adrian Chu have accepted new, expanded, and important roles, and I want to extend my sincere appreciation to Steve Pilla and Phil Ushigo for their significant contributions over the roughly 20 years that each have served the Pentair shareholders.
John Stauch: I would like to acknowledge that De'Mon Wiggins and Adrian Chiu have accepted new, expanded, and important roles, and I want to extend my sincere appreciation to Steve Pilla and Phil Rolchigo for their significant contributions over the roughly 20 years that each have served the Pentair shareholders. At Pentair, we believe that culture and talent are our ultimate competitive advantage, and we are committed to developing leaders who can drive sustained outperformance for creating future value. We are entering an exciting new chapter for our company, one defined by accelerated growth through customer obsession, innovation, and operational excellence. As announced this morning, we have strategically combined our Flow Residential business with our Residential business within Water Solutions beginning in Q1 of 2026. This move allows us to combine two businesses that both serve plumbers in the North American residential segment under the same leadership.
I would like to acknowledge that De'Mon Wiggins and Adrian Chiu have accepted new, expanded, and important roles, and I want to extend my sincere appreciation to Steve Pilla and Phil Rolchigo for their significant contributions over the roughly 20 years that each have served the Pentair shareholders. At Pentair, we believe that culture and talent are our ultimate competitive advantage, and we are committed to developing leaders who can drive sustained outperformance for creating future value. We are entering an exciting new chapter for our company, one defined by accelerated growth through customer obsession, innovation, and operational excellence. As announced this morning, we have strategically combined our Flow Residential business with our Residential business within Water Solutions beginning in Q1 of 2026. This move allows us to combine two businesses that both serve plumbers in the North American residential segment under the same leadership.
Speaker #3: At PENTAIR, we believe that culture and talent are our ultimate competitive advantage. And we are committed to developing leaders who can drive sustained outperformance for creating future value.
Speaker #3: We are entering an exciting new chapter for our company, one defined by accelerated growth through customer obsession, innovation, and operational excellence. As announced this morning, we have strategically combined our Flow Residential business with our Residential business within Water Solutions, beginning in Q1 of 2026.
Speaker #3: This move allows us to combine two businesses that both serve plumbers in the North American residential segment under the same leadership. It opens up channel growth opportunities, creates operational scale and efficiency, together they make up about 25% of total PENTAIR factories and allows for regional sales and G&A synergies and creates organic and inorganic growth opportunities to build the business for the future.
John Stauch: It opens up channel growth opportunities, creates operational scale and efficiency. Together, they make up about 25% of total Pentair factories, and allows for regional sales and G&A synergies, and creates organic and inorganic growth opportunities to build the business for the future. De'Mon, who has led a remarkable transformation in Flow, will now oversee both the Flow and Water Solutions segments, driving cross-segment collaboration and best practice sharing. Adrian will lead our efforts in strategy, digital, AI, and innovation for Pentair, helping to ensure that we stay at the forefront of technological change and partner with the businesses to build growth strategies to drive enduring success. As we position our company for continued growth in the future, we believe this new leadership structure provides more agility to drive long-term shareholder value.
It opens up channel growth opportunities, creates operational scale and efficiency. Together, they make up about 25% of total Pentair factories, and allows for regional sales and G&A synergies, and creates organic and inorganic growth opportunities to build the business for the future. De'Mon, who has led a remarkable transformation in Flow, will now oversee both the Flow and Water Solutions segments, driving cross-segment collaboration and best practice sharing. Adrian will lead our efforts in strategy, digital, AI, and innovation for Pentair, helping to ensure that we stay at the forefront of technological change and partner with the businesses to build growth strategies to drive enduring success. As we position our company for continued growth in the future, we believe this new leadership structure provides more agility to drive long-term shareholder value.
Speaker #3: Demon, who has led a remarkable transformation in Flow, will now oversee both the Flow and Water Solution segments, driving cross-segment collaboration and best practice sharing.
Speaker #3: Adrian, who will lead our efforts in strategy, digital, AI, and innovation for PENTAIR, helping to ensure that we stay at the forefront of technological change and partner with the businesses to build growth strategies to drive enduring success.
Speaker #3: As we position our company for continued growth in the future, we believe this new leadership structure provides more agility to drive long-term shareholder value.
Speaker #3: We believe our balance sheet is solid, our free cash flow is strong, and our opportunities are plentiful. Now let's turn to the Q4 executive summary on slide four.
John Stauch: We believe our balance sheet is solid, our Free Cash Flow is strong, and our opportunities are plentiful. Now, let's turn to the Q4 executive summary on slide 4. In the fourth quarter, we delivered 5% sales growth and the 15th consecutive quarter of margin expansion. This was made possible by the relentless application of our Pentair Business System tools and a culture of continuous improvement. Adjusted operating profit increased 9%, ROS expanded by 90 basis points to 24.7%, and adjusted EPS rose 9% to $1.18. Turning to the full year, let's move to the full year 2025 executive summary on slide 5. In 2025, we achieved record annual sales, adjusted operating income, ROS, and adjusted EPS. These results reflect our focus on execution, disciplined capital deployment, and the resilience of our balanced water portfolio.
We believe our balance sheet is solid, our Free Cash Flow is strong, and our opportunities are plentiful. Now, let's turn to the Q4 executive summary on slide 4. In the fourth quarter, we delivered 5% sales growth and the 15th consecutive quarter of margin expansion. This was made possible by the relentless application of our Pentair Business System tools and a culture of continuous improvement. Adjusted operating profit increased 9%, ROS expanded by 90 basis points to 24.7%, and adjusted EPS rose 9% to $1.18. Turning to the full year, let's move to the full year 2025 executive summary on slide 5. In 2025, we achieved record annual sales, adjusted operating income, ROS, and adjusted EPS. These results reflect our focus on execution, disciplined capital deployment, and the resilience of our balanced water portfolio.
Speaker #3: In the fourth quarter, we delivered 5% sales growth and the 15th consecutive quarter of margin expansion. This was made possible by the relentless application of our PENTAIR business system tools in a culture of continuous improvement.
Speaker #3: Adjusted operating profit increased 9%, ROS expanded by 90 basis points to 24.7%, and adjusted EPS rose 9% to $1.18. Turning to the full year, let's move to the full year 2025 executive summary on slide five.
Speaker #3: In 2025, we achieved record annual sales, adjusted operating income, ROS, and adjusted EPS. These results reflect our focus on execution, disciplined capital deployment, and the resilience of our balanced water portfolio.
Speaker #3: And 80/20 is gaining traction, allowing us to deepen relationships with our largest customers, our 80s, while streamlining our portfolio for higher efficiency and growth by reducing our efforts on the 20s.
John Stauch: 80/20 is gaining traction, allowing us to deepen relationships with our largest customers, our 80s, while streamlining our portfolio for higher efficiency and growth by reducing our efforts on the 20s. We generated record free cash flow of $748 million, and returned $225 million to shareholders through share repurchases, demonstrating our ongoing commitment to disciplined, balanced capital allocation. Our innovation engine remains robust, with notable launches, including the Xcentric impeller and Flow, PFAS Everpure Filtration and Water Solutions, the award-winning Manitowoc NEO, which leverages integrated filtration and next-generation refrigerants, which are compliant with new EPA standards, and IntelliVibe lights and IntelliChlor Plus in pool. Our focus on launching differentiated, high-value products that solve critical customer needs and drive sustainable growth ...
80/20 is gaining traction, allowing us to deepen relationships with our largest customers, our 80s, while streamlining our portfolio for higher efficiency and growth by reducing our efforts on the 20s. We generated record free cash flow of $748 million, and returned $225 million to shareholders through share repurchases, demonstrating our ongoing commitment to disciplined, balanced capital allocation. Our innovation engine remains robust, with notable launches, including the Xcentric impeller and Flow, PFAS Everpure Filtration and Water Solutions, the award-winning Manitowoc NEO, which leverages integrated filtration and next-generation refrigerants, which are compliant with new EPA standards, and IntelliVibe lights and IntelliChlor Plus in pool. Our focus on launching differentiated, high-value products that solve critical customer needs and drive sustainable growth ...
Speaker #3: We generated record-free cash flow of $748 million and returned $225 million to shareholders through share repurchases, demonstrating our ongoing commitment to discipline, balanced capital allocation.
Speaker #3: Our innovation engine remains robust with notable launches including the eccentric impeller and flow, PFAS Everpure filtration and water solutions, the award-winning Manitowoc Ice Neo, which leverages integrated filtration and next-generation refrigerants which are compliant with new EPA standards, and IntelliVibe Lights and IntelliCore Plus in pool.
Speaker #3: Our focus on launching differentiated, high-value products that solve critical customer needs and drive sustainable growth is highlighted by both the PFAS Everpure filtration and Neo under-counter ice machine, winning the Kitchen Innovation Awards at the 2025 National Restaurant Association Show.
John Stauch: is highlighted by both the PFAS Everpure Filtration and NEO Undercounter Ice Machine, winning the Kitchen Innovation Awards at the 2025 National Restaurant Association Show. Our 2026 outlook reflects confidence in our business model and the resilience of our end markets. We plan to continue to invest in digital and AI-driven solutions, strengthen our portfolio, and return capital to shareholders, all while advancing our leadership in sustainable water technologies. Looking ahead, we are introducing our full year 2026 adjusted EPS guidance range of $5.25 to $5.40, an 8% increase at the midpoint. We expect approximately 3% to 4% sales growth and approximately 5% to 8% adjusted operating income growth, driven by continued operational excellence and innovation.
John Stauch: is highlighted by both the PFAS Everpure Filtration and NEO Undercounter Ice Machine, winning the Kitchen Innovation Awards at the 2025 National Restaurant Association Show. Our 2026 outlook reflects confidence in our business model and the resilience of our end markets. We plan to continue to invest in digital and AI-driven solutions, strengthen our portfolio, and return capital to shareholders, all while advancing our leadership in sustainable water technologies. Looking ahead, we are introducing our full year 2026 adjusted EPS guidance range of $5.25 to $5.40, an 8% increase at the midpoint. We expect approximately 3% to 4% sales growth and approximately 5% to 8% adjusted operating income growth, driven by continued operational excellence and innovation.
Speaker #3: Our 2026 outlook reflects confidence in our business model and the resilience of our end markets. We plan to continue to invest in digital and AI-driven solutions, strengthen our portfolio, and return capital to shareholders all while advancing our leadership in sustainable water technologies.
Speaker #3: Looking ahead, we are introducing our full year 2026 adjusted EPS guidance range of $5.25 to $5.40, an 8% increase at the midpoint. We expect approximately 3% to 4% sales growth and approximately 5% to 8% adjusted operating income growth, driven by continued operational excellence and innovation.
Speaker #3: We remain vigilant in responding to macro volatility and the broader operating environment and continue to take proactive steps to mitigate risks, helping to ensure that we deliver on our commitments regardless of the external environment.
John Stauch: We remain vigilant in responding to macro volatility and the broader operating environment, and continue to take proactive steps to mitigate risks, helping to ensure that we deliver on our commitments regardless of the external environment. Let's turn to slide 6, titled Align- Aligning the Organization in 2026 for Accelerated Success. As I previously mentioned, we have moved our residential flow business into Water Solutions and combined it with our residential water solutions business to help accelerate efforts to improve customer experiences, enhance operational efficiencies, and deliver more comprehensive solutions to our channel partners. Our flow segment will now consist of our commercial and industrial flow businesses, and our water solutions segment will consist of our non-pool residential businesses, as well as our Everpure Filtration and Manitowoc Ice businesses. You will see these changes reflected in our Q1 2026 results.
John Stauch: We remain vigilant in responding to macro volatility and the broader operating environment, and continue to take proactive steps to mitigate risks, helping to ensure that we deliver on our commitments regardless of the external environment. Let's turn to slide 6, titled Align- Aligning the Organization in 2026 for Accelerated Success. As I previously mentioned, we have moved our residential flow business into Water Solutions and combined it with our residential water solutions business to help accelerate efforts to improve customer experiences, enhance operational efficiencies, and deliver more comprehensive solutions to our channel partners. Our flow segment will now consist of our commercial and industrial flow businesses, and our water solutions segment will consist of our non-pool residential businesses, as well as our Everpure Filtration and Manitowoc Ice businesses. You will see these changes reflected in our Q1 2026 results.
Speaker #3: Let's turn to slide six, titled Aligning Organization in 2026 for Accelerated Success. As I previously mentioned, we have moved our residential flow business into water solutions and combined it with our residential water solutions business to help accelerate efforts to improve customer experiences and enhance operational efficiencies and deliver more comprehensive solutions to our channel partners.
Speaker #3: Our flow segment will now consist of our commercial and industrial flow businesses and our water solutions segment will consist of our non-pool residential businesses as well as our Everpure filtration and Manitowoc Ice businesses.
Speaker #3: You will see these changes reflected in our Q1 2026 results. We have also provided the revised segment information for historical sales, reportable segment income, and return on sales, as well as the supplemental information section of our earnings presentation.
John Stauch: We have also provided the revised segment information for historical sales, reportable segment income, and return on sales in the supplemental information section of our earnings presentation. Let's move to the key takeaways on slide 7. With a strong foundation, a clear strategy, and an energized leadership team, we believe Pentair is poised to deliver sustainable growth and value creation. 2025 was another record year for Pentair. We delivered strong margin expansion, sales and earnings growth, and robust free cash flow. We have a clear strategy, a proven operating model, and an outstanding team. Our balance sheet is solid, and we plan to continue to drive a balanced capital allocation strategy. We remain confident in our ability to drive sustained outperformance, creating value for our customers, employees, and shareholders alike.
John Stauch: We have also provided the revised segment information for historical sales, reportable segment income, and return on sales in the supplemental information section of our earnings presentation. Let's move to the key takeaways on slide 7. With a strong foundation, a clear strategy, and an energized leadership team, we believe Pentair is poised to deliver sustainable growth and value creation. 2025 was another record year for Pentair. We delivered strong margin expansion, sales and earnings growth, and robust free cash flow. We have a clear strategy, a proven operating model, and an outstanding team. Our balance sheet is solid, and we plan to continue to drive a balanced capital allocation strategy. We remain confident in our ability to drive sustained outperformance, creating value for our customers, employees, and shareholders alike.
Speaker #3: Let's move to the key takeaways on slide seven. With a strong foundation, a clear strategy, and an energized leadership team, we believe Pentair is poised to deliver sustainable growth and value creation.
Speaker #3: 2025 was another record year for Pentair. We delivered strong margin expansion, sales and earnings growth, and robust free cash flow. We have a clear strategy, a proven operating model, and an outstanding team.
Speaker #3: Our balance sheet is solid, and we plan to continue to drive a balanced capital allocation strategy. We remain confident in our ability to drive sustained outperformance creating value for our customers, employees, and shareholders alike.
Speaker #3: Thank you for your continued investment in our company. I'm looking forward to seeing many of you at our upcoming Investor Day on March 4th.
John Stauch: Thank you for your continued investment in our company, and I'm looking forward to seeing many of you at our upcoming Investor Day on 4 March. I will now pass the call over to Bob and Nick, who will discuss our financial results and 2026 guidance in more detail. Bob?
John Stauch: Thank you for your continued investment in our company, and I'm looking forward to seeing many of you at our upcoming Investor Day on 4 March. I will now pass the call over to Bob and Nick, who will discuss our financial results and 2026 guidance in more detail. Bob?
Speaker #3: I will now pass the call over to Bob and Nick, who will discuss our financial results in 2026 guidance in more detail.
Speaker #3: Bob? Thank you, John, and good morning,
Robert Fishman: Thank you, John, and good morning, everyone. As John highlighted, Pentair is entering an exciting new chapter, one defined by innovation, sustainability, and operational excellence. Our financial results for Q4 and full year 2025 reflect the tangible impact of our transformation journey and disciplined execution, and most importantly, our commitment to creating value for all stakeholders. Before I review our performance, I'd like to echo John's welcome to Nick. Nick and I have worked closely together over the last 3 years, and I'm excited to pass the baton over to him. I'm confident he will excel as the incoming CFO. We are well aligned in how we think about capital allocation and driving shareholder value. Our Q4 and full year results are a testament to our commitment to building a more resilient, innovative Pentair.
Robert Fishman: Thank you, John, and good morning, everyone. As John highlighted, Pentair is entering an exciting new chapter, one defined by innovation, sustainability, and operational excellence. Our financial results for Q4 and full year 2025 reflect the tangible impact of our transformation journey and disciplined execution, and most importantly, our commitment to creating value for all stakeholders. Before I review our performance, I'd like to echo John's welcome to Nick. Nick and I have worked closely together over the last 3 years, and I'm excited to pass the baton over to him. I'm confident he will excel as the incoming CFO. We are well aligned in how we think about capital allocation and driving shareholder value. Our Q4 and full year results are a testament to our commitment to building a more resilient, innovative Pentair.
Speaker #2: everyone. As John highlighted, PENTAIR is entering an exciting new chapter one defined by innovation, sustainability, and operational excellence. Our financial results for Q4 and full year 2025 reflect a tangible impact of our transformation journey and disciplined execution and, most importantly, our commitment to creating value for all stakeholders.
Speaker #2: Before I review our performance, I'd like to echo John's welcome to Nick. Nick and I have worked closely together over the last three years, and I'm excited to pass the baton over to him.
Speaker #2: I'm confident he will excel as the incoming CFO. We are well aligned in how we think about capital allocation and driving shareholder value. Our Q4 and full year results are a testament to our commitment to building a more resilient, innovative PENTAIR.
Speaker #2: The sale of our commercial services business in Q2 and the acquisition of Hydrostop in Q3 are deliberate steps in our strategy to focus on higher-growth, higher-margin businesses, which we believe positions us to lead in the water industry.
Robert Fishman: The sale of our commercial services business in Q2 and the acquisition of Hydra-Stop in Q3 are deliberate steps in our strategy to focus on higher growth, higher margin businesses, which we believe positions us to lead in the water industry. We remain focused on our transformation initiatives and 80/20 approach, which have enabled us to streamline operations, invest in differentiated products, and deliver consistent margin expansion. These actions are not just about the short-term, they are about building the foundation for sustainable long-term success. Let's start on slide 8, titled Q4 2025 Pentair Performance. I will also be discussing our full year performance on slide 9. In Q4, we delivered a strong fourth quarter. We have remained focused on our transformation initiatives in 80/20, and proven that we can successfully navigate through a variety of macroeconomic and geopolitical landscapes.
Robert Fishman: The sale of our commercial services business in Q2 and the acquisition of Hydra-Stop in Q3 are deliberate steps in our strategy to focus on higher growth, higher margin businesses, which we believe positions us to lead in the water industry. We remain focused on our transformation initiatives and 80/20 approach, which have enabled us to streamline operations, invest in differentiated products, and deliver consistent margin expansion. These actions are not just about the short-term, they are about building the foundation for sustainable long-term success. Let's start on slide 8, titled Q4 2025 Pentair Performance. I will also be discussing our full year performance on slide 9. In Q4, we delivered a strong fourth quarter. We have remained focused on our transformation initiatives in 80/20, and proven that we can successfully navigate through a variety of macroeconomic and geopolitical landscapes.
Speaker #2: We remain focused on our transformation initiatives and 80/20 approach which have enabled us to streamline operations invest in differentiated products and deliver consistent margin expansion.
Speaker #2: These actions are not just about the short term; they are about building the long-term foundation for sustainable success. Let's start on slide eight, titled 'Q4 2025 Pentair Performance.'
Speaker #2: I will also be discussing our full year performance on slide nine. In Q4, we delivered a strong fourth quarter. We have remained focused on our transformation initiatives and 80/20 and proven that we can successfully navigate through a variety of macroeconomic and geopolitical landscapes.
Speaker #2: In Q4, we delivered sales growth of 5%, strong margin expansion, and adjusted EPS growth. Sales were driven by a 9% increase in flow with core flow sales growth of 4% and an 11% increase in pool sales with core pool sales up 9%.
Robert Fishman: In Q4, we delivered sales growth of 5%, strong margin expansion, and adjusted EPS growth. Sales were driven by a 9% increase in flow, with core flow sales growth of 4%, and an 11% increase in pool sales, with core pool sales up 9%, slightly offset by water solutions. The sale of our commercial services business in Q2 2025 was a strategic move to sharpen our portfolio focus. Fourth quarter adjusted operating income increased 9% to $252 million, with return on sales expanding 90 basis points year-over-year to 24.7%. This improvement was driven primarily by price and transformation.
Robert Fishman: In Q4, we delivered sales growth of 5%, strong margin expansion, and adjusted EPS growth. Sales were driven by a 9% increase in flow, with core flow sales growth of 4%, and an 11% increase in pool sales, with core pool sales up 9%, slightly offset by water solutions. The sale of our commercial services business in Q2 2025 was a strategic move to sharpen our portfolio focus. Fourth quarter adjusted operating income increased 9% to $252 million, with return on sales expanding 90 basis points year-over-year to 24.7%. This improvement was driven primarily by price and transformation.
Speaker #2: Slightly offset by water solutions. The sale of our commercial services business in Q2 2025 was a strategic move to sharpen our portfolio focus. Fourth quarter adjusted operating income increased 9% to $252 million with return on sales expanding 90 basis points year over year to 24.7%.
Speaker #2: This improvement was driven primarily by price and transformation. Adjusted EPS of $1.18 was up 9% versus the prior year. For the full year, sales were up 2% to $4.18 billion, driven by growth in Pool and Flow, slightly offset by Water Solutions.
Robert Fishman: Adjusted EPS of $1.18 was up 9% versus the prior year. For the full year, sales were up 2% to $4.18 billion, driven by growth in pool and flow, slightly offset by water solutions. Adjusted operating income grew 10%, and return on sales expanded 170 basis points to a record 25.2%. Adjusted EPS increased to a record $4.92, up 14% versus the prior year. Please turn to slide 10, labeled Q4 2025 Flow Performance. In addition to the fourth quarter performance for flow, I'll also be referencing the full year performance on slide 11. In Q4, flow sales were up 9% to $394 million. Commercial and industrial sales both increased 12% year-over-year, while residential sales rose 4%.
Robert Fishman: Adjusted EPS of $1.18 was up 9% versus the prior year. For the full year, sales were up 2% to $4.18 billion, driven by growth in pool and flow, slightly offset by water solutions. Adjusted operating income grew 10%, and return on sales expanded 170 basis points to a record 25.2%. Adjusted EPS increased to a record $4.92, up 14% versus the prior year. Please turn to slide 10, labeled Q4 2025 Flow Performance. In addition to the fourth quarter performance for flow, I'll also be referencing the full year performance on slide 11. In Q4, flow sales were up 9% to $394 million. Commercial and industrial sales both increased 12% year-over-year, while residential sales rose 4%.
Speaker #2: Adjusted operating income grew 10% and return on sales expanded 170 basis points to a record 25.2%. Adjusted EPS increased to a record $4.92 up 14% versus the prior year.
Speaker #2: Please turn to slide 10 labeled Q4 2025 flow performance. In addition to the fourth quarter performance for flow, I'll also be referencing the full year performance on slide 11.
Speaker #2: In Q4, flow sales were up 9% to $394 million. Commercial and industrial sales both increased 12% year over year while residential sales rose 4%.
Speaker #2: Reportable segment income was up 22%, and return on sales increased 240 basis points to 22.8%, driven by price, the acquisition of Hydrostop, and transformation.
Robert Fishman: Reportable segment income was up 22%, and return on sales increased 240 basis points to 22.8%, driven by price, the acquisition of Hydra-Stop, and transformation. For the year, flow sales increased 3% to $1.55 billion, driven by commercial and industrial. Full year reportable segment income grew 14%, and return on sales increased 230 basis points to 23.3%, a record margin for flow, driven primarily by transformation. Please turn to slide 12, labeled Q4 2025, Water Solutions Performance. In addition to the fourth quarter performance for Water Solutions, I'll also be referencing the full year performance on slide 13. In Q4, Water Solutions sales decreased 10% to $232 million.
Robert Fishman: Reportable segment income was up 22%, and return on sales increased 240 basis points to 22.8%, driven by price, the acquisition of Hydra-Stop, and transformation. For the year, flow sales increased 3% to $1.55 billion, driven by commercial and industrial. Full year reportable segment income grew 14%, and return on sales increased 230 basis points to 23.3%, a record margin for flow, driven primarily by transformation. Please turn to slide 12, labeled Q4 2025, Water Solutions Performance. In addition to the fourth quarter performance for Water Solutions, I'll also be referencing the full year performance on slide 13. In Q4, Water Solutions sales decreased 10% to $232 million.
Speaker #2: For the year, flow sales increased 3% to $1.55 billion driven by commercial and industrial. Full year reportable segment income grew 14% and return on sales increased 230 basis points to $23.3%, a record margin for flow driven primarily by transformation.
Speaker #2: Please turn to slide 12, labeled 'Q4 2025 Water Solutions Performance.' In addition to the fourth quarter performance for Water Solutions, I'll also be referencing the full year performance on slide 13.
Speaker #2: In Q4, water solution sales decreased 10% to $232 million; commercial sales were down 15%, which includes an 11% impact from the sale of our commercial services business in Q2.
Robert Fishman: Commercial sales were down 15%, which includes an 11% impact from the sale of our commercial services business in Q2. Reportable segment income declined 12% to $55 million, and return on sales decreased 60 basis points to 23.5%, due to FX and a decline in volume. For the year, water solution sales decreased 6%, reportable segment income was flat, and return on sales increased 130 basis points to 23.9%, a new full-year record as transformation drove significant productivity. Please turn to slide 14, labeled Q4 2025, Pool Performance. In addition to the fourth quarter performance for pool, I will also be referencing the full year performance on slide 15. In Q4, pool sales grew 11% to $393 million, driven primarily by price.
Robert Fishman: Commercial sales were down 15%, which includes an 11% impact from the sale of our commercial services business in Q2. Reportable segment income declined 12% to $55 million, and return on sales decreased 60 basis points to 23.5%, due to FX and a decline in volume. For the year, water solution sales decreased 6%, reportable segment income was flat, and return on sales increased 130 basis points to 23.9%, a new full-year record as transformation drove significant productivity. Please turn to slide 14, labeled Q4 2025, Pool Performance. In addition to the fourth quarter performance for pool, I will also be referencing the full year performance on slide 15. In Q4, pool sales grew 11% to $393 million, driven primarily by price.
Speaker #2: Reportable segment income declined 12% to $55 million, and return on sales decreased 60 basis points to 23.5% due to FX and a decline in volume.
Speaker #2: For the year, Water Solutions sales decreased 6%; reportable segment income was flat, and return on sales increased 130 basis points to 23.9%—a new full-year record as transformation drove significant productivity.
Speaker #2: Please turn to slide 14, labeled 'Q4 2025 Pool Performance.' In addition to the fourth quarter performance for pool, I will also be referencing the full year performance on slide 15.
Speaker #2: In Q4, pool sales grew 11% to $393 million, driven primarily by price. Reportable segment income increased 11%, and return on sales decreased 20 basis points to 8.6%.
Robert Fishman: Reportable segment income increased 11%, and return on sales decreased 20 basis points to 33.6%. We continued to invest in growth initiatives in Q4, which slightly offsets strong productivity. In the fourth quarter, we also experienced higher than expected inflation, primarily from certain metals. If this inflation persists, we will review pricing and other mitigation efforts to offset this impact. For the year, pool sales grew 9%, driven by price, volume, and the acquisition of Gulfstream in December 2024. Reportable segment income increased 11%, and return on sales increased 60 basis points to 33.8%, a new annual record driven by sales growth and transformation. While inflation and tariffs present ongoing challenges to total Pentair, our proactive pricing strategies and operational discipline have enabled us to sustain margin expansion.
Robert Fishman: Reportable segment income increased 11%, and return on sales decreased 20 basis points to 33.6%. We continued to invest in growth initiatives in Q4, which slightly offsets strong productivity. In the fourth quarter, we also experienced higher than expected inflation, primarily from certain metals. If this inflation persists, we will review pricing and other mitigation efforts to offset this impact. For the year, pool sales grew 9%, driven by price, volume, and the acquisition of Gulfstream in December 2024. Reportable segment income increased 11%, and return on sales increased 60 basis points to 33.8%, a new annual record driven by sales growth and transformation. While inflation and tariffs present ongoing challenges to total Pentair, our proactive pricing strategies and operational discipline have enabled us to sustain margin expansion.
Speaker #2: We continued to invest in growth initiatives in Q4, which slightly offset strong productivity. In the fourth quarter, we also experienced higher-than-expected inflation, primarily from certain metals.
Speaker #2: If this inflation persists, we will review pricing and other mitigation efforts to offset this impact. For the year, pool sales grew 9% driven by price, volume, and the acquisition of Gulfstream in December 2024.
Speaker #2: Reportable segment income increased 11% and return on sales increased 60 basis points to $33.8%, a new annual record driven by sales growth and transformation.
Speaker #2: While inflation and tariffs present ongoing challenges to Pentair, our proactive pricing strategies and operational discipline have enabled us to sustain margin expansion. We are closely monitoring global supply chain dynamics and remain ready to adjust quickly to protect profitability and invest in future growth.
Robert Fishman: We are closely monitoring global supply chain dynamics and remain ready to adjust quickly to protect profitability and invest in future growth. Our risk management approach remains agile and disciplined, allowing us to navigate volatility and seize new opportunities. Our record-free cash flow not only strengthens returns for our shareholders, but also empowers us to invest in our people, our communities, and the technologies that will deliver cleaner, safer water for millions. These results reflect our commitment to all stakeholders, shareholders, employees, customers, and partners, and our purpose-driven approach to value creation. I will now hand the call over to Nick to discuss our balance sheet and 2026 guidance.
Robert Fishman: We are closely monitoring global supply chain dynamics and remain ready to adjust quickly to protect profitability and invest in future growth. Our risk management approach remains agile and disciplined, allowing us to navigate volatility and seize new opportunities. Our record-free cash flow not only strengthens returns for our shareholders, but also empowers us to invest in our people, our communities, and the technologies that will deliver cleaner, safer water for millions. These results reflect our commitment to all stakeholders, shareholders, employees, customers, and partners, and our purpose-driven approach to value creation. I will now hand the call over to Nick to discuss our balance sheet and 2026 guidance.
Speaker #2: Our risk management approach remains agile and disciplined, allowing us to navigate volatility and seize new opportunities. Our record free cash flow not only strengthens returns for our shareholders but also empowers us to invest in our people, our communities, and the technologies that will deliver cleaner, safer water for millions.
Speaker #2: These results reflect our commitment to all stakeholders—shareholders, employees, customers, and partners—and our purpose-driven approach to value creation. I will now hand the call over to Nick to discuss our balance sheet and 2026 guidance.
Speaker #2: Thank you, Bob. It's been a privilege to partner with you these last few months and to learn from and work with you these past few years.
Nick Brazas: Thank you, Bob. It's been a privilege to partner with you these last few months, and to learn from and work with you these past few years. Good morning, everyone. Please turn to slide 16, labeled Balance Sheet and Cash Flow. We maintained a strong financial position with record annual free cash flow of $748 million, a healthy leverage ratio of 1.4 times, and we've delivered return on invested capital of 16.7%, up from 15.5% in 2024. Expect to continue to have a balanced capital allocation strategy, focused on delivering shareholder value with flexibility to invest in organic growth, pursue strategic acquisitions, repurchase shares, and pay dividends, all guided by our high teens return on invested capital target, as well as earnings growth....
Nick Brazas: Thank you, Bob. It's been a privilege to partner with you these last few months, and to learn from and work with you these past few years. Good morning, everyone. Please turn to slide 16, labeled Balance Sheet and Cash Flow. We maintained a strong financial position with record annual free cash flow of $748 million, a healthy leverage ratio of 1.4 times, and we've delivered return on invested capital of 16.7%, up from 15.5% in 2024. Expect to continue to have a balanced capital allocation strategy, focused on delivering shareholder value with flexibility to invest in organic growth, pursue strategic acquisitions, repurchase shares, and pay dividends, all guided by our high teens return on invested capital target, as well as earnings growth....
Speaker #2: Good morning, everyone. Please turn to slide 16, labeled Balance Sheet and Cash Flow. We maintained a strong financial position with record annual free cash flow of $748 million.
Speaker #2: We have a healthy leverage ratio of 1.4 times, and we've delivered a return on invested capital of 16.7%, up from 15.5% in 2024. We expect to continue to have a balanced capital allocation strategy focused on delivering shareholder value, with flexibility to invest in organic growth, pursue strategic acquisitions, repurchase shares, and pay dividends.
Speaker #2: All guided by our high-teens return on invested capital target as well as earnings growth. In 2025, we repurchased 2.3 million shares for a total of $225 million and announced a new share repurchase authorization for up to $1 billion.
Nick Brazas: 2025, we repurchased 2.3 million shares for a total of $225 million and announced a new share repurchase authorization for up to $1 billion. Moving to Slide 17, titled Q1 and Full Year 2026: Pentair Outlook and Expectations. Looking ahead, our priorities are clear: continue to deliver for customers and create value for shareholders as we accelerate innovation, deepen our Quad One customer relationships, and drive operational excellence through the Pentair Business System. Our guidance reflects customer obsession, continued investment in focused priorities, portfolio optimization, and disciplined capital allocation. For the full year, we are introducing our adjusted earnings per share guidance range of approximately $5.25 to $5.40, which represents a year-over-year increase of 7% to 10%.
Nick Brazas: 2025, we repurchased 2.3 million shares for a total of $225 million and announced a new share repurchase authorization for up to $1 billion. Moving to Slide 17, titled Q1 and Full Year 2026: Pentair Outlook and Expectations. Looking ahead, our priorities are clear: continue to deliver for customers and create value for shareholders as we accelerate innovation, deepen our Quad One customer relationships, and drive operational excellence through the Pentair Business System. Our guidance reflects customer obsession, continued investment in focused priorities, portfolio optimization, and disciplined capital allocation. For the full year, we are introducing our adjusted earnings per share guidance range of approximately $5.25 to $5.40, which represents a year-over-year increase of 7% to 10%.
Speaker #2: Moving to slide 17, titled 'Q1 and Full Year 2026 Pentair Outlook and Expectations.' Looking ahead, our priorities are clear: continue to deliver for customers and create value for shareholders as we accelerate innovation, deepen our Quad One customer relationship, and drive operational excellence through the Pentair Business System.
Speaker #2: Our guidance reflects customer obsession, continued investment in focused priorities, portfolio optimization, and disciplined capital allocation. For the full year, we are introducing our adjusted earning per share guidance range of approximately $5.25 to $5.40.
Speaker #2: Which represents a year-over-year increase of 7% to 10%. We expect total PENTAIR sales in fiscal 2026 to be up approximately 3 to 4%. We expect flow sales to be up approximately mid-single digits to high-single digits.
Nick Brazas: We expect total Pentair sales in fiscal 2026 to be up approximately 3% to 4%. We expect flow sales to be up approximately mid-single digits to high single digits. Water solution sales are expected to be approximately flat, with core sales up approximately low single digits. Pool sales are expected to increase approximately 3% in fiscal 2026. Within our 3% to 4% sales guide for total Pentair, we expect full year volume to be roughly flat, price to be up 2% to 3%, and FX, acquisitions, and divestitures to be an approximate 50 basis point benefit. We expect total Pentair adjusted operating income to increase approximately 5% to 8%, with return on sales expansion of roughly 100 basis points to approximately 26%.
Nick Brazas: We expect total Pentair sales in fiscal 2026 to be up approximately 3% to 4%. We expect flow sales to be up approximately mid-single digits to high single digits. Water solution sales are expected to be approximately flat, with core sales up approximately low single digits. Pool sales are expected to increase approximately 3% in fiscal 2026. Within our 3% to 4% sales guide for total Pentair, we expect full year volume to be roughly flat, price to be up 2% to 3%, and FX, acquisitions, and divestitures to be an approximate 50 basis point benefit. We expect total Pentair adjusted operating income to increase approximately 5% to 8%, with return on sales expansion of roughly 100 basis points to approximately 26%.
Speaker #2: Water solution sales are expected to be approximately flat with core sales up approximately low-single digits. In pool sales, our expected to increase approximately 3% in fiscal 2026.
Speaker #2: Within our 3% to 4% sales guide for total Pentair, we expect full-year volume to be roughly flat, price to be up 2% to 3%, and FX, acquisitions, and divestitures to be an approximate 50 basis point benefit.
Speaker #2: We expect total PENTAIR adjusted operating income to increase approximately 5% to 8%, with return on sales expansion of roughly 100 basis points to approximately 26%.
Speaker #2: We expect price to offset inflation and another strong year of transformation savings of approximately $70 million net of investments, which delivers on our 26% return on sales target set at our last investor day in March 2024.
Nick Brazas: We expect price to offset inflation and another strong year of transformation savings of approximately $70 million net of investment, which delivers on our 26% return on sales target set at our last Investor Day in March 2024. We expect pool to improve its return on sales slightly, and flow and water solutions to continue to benefit from complexity reduction and transformation savings. We expect flow to improve its return on sales in line with the company's return on sales expansion, and water solutions to do better than the overall company. Also, for the full year, we expect corporate expenses of approximately $90 million, net interest expenses of roughly $67 million, an adjusted tax rate of approximately 17%, and a share count of approximately 165 million. For Q1, we expect sales to be up approximately 1% to 2%.
Nick Brazas: We expect price to offset inflation and another strong year of transformation savings of approximately $70 million net of investment, which delivers on our 26% return on sales target set at our last Investor Day in March 2024. We expect pool to improve its return on sales slightly, and flow and water solutions to continue to benefit from complexity reduction and transformation savings. We expect flow to improve its return on sales in line with the company's return on sales expansion, and water solutions to do better than the overall company. Also, for the full year, we expect corporate expenses of approximately $90 million, net interest expenses of roughly $67 million, an adjusted tax rate of approximately 17%, and a share count of approximately 165 million. For Q1, we expect sales to be up approximately 1% to 2%.
Speaker #2: We expect Pool to improve its return on sales slightly, and Flow in Water Solutions to continue to benefit from complexity reduction and transformation savings.
Speaker #2: We expect flow to improve its return on sales in line with the company's return on sales expansion and water solutions to do better than the overall company.
Speaker #2: Also, for the full year, we expect corporate expenses of approximately $90 million net interest expenses of roughly $67 million and adjusted tax rate of approximately 17% and a share count of approximately 165 million.
Speaker #2: For the first quarter, we expect sales to be up approximately 1 to 2%. We expect flow sales to be up approximately high-single digits; water solution sales to be down approximately low-single digits with core water solutions roughly flat and pool sales to be approximately flat year over year.
Nick Brazas: We expect flow sales to be up approximately high single digits, water solution sales to be down approximately low single digits, with core water solutions roughly flat, and pool sales to be approximately flat year-over-year. We expect to maintain normal seasonality trends, where sales in Q1 are typically the lowest and Q2 are typically the highest. The rate of year-over-year growth is expected to be slightly higher in the second half of 2026 than the first half, as is typical for our business. We expect first quarter adjusted operating income to be up 2% to 5%. We expect return on sales expansion in Q1 for total Pentair, including return on sales expansion in each of our three segments. Similar to sales, we expect return on sales to follow a normal seasonality pattern, with the highest rate in Q2, followed by Q3, and then Q4.
Nick Brazas: We expect flow sales to be up approximately high single digits, water solution sales to be down approximately low single digits, with core water solutions roughly flat, and pool sales to be approximately flat year-over-year. We expect to maintain normal seasonality trends, where sales in Q1 are typically the lowest and Q2 are typically the highest. The rate of year-over-year growth is expected to be slightly higher in the second half of 2026 than the first half, as is typical for our business. We expect first quarter adjusted operating income to be up 2% to 5%. We expect return on sales expansion in Q1 for total Pentair, including return on sales expansion in each of our three segments. Similar to sales, we expect return on sales to follow a normal seasonality pattern, with the highest rate in Q2, followed by Q3, and then Q4.
Speaker #2: We expect to maintain normal seasonality trends where sales in Q1 are typically the lowest and Q2 are typically the highest. The rate of year-over-year growth is expected to be slightly higher in the second half of 2026 than the first half, as is typical for our business.
Speaker #2: We expect first quarter adjusted operating income to be up 2% to 5%. We expect return on sales expansion in Q1 for total PENTAIR, including return on sales expansion in each of our three segments.
Speaker #2: Similar to sales, we expect return on sales to follow a normal seasonality pattern, with the highest rate in Q2, followed by Q3, and then Q4.
Speaker #2: We're also introducing adjusted EPS guidance for the first quarter of approximately $1.15 to $1.18, an increase of approximately 4 to 6%. In the first half of 2026, we expect adjusted EPS to be approximately 50% of our full year adjusted EPS guide, roughly in line with our historical norm.
Nick Brazas: We're also introducing adjusted EPS guidance for the first quarter of approximately $1.15 to $1.18, an increase of approximately 4% to 6%. In the first half of 2026, we expect adjusted EPS to be approximately 50% of our full-year adjusted EPS guide, roughly in line with our historical norm. Q1 adjusted EPS is expected to be roughly 22% of the full year, consistent with the prior 3 years. We are targeting strong free cash flow in 2026 of approximately 100% of net income. As a reminder, Q1 is a cash use quarter in any given year, while Q2 is typically our highest cash generation quarter. At this time, our 2026 guidance assumes a balanced contribution from flow, water solutions, and pool.
Nick Brazas: We're also introducing adjusted EPS guidance for the first quarter of approximately $1.15 to $1.18, an increase of approximately 4% to 6%. In the first half of 2026, we expect adjusted EPS to be approximately 50% of our full-year adjusted EPS guide, roughly in line with our historical norm. Q1 adjusted EPS is expected to be roughly 22% of the full year, consistent with the prior 3 years. We are targeting strong free cash flow in 2026 of approximately 100% of net income. As a reminder, Q1 is a cash use quarter in any given year, while Q2 is typically our highest cash generation quarter. At this time, our 2026 guidance assumes a balanced contribution from flow, water solutions, and pool.
Speaker #2: Q1 adjusted EPS is expected to be roughly 22% of the full year, consistent with the prior three years. We are targeting strong free cash flow in 2026 of approximately 100% of net income.
Speaker #2: As a reminder, Q1 is a cash use quarter in any given year, while Q2 is typically our highest cash generation quarter. At this time, our 2026 guidance assumes a balanced contribution from Flow, Water Solutions, and Pool.
Speaker #2: We have not included a residential recovery in our guide, which we believe would be upside. We expect transformation, 80/20, and innovation to drive growth across our balanced portfolio.
Nick Brazas: We have not included a residential recovery in our guide, which we believe would be upside. We expect transformation, 80/20, and innovation to drive growth across our balanced portfolio. We expect new pool builds, remodels, and aftermarket to be similar to 2025. We expect tariffs will have an incremental impact on Q1. Please recall that new tariffs impacted us beginning Q2 of 2025. We expect to maintain a disciplined capital allocation strategy and deliver strong Free Cash Flow.
Nick Brazas: We have not included a residential recovery in our guide, which we believe would be upside. We expect transformation, 80/20, and innovation to drive growth across our balanced portfolio. We expect new pool builds, remodels, and aftermarket to be similar to 2025. We expect tariffs will have an incremental impact on Q1. Please recall that new tariffs impacted us beginning Q2 of 2025. We expect to maintain a disciplined capital allocation strategy and deliver strong Free Cash Flow.
Speaker #2: We expect new pool builds, remodels, and aftermarket to be similar to 2025. We expect tariffs will have an incremental impact on Q1. Please recall that new tariffs impacted us beginning Q2 of 2025.
Speaker #2: We expect to maintain a disciplined capital allocation strategy and deliver strong free cash flow. Moving to slide 18, we had roughly $70 million of tariff impact in 2025, and we expect approximately $30 million in incremental tariffs in 2026, primarily in Q1.
John Stauch: ... Moving to slide 18. We had roughly $70 million of tariff impact in 2025, and we expect approximately $30 million in incremental tariffs in 2026, primarily in Q1. But we believe our carryover pricing and ongoing mitigation strategies position us to offset these impacts. Let's move to slide 19. We look forward to welcoming you at our upcoming Investor Day on 4 March, where you'll hear more about our updated long-term strategy and outlook, our growth strategies and expectations to drive future growth, our Pentair Business System, and how it fuels continuous transformation and growth, new product launches and innovation, and a lot more. As I step into the CFO role, I'm committed to upholding Pentair's legacy of financial integrity, discipline, transparency, and stakeholder engagement.
John Stauch: ... Moving to slide 18. We had roughly $70 million of tariff impact in 2025, and we expect approximately $30 million in incremental tariffs in 2026, primarily in Q1. But we believe our carryover pricing and ongoing mitigation strategies position us to offset these impacts. Let's move to slide 19. We look forward to welcoming you at our upcoming Investor Day on 4 March, where you'll hear more about our updated long-term strategy and outlook, our growth strategies and expectations to drive future growth, our Pentair Business System, and how it fuels continuous transformation and growth, new product launches and innovation, and a lot more. As I step into the CFO role, I'm committed to upholding Pentair's legacy of financial integrity, discipline, transparency, and stakeholder engagement.
Speaker #2: But we believe our carryover pricing and ongoing mitigation strategies position us to offset these impacts. Let's move to slide 19. We look forward to welcoming you at our upcoming Investor Day on March 4th.
Speaker #2: Where you'll hear more about our updated long-term strategy and outlook, our growth strategies and expectations to drive future growth, our PENTAIR Business System and how it fuels continuous transformation and growth, new product launches and innovation, and a lot more.
Speaker #2: As I step into the CFO role, I am committed to upholding Pentair's legacy of financial integrity, discipline, transparency, and stakeholder engagement. I look forward to embarking on the next phase of our journey together and meeting many of you at our Investor Day in March, and then throughout the year.
John Stauch: I look forward to embarking on the next phase of our journey together and meeting many of you at our Investor Day in March, and then throughout the year. Thank you for your trust and partnership. Together, we are building a Pentair that is not only stronger financially, but also making a lasting impact by helping our customers move, improve, and enjoy water, life's most essential resource. I would now like to turn the call over to the operator for Q&A, after which John will have a few closing remarks. Operator, please open the line for questions. Thank you.
John Stauch: I look forward to embarking on the next phase of our journey together and meeting many of you at our Investor Day in March, and then throughout the year. Thank you for your trust and partnership. Together, we are building a Pentair that is not only stronger financially, but also making a lasting impact by helping our customers move, improve, and enjoy water, life's most essential resource. I would now like to turn the call over to the operator for Q&A, after which John will have a few closing remarks. Operator, please open the line for questions. Thank you.
Speaker #2: Thank you for your trust and partnership. Together, we are building a Pentair that is not only stronger financially, but also making a lasting impact by helping our customers move, prove, and enjoy water, life's most essential resource.
Speaker #2: I would now like to turn the call over to the operator for Q&A, after which John will have a few closing remarks. Operator, please open the line for questions.
Speaker #2: Thank you. We will now begin the question and answer session. In the interest of time, we ask that you please limit yourself to one question and one follow-up.
Operator: We will now begin the question-and-answer session. In the interest of time, we ask that you please limit yourself to one question and one follow-up. To ask a question, you may press Star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Andy Kaplowitz with Citigroup. Please go ahead.
Operator: We will now begin the question-and-answer session. In the interest of time, we ask that you please limit yourself to one question and one follow-up. To ask a question, you may press Star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Andy Kaplowitz with Citigroup. Please go ahead.
Speaker #2: To ask a question, you may press star, then one on your telephone keypad. For those of you who are using a speakerphone, please pick up your handset before pressing the keys.
Speaker #2: To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Andy Kaplowitz with Citigroup.
Speaker #2: Please go ahead.
Speaker #3: Good morning,
[Analyst] (Citigroup): Hey, good morning, everyone.
Andy Kaplowitz: Hey, good morning, everyone.
Speaker #3: everyone. Good morning. Bob, thanks for all your
John Stauch: Morning.
John Stauch: Morning.
[Analyst] (Citigroup): Bob, thanks for all your help.
Andy Kaplowitz: Bob, thanks for all your help.
Speaker #3: help. Thank you, Andy.
John Stauch: Thank you, Andy. Appreciate that.
John Stauch: Thank you, Andy. Appreciate that.
Speaker #4: Appreciate
Speaker #4: that. Sure.
[Analyst] (Citigroup): Sure. So can you give us a little more color on what you're seeing in your commercial water solutions business? I think you said for water solutions, in general, you start out flat in the core in Q1 after being down in Q4. I think you're going to low single digits for the year. So, you know, the visibility into that improvement that you're modeling and maybe any difference you're seeing between Manitowoc Ice and Everpure.
Andy Kaplowitz: Sure. So can you give us a little more color on what you're seeing in your commercial water solutions business? I think you said for water solutions, in general, you start out flat in the core in Q1 after being down in Q4. I think you're going to low single digits for the year. So, you know, the visibility into that improvement that you're modeling and maybe any difference you're seeing between Manitowoc Ice and Everpure.
Speaker #3: So can you give us a little more color on what you're seeing in your commercial water solutions business? I think you said for water solutions in general, you start out flat in the core, in Q1, after being down in Q4.
Speaker #3: And I think you're going to low single digits for the year. So, the visibility into that improvement that you're modeling, and maybe any difference you're seeing between Manise and...
Speaker #3: Everpure? Yeah, I'll just start with
John Stauch: Yeah, I'll just start with 2026. I mean, we think CWS, those two businesses return to growth in 2026, you know, and as far as Manitowoc and filtration, and remind you that even throughout 2025, the North American market remained relatively strong. The volatility that we're generally seeing in the business is more of the international and the China sales and how they're flipping a little bit, what the metrics look like in North America. So we feel like we've ended the year positioning ourselves in a really good position to grow again in 2026. They're both very high-margin businesses, and we expect the contributions next year to be very solid from both.
John Stauch: Yeah, I'll just start with 2026. I mean, we think CWS, those two businesses return to growth in 2026, you know, and as far as Manitowoc and filtration, and remind you that even throughout 2025, the North American market remained relatively strong. The volatility that we're generally seeing in the business is more of the international and the China sales and how they're flipping a little bit, what the metrics look like in North America. So we feel like we've ended the year positioning ourselves in a really good position to grow again in 2026. They're both very high-margin businesses, and we expect the contributions next year to be very solid from both.
Speaker #4: 26. I mean, we think CWS, those two businesses, return to growth in 2026. And as far as Mantauk and filtration, and remind you that even throughout '25, the North American market remained relatively strong.
Speaker #4: The volatility that we're generally seeing in the business is more of the international and the China sales, and how they're flipping a little bit what the metrics look like in North America.
Speaker #4: So we feel like we've ended the year positioning ourselves in a really good position to grow again in 2026. They're both very high-margin businesses, and we expect the contributions next year to be very solid from both.
Speaker #3: Thanks for that, John. And maybe just a follow-up on sort of this combination of residential flow and residential water. I think you said it has 25% of your factories, which is obviously quite a bit of a high number.
[Analyst] (Citigroup): Thanks for that, John. And then maybe just to follow up on sort of this combination of residential flow and residential water. I think you said it has 25% of your factories, which is obviously quite a bit of a high number. So maybe you could talk a little bit about the incremental productivity opportunity that you have. I would assume it's something you'll highlight a little more for us at the Investor Day, but what kind of timeline could you get these improvements that you're talking about?
Andy Kaplowitz: Thanks for that, John. And then maybe just to follow up on sort of this combination of residential flow and residential water. I think you said it has 25% of your factories, which is obviously quite a bit of a high number. So maybe you could talk a little bit about the incremental productivity opportunity that you have. I would assume it's something you'll highlight a little more for us at the Investor Day, but what kind of timeline could you get these improvements that you're talking about?
Speaker #3: So maybe you could talk a little bit about the incremental productivity opportunity that you have. I would assume it's something you'll highlight a little more for us at the Investor Day.
Speaker #3: But what kind of timeline can you get these improvements that you're talking about?
Speaker #3: About? Yeah, I don't want to give—
John Stauch: Yeah, I don't want to give away my Investor Day, but I'll give you a hint or a tease. These businesses come together, form a roughly a billion-dollar, what we call, water quality management business. And as you saw from the pie charts that we shared, we get our channels aligned better on go-to-market. If you recall, residential water treatment, which was in water solutions, was historically a specialty filtration play, you know, with people just designed to be high-end servicers for water softeners. Where the market has shifted, we believe, is into the North American plumbing channel, well diggers, which we service from the R&I side, and we believe we can bring the technologies and the channel opportunities together to create some growth synergies and begin to merge into the utility room opportunities in a broader way.
John Stauch: Yeah, I don't want to give away my Investor Day, but I'll give you a hint or a tease. These businesses come together, form a roughly a billion-dollar, what we call, water quality management business. And as you saw from the pie charts that we shared, we get our channels aligned better on go-to-market. If you recall, residential water treatment, which was in water solutions, was historically a specialty filtration play, you know, with people just designed to be high-end servicers for water softeners. Where the market has shifted, we believe, is into the North American plumbing channel, well diggers, which we service from the R&I side, and we believe we can bring the technologies and the channel opportunities together to create some growth synergies and begin to merge into the utility room opportunities in a broader way.
Speaker #4: away my investor day, but I'll give you a hint or a tease. These businesses come together, form roughly a billion-dollar, what we call water quality management business.
Speaker #4: And as you saw from the pie charts that we shared, we get our channels aligned better on go-to-market. If you recall, residential water treatment, which was in Water Solutions, was historically a specialty filtration play.
Speaker #4: With people just designed to be high-end servicers for water softeners, where the market has shifted, we believe, is into the North American plumbing channel—well diggers, which we service from the R&I side.
Speaker #4: And we believe we can bring the technologies and the channel opportunities together to create some growth synergies, and begin to merge into the utility room opportunities in a broader way.
Speaker #4: On the cost side, they both have large regional global operations—both factories and regional sales and G&A structures. And we do see a substantial amount of margin improvement in the combined business over the next several years.
John Stauch: On the cost side, they both have large regional, you know, global operations, both factories and regional sales and G&A structures. And we do see a substantial amount of margin improvement in the combined business over the next several years.
John Stauch: On the cost side, they both have large regional, you know, global operations, both factories and regional sales and G&A structures. And we do see a substantial amount of margin improvement in the combined business over the next several years.
Speaker #3: Appreciate all the
Speaker #3: Appreciate all the color. Our next question
[Analyst] (Citigroup): Appreciate all the color.
Andy Kaplowitz: Appreciate all the color.
Operator: Our next question comes from Mike Halloran with Baird. Please go ahead.
Operator: Our next question comes from Mike Halloran with Baird. Please go ahead.
Speaker #2: Comes from Mike Halloran with Baird. Please go ahead.
Speaker #2: ahead. Good morning,
[Analyst] (Baird): Hey, morning, everyone, and thanks for everything, Bob.
Mike Halloran: Hey, morning, everyone, and thanks for everything, Bob.
Speaker #5: everyone.
Speaker #5: everyone. And thanks for everything, Bob. Thank
Speaker #4: you, Mike.
John Stauch: Thank you, Mike.
John Stauch: Thank you, Mike.
[Analyst] (Baird): Hey, so can we just start on the pool side of things? Maybe some help on what you're seeing in the first quarter here for the flattish guidance, Q2, you know, the price-volume dynamics, inventory levels, and then the confidence in seeing that normalize through the year a bit.
Mike Halloran: Hey, so can we just start on the pool side of things? Maybe some help on what you're seeing in the first quarter here for the flattish guidance, Q2, you know, the price-volume dynamics, inventory levels, and then the confidence in seeing that normalize through the year a bit.
Speaker #5: things? Maybe some help on what you're seeing Hey, so can we just start on the pool side of in the first quarter. Here for that flattish guidance, all else equal, the price volume dynamics inventory levels and then the confidence in seeing that normalize through the year a
Speaker #5: bit.
Speaker #4: Yeah.
John Stauch: Yeah. So, you know, since we're thanking Bob, I promised Bob a normal pool year, you know, when he joined the company and said it was the most steady, easily to predict business that Pentair had. I still believe it's the best business Pentair's had and one of the best businesses I've ever seen. 2025 ended from a full year perspective, if you look at it, mostly normal, but there was anything but normal as the quarters unfolded. So I want to start there. I think we're well positioned in the industry. I think we're still waiting for the markets to recover. We wanted to put out a guide that reflected no residential recovery in 2026, which means a flattish pool year.
John Stauch: Yeah. So, you know, since we're thanking Bob, I promised Bob a normal pool year, you know, when he joined the company and said it was the most steady, easily to predict business that Pentair had. I still believe it's the best business Pentair's had and one of the best businesses I've ever seen. 2025 ended from a full year perspective, if you look at it, mostly normal, but there was anything but normal as the quarters unfolded. So I want to start there. I think we're well positioned in the industry. I think we're still waiting for the markets to recover. We wanted to put out a guide that reflected no residential recovery in 2026, which means a flattish pool year.
Speaker #4: So since we're thanking Bob, I promised Bob a normal pool year. When he joined the company and said it was the most steady, easy-to-predict business that Pentair had, I still believe it's the best business Pentair has had, and one of the best businesses I've ever seen.
Speaker #4: '25 ended from a full-year perspective. If you look at it, mostly normal. But there was anything but normal as the quarters unfolded. So I want to start there.
Speaker #4: I think we're well positioned in the industry. I think we're still waiting for the markets to recover. We wanted to put out a guide that reflected no residential recovery in 2026, which means a flattish pool year.
Speaker #4: And I also wanted to make sure I mentioned, Mike, that that would also include no indication of a '27 recovery. Not that we don't believe it will happen, but that we don't want it in our guide.
John Stauch: I also wanted to make sure I mentioned, Mike, that that would also include no indication of a '27 recovery. Not that we don't believe it will happen, but that we don't want it in our guide. As '27 starts to recover, we would expect that demand to work its way into the back half of the year. But we don't see that yet, and we have no evidence that that's gonna happen. So we wanted to put the pool opportunity on the upside versus putting risk out in 2026. With that, I'm gonna let Nick answer a couple of the dynamics.
John Stauch: I also wanted to make sure I mentioned, Mike, that that would also include no indication of a '27 recovery. Not that we don't believe it will happen, but that we don't want it in our guide. As '27 starts to recover, we would expect that demand to work its way into the back half of the year. But we don't see that yet, and we have no evidence that that's gonna happen. So we wanted to put the pool opportunity on the upside versus putting risk out in 2026. With that, I'm gonna let Nick answer a couple of the dynamics.
Speaker #4: And as '27 starts to recover, we would expect that demand to work its way into the back half of the year. But we don't see that yet, and we have no evidence that that's going to happen.
Speaker #4: So we wanted to put the pool opportunity on the upside versus putting risk out in 2026. With that, I'm going to let Nick answer a couple of the dynamics.
Speaker #4: Yeah, I'll just add, when you look at sell-in for Q4, it's up a little bit relative to sell-out, which we believe balances in Q1.
Nick Brazas: Yeah, I'll just add, when you look at sell-in for Q4, it's up a little bit relative to sell out, which we believe balances in Q1. And then we see volume up Q2 through Q4 for flat volume for pool in our guide for the year. And we think we're being pragmatic with this guide. When you look at weather patterns in Q1, some of the freezes in the South, you know, tariffs driving some buying patterns, we think that it's a pragmatic guide, where we're, again, as John said, we're just not assuming a, a change in residential recovery in 2026.
Nick Brazas: Yeah, I'll just add, when you look at sell-in for Q4, it's up a little bit relative to sell out, which we believe balances in Q1. And then we see volume up Q2 through Q4 for flat volume for pool in our guide for the year. And we think we're being pragmatic with this guide. When you look at weather patterns in Q1, some of the freezes in the South, you know, tariffs driving some buying patterns, we think that it's a pragmatic guide, where we're, again, as John said, we're just not assuming a, a change in residential recovery in 2026.
Speaker #4: And then we see volume up Q2 through Q4 for flat volume for pool in our guide for the year. And we think we're being pragmatic with this guide.
Speaker #4: And you look at weather patterns in Q1—some of the freezes in the South, tariffs driving some buying patterns—we think that it's a pragmatic guide.
Speaker #4: We're, again, as John said, we're just not assuming a change in residential recovery in 2026.
Speaker #5: Great, makes sense. And then secondarily, could you just maybe talk about capital priorities outside of the dividend, which I know you guys are going to still keep moving higher?
[Analyst] (Baird): Great. Makes sense. And then, secondly, could you just maybe talk about capital priorities outside of the dividend, which I know you guys are gonna still keep moving that higher. But buyback, how, how interested are you guys in pursuing the buyback side? And then any thoughts on the M&A side of things and actionability in the channel?
Mike Halloran: Great. Makes sense. And then, secondly, could you just maybe talk about capital priorities outside of the dividend, which I know you guys are gonna still keep moving that higher. But buyback, how, how interested are you guys in pursuing the buyback side? And then any thoughts on the M&A side of things and actionability in the channel?
Speaker #5: But buyback, how interested are you guys in pursuing the buyback side? And then any thoughts on the M&A side of things and actionability
Speaker #5: in the channel? Yeah.
John Stauch: Yeah. So first of all, it's good to have a healthy balance sheet, and I think we're well positioned. We generate a lot of cash and don't use a lot of capital, so those are a blessing to have. We're moving into our 50th year of raising the dividends and Dividend King status, so let's say we're gonna continue to raise that, likely. And then I look at buyback and M&A as, you know, what creates the best longer-term value. You know, if we find more Hydra-Stops, if we find more Gulfstreams, those are really nice acquisitions to tuck into the portfolio, and we're always actively looking for those bolt-ons. And if not, we'll begin to nibble at the stock and continue return to shareholders through buyback.
John Stauch: Yeah. So first of all, it's good to have a healthy balance sheet, and I think we're well positioned. We generate a lot of cash and don't use a lot of capital, so those are a blessing to have. We're moving into our 50th year of raising the dividends and Dividend King status, so let's say we're gonna continue to raise that, likely. And then I look at buyback and M&A as, you know, what creates the best longer-term value. You know, if we find more Hydra-Stops, if we find more Gulfstreams, those are really nice acquisitions to tuck into the portfolio, and we're always actively looking for those bolt-ons. And if not, we'll begin to nibble at the stock and continue return to shareholders through buyback.
Speaker #4: So, first of all, it's good to have a healthy balance sheet. I think we're well positioned. We generate a lot of cash and don't use a lot of capital.
Speaker #4: So those are a blessing to have. We're moving into our 50th year of raising the dividends and dividend king status. So let's say we're going to continue to raise that likely.
Speaker #4: And then I look at buyback and M&A as what creates the best longer-term value. If we find more hydrostops, if we find more golf streams, those are really nice acquisitions to tuck into the portfolio.
Speaker #4: And we're always actively looking for those bolt-ons. And if not, we'll begin to nibble at the stock and continue return to share owners through buyback.
Speaker #5: Thanks, everyone.
[Analyst] (Baird): Thanks, everyone.
Mike Halloran: Thanks, everyone.
Speaker #4: Thank you.
Nick Brazas: Thank you.
Nick Brazas: Thank you.
Speaker #2: Our next question comes from Nathan Jones with Stifel. Please go ahead.
Operator: Our next question comes from Nathan Jones with Stifel. Please go ahead.
Operator: Our next question comes from Nathan Jones with Stifel. Please go ahead.
[Analyst] (Stifel): Good morning, everyone.
Nathan Jones: Good morning, everyone.
Speaker #4: Good Good morning, everyone.
Speaker #4: morning. Good morning.
Nick Brazas: Morning.
Nick Brazas: Morning.
John Stauch: Morning.
John Stauch: Morning.
Speaker #6: I guess I'll start off, well, first, congratulations on your re-retirement, Bob. And thanks for all the help over the years. I guess
[Analyst] (Stifel): I guess I'll start off, well, first, congratulations on your re-retirement, Bob, and thanks for all the help over the years.
Nathan Jones: I guess I'll start off, well, first, congratulations on your re-retirement, Bob, and thanks for all the help over the years.
Speaker #4: Thank you, Nathan.
John Stauch: Thank you, Nathan.
John Stauch: Thank you, Nathan.
[Analyst] (Stifel): I guess I'll start off with a couple questions, couple questions around 80/20. Sometimes early in 80/20, you see some headwinds to revenue from, you know, from, from revenue that you're walking away from. You guys have targeted it a bit more as a growth tool. Can you talk about kind of the impact that you're expecting 80/20 to have in 2026 on organic growth? Is it a headwind? Is it a tailwind? Start there.
Nathan Jones: I guess I'll start off with a couple questions, couple questions around 80/20. Sometimes early in 80/20, you see some headwinds to revenue from, you know, from, from revenue that you're walking away from. You guys have targeted it a bit more as a growth tool. Can you talk about kind of the impact that you're expecting 80/20 to have in 2026 on organic growth? Is it a headwind? Is it a tailwind? Start there.
Speaker #6: I'll start off with a couple of questions around 80/20. Sometimes early in 80/20, you see some headwinds to revenue from revenue that you're walking away from.
Speaker #6: You guys have targeted it a bit more as a growth tool. Can you talk about the kind of impact that you're expecting 80/20 to have in 2026 on organic growth?
Speaker #6: a tailwind? Start Is it a headwind? Is it there.
Speaker #4: No headwind. All of those early, 'Let's allow businesses to walk away from quad four revenue,' are behind us. And what we have going forward is what should be a higher level of growing the 80s, which is the quad one and the top customers we have.
John Stauch: No headwind. All of those early, you know, let's allow businesses to walk away from Quad 4 revenue are behind us, and what we have going forward is what should be a higher level of growing the 80s, which is the Quad 1 and the top customers we have, and we would expect those relationships to bear fruit and drive revenue higher in the upcoming next several years.
John Stauch: No headwind. All of those early, you know, let's allow businesses to walk away from Quad 4 revenue are behind us, and what we have going forward is what should be a higher level of growing the 80s, which is the Quad 1 and the top customers we have, and we would expect those relationships to bear fruit and drive revenue higher in the upcoming next several years.
Speaker #4: And we would expect those relationships to bear fruit and drive revenue higher in the upcoming next several
Speaker #4: years.
Speaker #6: Thanks for that. I guess I'll ask a question
[Analyst] (Stifel): Thanks for that. I guess I'll, I'll ask a question on pricing. You did talk about seeing more inflation than expected in Q4, primarily, I think it was in the pool business. John, you've talked about the amount of price that's gone through in, in pool, especially over the last few years, and, maybe the difficulty of passing through any more price. Can you talk about how you've approached pricing for, you know, kind of normal 2026 price increases, whether you pulled back a little bit on that, whether you have any concerns about market acceptance of further price increases, or just how you guys are thinking about price this year? Thanks.
Nathan Jones: Thanks for that. I guess I'll, I'll ask a question on pricing. You did talk about seeing more inflation than expected in Q4, primarily, I think it was in the pool business. John, you've talked about the amount of price that's gone through in, in pool, especially over the last few years, and, maybe the difficulty of passing through any more price. Can you talk about how you've approached pricing for, you know, kind of normal 2026 price increases, whether you pulled back a little bit on that, whether you have any concerns about market acceptance of further price increases, or just how you guys are thinking about price this year? Thanks.
Speaker #6: On pricing, you did talk about seeing more inflation than expected in Q4, primarily—I think it was in the pool business. John, you've talked about the amount of price that's gone through in pool, especially over the last few years, and maybe the difficulty of passing through any more price.
Speaker #6: Can you talk about how you've approached pricing for kind of normal 2026 price increases, whether you pulled back a little bit on that, whether you have any concerns about market acceptance of further price increases, or just how you guys are thinking about price?
Speaker #6: this year? Thanks. Yeah.
John Stauch: Yeah. So just real quickly, Nathan, I just as a reminder, you know, all of us in the equipment side of pool have our own proprietary technologies. We buy from our unique motor suppliers, unique drive suppliers, and have our own relationships. So it's not like other industries where you have the same central buying pattern. So sometimes tariffs affect us differently, across, depending where our supply chains are. I think our goal is we're not trying to do more than offset costs with price. Now, we're not always able to get that perfectly, but that's our going-in general position, is that we have a right to recapture our inflationary pressures in the form of price.
John Stauch: Yeah. So just real quickly, Nathan, I just as a reminder, you know, all of us in the equipment side of pool have our own proprietary technologies. We buy from our unique motor suppliers, unique drive suppliers, and have our own relationships. So it's not like other industries where you have the same central buying pattern. So sometimes tariffs affect us differently, across, depending where our supply chains are. I think our goal is we're not trying to do more than offset costs with price. Now, we're not always able to get that perfectly, but that's our going-in general position, is that we have a right to recapture our inflationary pressures in the form of price.
Speaker #4: So, just real quickly, Nathan, I just—as a reminder—all of us in the equipment side of pool have our own proprietary technologies, suppliers, unique drive suppliers.
Speaker #4: And we buy from our unique motor and have our own relationships. So it's not like other industries where you have the same central buying pattern.
Speaker #4: So sometimes tariffs affect us differently depending on where our supply chains are. I think our goal is we're not trying to do more than offset costs with price.
Speaker #4: Now, we're not always able to get that perfectly, but that's our going-in general position, is that we have a right to recapture our inflationary pressures in the form of price.
Speaker #4: What we want to do, though, is work more cooperatively with our channel partners to incentivize the products we want to sell and to make sure that our dealers and our distributors are benefiting from the sale of products as well as we are.
John Stauch: What we wanna do, though, is work more, you know, cooperatively with our channel partners to incentivize the products we wanna sell and to make sure that the, our dealers and our distributors are benefiting from the sale of products as well as we are. And, and that's how we're thinking about 2026. We're all at our best if we're adding content to the pad from a volume perspective and not just adding price. And so where are the new innovations? You know, we've offered a few of those in our, our earnings call here today of things we're trying to drive, and we want the industry, to rely on us again to create that innovation pathway, and everybody benefits when we're adding content and adding capability to the homeowner. So that's what we're off doing, Nathan.
John Stauch: What we wanna do, though, is work more, you know, cooperatively with our channel partners to incentivize the products we wanna sell and to make sure that the, our dealers and our distributors are benefiting from the sale of products as well as we are. And, and that's how we're thinking about 2026. We're all at our best if we're adding content to the pad from a volume perspective and not just adding price. And so where are the new innovations? You know, we've offered a few of those in our, our earnings call here today of things we're trying to drive, and we want the industry, to rely on us again to create that innovation pathway, and everybody benefits when we're adding content and adding capability to the homeowner. So that's what we're off doing, Nathan.
Speaker #4: And that's how we're thinking about 2026. We're all at our best if we're adding content to the pad from a volume perspective, and not just adding price.
Speaker #4: And so where are the new innovations? We've offered a few of those in our earnings call here today of things we're trying to drive.
Speaker #4: And we want the industry to rely on us again to create that innovation pathway. And everybody benefits when we're adding content and adding capability to the homeowner.
Speaker #4: So that's what we're off doing, Nathan.
Speaker #6: Thanks, Jess.
[Analyst] (Stifel): Thanks, guys.
Nathan Jones: Thanks, guys.
Speaker #2: Our next question comes from Dean Dre with RBC Capital Markets. Please go ahead.
Operator: Our next question comes from Dean Dray with RBC Capital Markets. Please go ahead.
Operator: Our next question comes from Dean Dray with RBC Capital Markets. Please go ahead.
Nick Brazas: Thank you. Good morning, everyone.
Nick Brazas: Thank you. Good morning, everyone.
Speaker #7: Good morning,
Speaker #7: everyone.
Speaker #4: Morning, Thank you.
John Stauch: Morning, Dean.
John Stauch: Morning, Dean.
Speaker #7: Hey, just on the leadership, Dean. Announcements—just want to say welcome to Nick and Bob, and it was noted before, I think this is your second retirement, so we'll be watching for a potential third act.
Nick Brazas: Hey, just on the leadership announcements, just, wanna say welcome to Nick.
Nick Brazas: Hey, just on the leadership announcements, just, wanna say welcome to Nick.
[Analyst] (RBC Capital Markets): ... Bob, and it was noted before, I think this is your second retirement, so we'll be watching for a potential third act. And then I know he's not on the call, but Dr. Phil, just want to congratulate him for over two decades of thought leadership in the water space, and I wish him all the best.
Deane Dray: ... Bob, and it was noted before, I think this is your second retirement, so we'll be watching for a potential third act. And then I know he's not on the call, but Dr. Phil, just want to congratulate him for over two decades of thought leadership in the water space, and I wish him all the best.
Speaker #7: And then I know he's not on the call, but Dr. Phil, just want to congratulate him for over two decades of thought leadership in the water space.
Speaker #7: And I wish him all the best.
Speaker #7: Best. Thank you for that, Dean.
John Stauch: Thank you for that, Dean. He's been an absolute contributor to us. He's heading off to North Carolina, but, you know, we'll pass along those wishes, and, you know, his contribution is enormous here.
John Stauch: Thank you for that, Dean. He's been an absolute contributor to us. He's heading off to North Carolina, but, you know, we'll pass along those wishes, and, you know, his contribution is enormous here.
Speaker #4: He's been an absolute contributor to us. He's heading off to North Carolina, but we'll pass along those wishes. And his contributions are enormous here.
Speaker #7: Absolutely, appreciate that. And I know we've already touched on price and pool, but I would love to hear what the contribution from new increase.
[Analyst] (RBC Capital Markets): Absolutely. Appreciate that. Hey, I know we've already touched on price and pool, but I would love to hear what the new contribution from new products were part of that price increase. And you didn't mention any early buy. I don't think it was needed this time, but was there any contribution there?
Deane Dray: Absolutely. Appreciate that. Hey, I know we've already touched on price and pool, but I would love to hear what the new contribution from new products were part of that price increase. And you didn't mention any early buy. I don't think it was needed this time, but was there any contribution there?
Speaker #7: And you didn't mention any early buy. I don't think it was needed this time, but was there any contribution there?
Speaker #4: Yeah. So just as a reminder, Dean, early buy is really about us trying to balance our manufacturing over Q4 and Q1. And we take orders into Q4 at pre-next year's prices, which means we don't raise prices on those orders.
John Stauch: Yeah. So just as a reminder, Dean, our early buy is really about us trying to balance our manufacturing over Q4 and Q1. And, you know, we take orders into Q4 at pre next year's prices, which means we don't raise prices on those orders. Generally, the order intake on early buy was in line with previous years and, you know, reflecting their 2026 guide. There is NPI contribution in all of our businesses. It's generally harder to find when the volume in the industries is not a tailwind. But we're really excited about our new product introductions, and we shared a few of them, and we're hopeful to continue to update more of that at Investor Day. And we're excited about that early innovation aspects on all the industries that we serve.
John Stauch: Yeah. So just as a reminder, Dean, our early buy is really about us trying to balance our manufacturing over Q4 and Q1. And, you know, we take orders into Q4 at pre next year's prices, which means we don't raise prices on those orders. Generally, the order intake on early buy was in line with previous years and, you know, reflecting their 2026 guide. There is NPI contribution in all of our businesses. It's generally harder to find when the volume in the industries is not a tailwind. But we're really excited about our new product introductions, and we shared a few of them, and we're hopeful to continue to update more of that at Investor Day. And we're excited about that early innovation aspects on all the industries that we serve.
Speaker #4: Generally, the order intake on early buy was in line with previous years and reflects our 2026 guide. There is NPI contribution in all of our businesses.
Speaker #4: It's generally harder to find when the volume in the industry is not a tailwind. But we're really excited about our new product introductions, and we shared a few of them.
Speaker #4: And we're hopeful to continue to update more of that at Investor Day. And we're excited about those early innovation aspects in all the industries that we...
Speaker #4: serve. Good to hear.
[Analyst] (RBC Capital Markets): Good to hear. Just as a follow-up, you know, what struck me on the slide on the tariff, slide 18, you know, a year ago, we were all pretty nervous about what the fallout would be and what the reactions and how could you offset. When I look at this slide, the one that jumps off the page is how you offset all of the China impact. So just give us a sense of how you were able to work as a supply chain adjustments. But that zero on there, I know, came through a lot of hard work, but just some color there would be helpful.
Deane Dray: Good to hear. Just as a follow-up, you know, what struck me on the slide on the tariff, slide 18, you know, a year ago, we were all pretty nervous about what the fallout would be and what the reactions and how could you offset. When I look at this slide, the one that jumps off the page is how you offset all of the China impact. So just give us a sense of how you were able to work as a supply chain adjustments. But that zero on there, I know, came through a lot of hard work, but just some color there would be helpful.
Speaker #7: And just as a follow-up, what struck me on the slide on the tariffs, slide 18—a year ago, we were all pretty nervous about what the fallout would be, and what the reactions would be, and how you could offset.
Speaker #7: And when I look at this slide, the one that jumps off the page is how you offset all of the China impact. And so just give us a sense of how you were able to work as a supply chain adjustments.
Speaker #7: But that zero on there, I know, came through a lot of hard work, but just some color there would be helpful.
Speaker #4: And this is Bob. Just a clarification on that particular chart: so the first column represents the tariff impact in 2025—so, call it $70 million.
Robert Fishman: This is Bob. Just a clarification on that particular chart. So the first column represents the tariff impact in 2025, so call it $70 million. The 2026 column would be the incremental tariff impact in 2026. So think of $30 million more tariffs in 2026 than 2025.
Robert Fishman: This is Bob. Just a clarification on that particular chart. So the first column represents the tariff impact in 2025, so call it $70 million. The 2026 column would be the incremental tariff impact in 2026. So think of $30 million more tariffs in 2026 than 2025.
Speaker #4: The 2026 column would be the incremental tariff impact in 2026. So think of 30 million dollars more tariffs in 2026 than 2025. And what happened in China is there was some earlier headwinds at the beginning of the year on the higher tariffs, and they started to mitigate.
John Stauch: What happened in China is there was some earlier headwinds at the beginning of the year on the higher tariffs, and they started to mitigate in the back half of the year, and, and now they're basically flat year-over-year from a China perspective, Dean.
John Stauch: What happened in China is there was some earlier headwinds at the beginning of the year on the higher tariffs, and they started to mitigate in the back half of the year, and, and now they're basically flat year-over-year from a China perspective, Dean.
Speaker #4: And the back half of the year, and now they're basically flat year over year from a China perspective, Dean. Thank
Speaker #7: Good to hear. Thank you.
[Analyst] (RBC Capital Markets): Good to hear. Thank you.
Deane Dray: Good to hear. Thank you.
John Stauch: Thank you.
John Stauch: Thank you.
Speaker #2: Our next question comes from Brett Lindsey with Mizzou. Please go ahead.
Operator: Our next question comes from Brett Linzey with Mizuho. Please go ahead.
Operator: Our next question comes from Brett Linzey with Mizuho. Please go ahead.
Speaker #2: ahead. Hey, good
[Analyst] (Mizuho): Hey, good morning. Appreciate all the detail, and, yeah, congrats to Bob. Just to follow up on the transformation, so lots of moving pieces here. Expect to deliver the $70 million in 2026, and you're implementing this wave three. Maybe just talk about the phasing of that as you progress through 2026. It's a little bit more heavy lifting. I know one and two continue, but as you shift to that next wave.
Brett Linzey: Hey, good morning. Appreciate all the detail, and, yeah, congrats to Bob. Just to follow up on the transformation, so lots of moving pieces here. Expect to deliver the $70 million in 2026, and you're implementing this wave three. Maybe just talk about the phasing of that as you progress through 2026. It's a little bit more heavy lifting. I know one and two continue, but as you shift to that next wave.
Speaker #8: Morning. Appreciate all the detail. And yeah, congrats to Bob. Just a follow-up on the transformation. So, lots of moving pieces here. Expect to deliver the $70 million in '26.
Speaker #8: And you're implementing this—wave three. Maybe just talk about the phasing of that as you progress through 2026, as it's a little bit more heavy lifting?
Speaker #8: I know one and two continue, but as you shift to that next
Speaker #8: wave. Yeah.
John Stauch: Yeah. So a couple things. I mean, I think we're anticipating another $70 million of year-over-year transformation next year, which, if you're doing your math correctly, kicks off that three-year contribution that Bob promised in 2024, and certainly I am accountable for. And Nick and I are gonna update everybody at Investor Day of how we see transformation in 2027 and beyond. But I think that is a net number, as I want to remind everybody. So it's net of headwinds that we see. It's also net of investments. And some of our investments are gonna hit us earlier in the year, which means our overall contribution and transformation will be a little bit more skewed to the Q2, Q3, and Q4 range, but we fully expect to achieve it.
John Stauch: Yeah. So a couple things. I mean, I think we're anticipating another $70 million of year-over-year transformation next year, which, if you're doing your math correctly, kicks off that three-year contribution that Bob promised in 2024, and certainly I am accountable for. And Nick and I are gonna update everybody at Investor Day of how we see transformation in 2027 and beyond. But I think that is a net number, as I want to remind everybody. So it's net of headwinds that we see. It's also net of investments. And some of our investments are gonna hit us earlier in the year, which means our overall contribution and transformation will be a little bit more skewed to the Q2, Q3, and Q4 range, but we fully expect to achieve it.
Speaker #4: So, a couple things. I mean, I think we're anticipating another $70 million of year-over-year transformation next year, which, if you're doing your math correctly, ticks off that three-year contribution that Bob promised in 2024 and certainly I am accountable for.
Speaker #4: And Nick and I are going to update everybody at Investor Day on how we see transformation in '27 and beyond. But I think that is a net number, as I want to remind everybody.
Speaker #4: So, it's net of headwinds that we see. It's also net of investments. And some of our investments are going to hit us earlier in the year, which means our overall contribution and transformation will be a little bit more skewed to the Q2, Q3, and Q4 range.
Speaker #4: But we fully expect to achieve it. And most of that is already in the funnel and to be realized, versus having to be created.
John Stauch: And, most of that is already in the funnel and to be realized versus having to be created.
John Stauch: And, most of that is already in the funnel and to be realized versus having to be created.
Speaker #8: Great. Thanks. And then just a follow-up on slide 18. So the tariff impact and specifically the steel aluminum copper line. So 10 million in '25 grows to 14 in '26.
[Analyst] (Mizuho): Great, thanks. And then just to follow up on slide 18, so the tariff impact, and specifically the steel, aluminum, copper line. So $10 million in 2025 grows to $14 million in 2026. Does the $14 million include tariff plus some assumption for just general inflation of metals?
Brett Linzey: Great, thanks. And then just to follow up on slide 18, so the tariff impact, and specifically the steel, aluminum, copper line. So $10 million in 2025 grows to $14 million in 2026. Does the $14 million include tariff plus some assumption for just general inflation of metals?
Speaker #8: Does the 14 include tariff plus some assumption for just general inflation of metals?
Speaker #4: No, it's just the tariff impact. And if inflation continues to go forward, we kind of picture that, pick up that in the overall right-hand side where we mentioned metal inflation's running hot.
John Stauch: No, it's just the tariff impact, and if the inflation continues to go forward, we kind of pick up that in the overall right-hand side, where we mentioned, metal inflation is running hot. But what you see on the far left is just the tariff impact, and then the right would be, you know, just your normalized inflation. And we felt like we needed to call it out because I think as we work with our channel partners, we work with our customers, we're pricing both for tariffs, we're pricing for, you know, wage inflation, and we're pricing for just general inflation overall and trying to align that by industry.
John Stauch: No, it's just the tariff impact, and if the inflation continues to go forward, we kind of pick up that in the overall right-hand side, where we mentioned, metal inflation is running hot. But what you see on the far left is just the tariff impact, and then the right would be, you know, just your normalized inflation. And we felt like we needed to call it out because I think as we work with our channel partners, we work with our customers, we're pricing both for tariffs, we're pricing for, you know, wage inflation, and we're pricing for just general inflation overall and trying to align that by industry.
Speaker #4: But what you see on the far left is just the tariff impact. And then the right would be just your normalized inflation. And we felt like we needed to call it out because, I think as we work with our channel partners, we work with our customers, we're pricing both for tariffs, we're pricing for wage inflation, and we're pricing for just general inflation overall, and trying to align that by industry.
Speaker #8: Got it. Best of luck.
[Analyst] (Mizuho): Got it. Best of luck. Thanks.
Brett Linzey: Got it. Best of luck. Thanks.
Speaker #8: Thanks. Thank
Speaker #4: you. Our next question
John Stauch: Thank you.
John Stauch: Thank you.
Operator: Our next question comes from Sari Boroditsky with Jefferies. Please go ahead.
Operator: Our next question comes from Sari Boroditsky with Jefferies. Please go ahead.
Speaker #2: Comes from Sarie Boroditsky with Jefferies. Please go ahead.
Speaker #2: ahead. Hi, good morning.
[Analyst] (RBC Capital Markets): Hi, good morning. Appreciate you taking the questions. Just building on some of the previous guidance commentary, I believe the guidance assumes around $70 million of EBIT improvement, but I think you just said you had $70 million in cost outs in 2026, plus I think you have about $10 to 15 million from the Hydra deal. So can you just talk about any headwinds embedded in the guidance that are offsetting these cost savings and deal contribution? Thank you.
Deane Dray: Hi, good morning. Appreciate you taking the questions. Just building on some of the previous guidance commentary, I believe the guidance assumes around $70 million of EBIT improvement, but I think you just said you had $70 million in cost outs in 2026, plus I think you have about $10 to 15 million from the Hydra deal. So can you just talk about any headwinds embedded in the guidance that are offsetting these cost savings and deal contribution? Thank you.
Speaker #9: Appreciate you taking the questions. Just building on some of the previous guidance commentary, I believe the guidance assumes around $70 million of EBIT improvement, but I think you just said you had $70 million in cost outs in 2026, plus I think you have about $10 to $15 million from the hydro deal.
Speaker #9: So, could you just talk about any headwinds embedded in the guidance that are offsetting these cost savings and deal contribution? Thank you.
Speaker #4: Yeah, you may have this correct. I think we have an investment that we're planning to make on digital and innovation and strategic priorities that comes within Adrian's role.
John Stauch: ... Yeah, your math is correct. I think we have an investment that we're planning to make on digital and innovation and strategic priorities that it comes within Adrian's role. We've got some new product launches that we're generating and getting behind. We have modest volume contribution in this plan, and we have year-over-year price, generally equal cost. So your math is correct. A lot of moving pieces behind it, but the overall read on your view of our guide is accurate.
John Stauch: Yeah, your math is correct. I think we have an investment that we're planning to make on digital and innovation and strategic priorities that it comes within Adrian's role. We've got some new product launches that we're generating and getting behind. We have modest volume contribution in this plan, and we have year-over-year price, generally equal cost. So your math is correct. A lot of moving pieces behind it, but the overall read on your view of our guide is accurate.
Speaker #4: We've got some new product launches that we're generating and getting behind. We have modest volume, price generally equal, costs, contribution in this plan, and we have year-over-year. So your math is correct.
Speaker #4: A lot of moving pieces behind it, but the overall read on your view of our guide is accurate.
Speaker #9: Appreciate that. And then maybe a bigger picture question. I know you talked about the non-discretionary demand in pool being flat this year, but do you expect to see any benefit from the replacement of equipment that was put in during the COVID boom, as we're about five years out now?
[Analyst] (J.P. Morgan): Appreciate that. And then maybe a bigger picture question. I know you talked about the non-discretionary demand in pool being flattest this year, but do you expect to see any benefit from the replacement of equipment that was put in during the COVID boom as we're about five years out now? And then any benefit from the recent cold weather in the non-seasonal markets?
Steve Tusa: Appreciate that. And then maybe a bigger picture question. I know you talked about the non-discretionary demand in pool being flattest this year, but do you expect to see any benefit from the replacement of equipment that was put in during the COVID boom as we're about five years out now? And then any benefit from the recent cold weather in the non-seasonal markets?
Speaker #9: And then, any benefit from the recent cold weather and the non-seasonal markets?
Speaker #4: Yeah, hard to track both. I mean, both are out there as incremental demand that we think are tailwinds for us. Eventually, to time it exactly and assume what's going to happen each year is hard.
John Stauch: Yeah, hard to track both. I mean, both are out there as incremental demand that we think are tailwinds for us eventually. To time it exactly and assume what's gonna happen each year is hard. You know, the weather is a timing issue. You know, the weather sometimes delays overall shipments and sales, and then the weather that we see, and especially when it freezes in the northern part of warm states, generally means breakage of product and a replacement cycle for that product. So all of that is probably properly captured in the guide right now, and hard to see upside at the moment.
John Stauch: Yeah, hard to track both. I mean, both are out there as incremental demand that we think are tailwinds for us eventually. To time it exactly and assume what's gonna happen each year is hard. You know, the weather is a timing issue. You know, the weather sometimes delays overall shipments and sales, and then the weather that we see, and especially when it freezes in the northern part of warm states, generally means breakage of product and a replacement cycle for that product. So all of that is probably properly captured in the guide right now, and hard to see upside at the moment.
Speaker #4: The weather is a timing issue. Sometimes the weather delays overall shipments and sales, and then the weather that we see—especially when it freezes in the northern part of Warren states—generally means breakage of product and a replacement cycle for that product.
Speaker #4: So all of that is probably captured in the guide right now, and hard to see upside at the moment.
Speaker #9: Appreciate the color. Thank you.
[Analyst] (J.P. Morgan): Appreciate the color. Thank you.
Steve Tusa: Appreciate the color. Thank you.
John Stauch: Thanks.
John Stauch: Thanks.
Speaker #2: Our next question comes, thanks, from Andrew Krill with Deutsche Bank. Please go ahead.
Operator: Our next question comes from Andrew Krill with Deutsche, Deutsche Bank. Please go ahead.
Operator: Our next question comes from Andrew Krill with Deutsche, Deutsche Bank. Please go ahead.
[Analyst] (Deutsche Bank): Hi. Hi, thanks. Good morning, everyone. So John, in some of your recent presentations, you've started to cite the rule of forty more consistently. It seems like pool clearly checks that box. Maybe the other two segments are a little further away from there, at least right now. I guess my question, any, like, changing views on potential portfolio reshaping to achieve that?
Andrew Krill: Hi. Hi, thanks. Good morning, everyone. So John, in some of your recent presentations, you've started to cite the rule of forty more consistently. It seems like pool clearly checks that box. Maybe the other two segments are a little further away from there, at least right now. I guess my question, any, like, changing views on potential portfolio reshaping to achieve that?
Speaker #10: Hi. Hi, John, in some of your recent presentations, you started to cite the rule of 40 more consistently. It seems like Pool clearly checks that box.
Speaker #10: Maybe the other two segments are a little further away from there, at least right now. I guess the question, any changing views on potential portfolio reshaping to achieve that?
Speaker #4: Yeah, I mean, I like the businesses we have. I mean, obviously, some are in a higher-performing space than others. I mean, I think what we'll do at Investor Day is I want to give you a look at the four businesses that kind of fall underneath the segments today.
John Stauch: Yeah, I don't... I mean, I like the businesses we have. I mean, obviously, some are in a higher performing space than others. I mean, I think what we'll do in Investor Day is I wanna give you a look at the four businesses that kind of fall underneath the segments today, share with you where we think the margin opportunities are. Certainly remind everybody that our margin goals are a combination of growing high margin businesses faster. That would be our food service businesses and our pool businesses, and making sure that our underperforming businesses, or the businesses that aren't yet at industry margins, are leaning into both some growth contribution, but really going after their operational efficiencies, and that's how we get to a Pentair number.
John Stauch: Yeah, I don't... I mean, I like the businesses we have. I mean, obviously, some are in a higher performing space than others. I mean, I think what we'll do in Investor Day is I wanna give you a look at the four businesses that kind of fall underneath the segments today, share with you where we think the margin opportunities are. Certainly remind everybody that our margin goals are a combination of growing high margin businesses faster. That would be our food service businesses and our pool businesses, and making sure that our underperforming businesses, or the businesses that aren't yet at industry margins, are leaning into both some growth contribution, but really going after their operational efficiencies, and that's how we get to a Pentair number.
Speaker #4: Share with you where we think the margin opportunities are. Certainly remind everybody that our margin goals are a combination of growing high-margin businesses faster.
Speaker #4: That would be our food service businesses and our pool businesses. And making sure that our underperforming businesses, or the businesses that aren't yet at industry margins, are leaning into both some growth contribution but really going after their operational efficiencies.
Speaker #4: And that's how we get to a Pentair number. Right now, I think everybody's got the ability to create value, which is growing EBITDA and taking advantage of our multiple times EBITDA from a value creation standpoint.
John Stauch: Right now, I think everybody's got the ability to create future value, which is growing EBITDA and, you know, taking advantage of our multiple times EBITDA from a value creation standpoint. We're always looking, wanting to tuck in or add and be more relevant to the channels we serve, as well as find adjacencies that might be growing faster than the markets we're in. And that's what our M&A funnel and profile looks like today.
John Stauch: Right now, I think everybody's got the ability to create future value, which is growing EBITDA and, you know, taking advantage of our multiple times EBITDA from a value creation standpoint. We're always looking, wanting to tuck in or add and be more relevant to the channels we serve, as well as find adjacencies that might be growing faster than the markets we're in. And that's what our M&A funnel and profile looks like today.
Speaker #4: We're always looking, one, into what to tuck in or add, and be more relevant to the channels we serve, as well as find adjacencies that might be growing faster than the markets we're in.
Speaker #4: And that's what our M&A funnel and profile looks like.
Speaker #4: today. Great.
[Analyst] (Deutsche Bank): Great. That's very helpful. And then, I think building a little on Sari's question, just last year, I think you were pretty explicit. There was a contingency in the guide, mostly related to tariffs. So this year, have you approached the guide similarly, or do you think, you know, the certainty is a little bit better this year, and you don't need as much of a cushion? Or would it be similar? How do you any way you can quantify that for us? Thanks.
Andrew Krill: Great. That's very helpful. And then, I think building a little on Sari's question, just last year, I think you were pretty explicit. There was a contingency in the guide, mostly related to tariffs. So this year, have you approached the guide similarly, or do you think, you know, the certainty is a little bit better this year, and you don't need as much of a cushion? Or would it be similar? How do you any way you can quantify that for us? Thanks.
Speaker #10: That's very helpful. And then, kind of building a little on Sarie's question—just last year, and you were pretty explicit—there was contingency in the guide, mostly related to tariffs.
Speaker #10: So this year, have you approached the guide similarly, or do you think the certainty is a little bit better this year, and you don't need as much of a cushion?
Speaker #10: Or would it be similar? How do you—any way you can quantify that for us? Thanks.
Speaker #4: Yeah, I'll kick it off and I'll let Nick add a word or two. As he's going to be leaning in as the accountable party to all of you.
John Stauch: Yeah. I'll kick it off, and I'll let Nick add a word or two, as he's gonna be leaning in as the accountable party to all of you. Of course, I am as well. I think what we've done is allowed for our view of the markets and the residential view in the guide versus what we think it'll be to be a little contingency as we head into the back half of the year. We want a more balanced contribution, which is what you should be able to calculate here, that all 3 segments generally contributing equally.
John Stauch: Yeah. I'll kick it off, and I'll let Nick add a word or two, as he's gonna be leaning in as the accountable party to all of you. Of course, I am as well. I think what we've done is allowed for our view of the markets and the residential view in the guide versus what we think it'll be to be a little contingency as we head into the back half of the year. We want a more balanced contribution, which is what you should be able to calculate here, that all 3 segments generally contributing equally.
Speaker #4: Of course, I am as well. I think what we've done is allowed for our view of the markets and the residential view in the guide, versus what we think it'll be, to be a little contingency as we head into the back half of the year.
Speaker #4: We want a more balanced contribution, which is what you should be able to calculate here—that all three segments, generally speaking, are equally contributing. That's important to me.
John Stauch: That's important to me because I wanna make sure we continue to invest in pool over the next couple of years, while we're also waiting for that recovery to occur, which means stepping up the contribution on transformation of the other two segments and making sure that we've got growth contributions across our businesses. Nick, do you wanna adjust the contingency at all?
John Stauch: That's important to me because I wanna make sure we continue to invest in pool over the next couple of years, while we're also waiting for that recovery to occur, which means stepping up the contribution on transformation of the other two segments and making sure that we've got growth contributions across our businesses. Nick, do you wanna adjust the contingency at all?
Speaker #4: Because I want to make sure we continue to invest in pool over the next couple of years, while we're also waiting for that recovery to occur.
Speaker #4: Which means stepping up the contribution on transformation of the other two segments, and making sure that we've got growth contributions across our businesses. If you want to address the contingency at all.
Speaker #10: Yeah, I just mentioned we think it's a very pragmatic guide, as we mentioned earlier. There's no residential recovery in our guide. And the transformation number is net of investments.
Nick Brazas: Yeah, I'll just mention, you know, we think it's a very pragmatic guide. As we mentioned earlier, there's no residential recovery in our guide, and the transformation number is net of investments. We are investing in many of these businesses. We'll talk to you more about this at Investor Day, how we have differentiated investment in a couple different pieces of our portfolio, and we expect a balanced contribution across the existing portfolio in our 2026 guide.
Nick Brazas: Yeah, I'll just mention, you know, we think it's a very pragmatic guide. As we mentioned earlier, there's no residential recovery in our guide, and the transformation number is net of investments. We are investing in many of these businesses. We'll talk to you more about this at Investor Day, how we have differentiated investment in a couple different pieces of our portfolio, and we expect a balanced contribution across the existing portfolio in our 2026 guide.
Speaker #10: We are investing in many of these businesses. We'll talk to you more about this at Investor Day, how we're having differentiated investment in a couple of different pieces of our portfolio.
Speaker #10: And we expect a balanced contribution across the existing portfolio in our 2026 guide. Thank you.
[Analyst] (Deutsche Bank): Thank you.
Andrew Krill: Thank you.
Speaker #4: Thank
Speaker #4: you.
John Stauch: Thank you.
John Stauch: Thank you.
Speaker #2: Our next question comes from Steve.
Operator: Our next question comes from Steve Tusa with J.P. Morgan. Please go ahead.
Operator: Our next question comes from Steve Tusa with J.P. Morgan. Please go ahead.
Speaker #2: Tusa with JP Morgan. Please go ahead.
Speaker #2: ahead. Hey,
[Analyst] (J.P. Morgan): Hey, guys. Good morning. How are you?
Steve Tusa: Hey, guys. Good morning. How are you?
Speaker #4: Good. Same to you. Good morning,
John Stauch: Good. How are you?
John Stauch: Good. How are you?
Nick Brazas: Morning, Steve.
Nick Brazas: Morning, Steve.
Speaker #4: Steve. The
[Analyst] (J.P. Morgan): The pool pricing, you guys had a great Q4, but I guess you're guiding. I'm not sure I heard it correctly, but like a low single-digit type of trend line into, into next year. Anything you're seeing on, like, the competitive front that's influencing that? It just seems a little bit light relative to how you're exiting the year.
Steve Tusa: The pool pricing, you guys had a great Q4, but I guess you're guiding. I'm not sure I heard it correctly, but like a low single-digit type of trend line into, into next year. Anything you're seeing on, like, the competitive front that's influencing that? It just seems a little bit light relative to how you're exiting the year.
Speaker #11: Pool pricing—you guys had a great fourth quarter, but I guess your guiding, I'm not sure I heard it correctly, but like a low single-digit type of trend line into next year.
Speaker #11: Anything you're seeing on the competitive front that's influencing that? That just seems a little bit light relative to how—
Speaker #11: you're exiting the year? Yeah,
John Stauch: Yeah, fair point, Steve. You'll see a fairly sizable year-over-year in Q1, and then that, that number starts to level off as we get into more year-over-year. Inflationary was equal and-- or generally the same in 25 as it was 26. So think of a higher number starting off the year and, and it moderating as the year goes on. It's still double the normal pricing that we generally expect to have, but less than the 25 contribution by a couple points.
John Stauch: Yeah, fair point, Steve. You'll see a fairly sizable year-over-year in Q1, and then that, that number starts to level off as we get into more year-over-year. Inflationary was equal and-- or generally the same in 25 as it was 26. So think of a higher number starting off the year and, and it moderating as the year goes on. It's still double the normal pricing that we generally expect to have, but less than the 25 contribution by a couple points.
Speaker #4: fair point, Steve. You'll see a fairly sizable year-over-year in Q1. And then that number starts to level off as we get into more year-over-year inflationary was equal and generally the same in '25 as it was '26.
Speaker #4: So, think of a higher number starting off the year and it moderating as the year goes on. It's still double the normal pricing that we generally expect to have, but less than the 25 contribution by a couple of points.
Speaker #11: But I mean, are you seeing anything? Is the consumer given where they are and where the market is, is the consumer looking at or the dealer looking at cheaper products or any kind of mixed dynamics there?
[Analyst] (J.P. Morgan): ... But I mean, are you seeing anything? Is the consumer, given where they are and where the market is, is the consumer, you know, looking at, or the, or the dealer looking at, you know, cheaper products or any kind of, like, mixed dynamics there?
Steve Tusa: But I mean, are you seeing anything? Is the consumer, given where they are and where the market is, is the consumer, you know, looking at, or the, or the dealer looking at, you know, cheaper products or any kind of, like, mixed dynamics there?
Speaker #4: Not in a meaningful way, Steve, but it's definitely front and center of my mind. I think we can't just keep adding price and enforcing consumers to pay more money.
John Stauch: Not in a meaningful way, Steve, but it's definitely in front and center of my mind. I think we can't just keep adding price and forcing consumers to pay more money. I think we've got to make sure we're working with our channel partners, and that includes the dealers and distributors, to giving value and making sure that value is realized. And so we are raising price to cover inflation, but we're not moving price beyond what we need to cover inflation, if that answers your question.
John Stauch: Not in a meaningful way, Steve, but it's definitely in front and center of my mind. I think we can't just keep adding price and forcing consumers to pay more money. I think we've got to make sure we're working with our channel partners, and that includes the dealers and distributors, to giving value and making sure that value is realized. And so we are raising price to cover inflation, but we're not moving price beyond what we need to cover inflation, if that answers your question.
Speaker #4: I think we've got to make sure we're working with our channel partners, and that includes the dealers and distributors, to give value and make sure that value is realized.
Speaker #4: And so we are raising price to cover inflation, but we're not moving price beyond what we need to cover inflation. If that answers.
Speaker #4: your question. Nope.
[Analyst] (J.P. Morgan): Oh, okay. Yeah, sorry, so just for the total company, it's like 1.5 points of price, something like that, or maybe two points of price for the total company in the bridge?
Steve Tusa: Oh, okay. Yeah, sorry, so just for the total company, it's like 1.5 points of price, something like that, or maybe two points of price for the total company in the bridge?
Speaker #11: Okay. And yeah, sorry. So just for the total company, it's like a point and a half of price, something like that, or maybe two points of price for the total company in the—
Speaker #11: bridge? Yes, that's about right,
John Stauch: Yes, that's about right, Steve. And gonna be slightly more than that in pool, because pool has more of the inflationary pressure through the metals and the copper and also the tariffs.
John Stauch: Yes, that's about right, Steve. And gonna be slightly more than that in pool, because pool has more of the inflationary pressure through the metals and the copper and also the tariffs.
Speaker #4: Steve. And it's going to be slightly more than that in Pool because Pool has more of the inflationary pressure through the metals and the copper, and also the tariffs.
Speaker #11: Okay.
[Analyst] (J.P. Morgan): Okay, awesome. Thanks a lot.
Steve Tusa: Okay, awesome. Thanks a lot.
Speaker #11: Awesome. Thanks a lot. Thank
Speaker #4: you. Our next question comes
John Stauch: Thank you.
John Stauch: Thank you.
Operator: Our next question comes from Nigel Coe with Wolfe Research. Please go ahead.
Operator: Our next question comes from Nigel Coe with Wolfe Research. Please go ahead.
Speaker #2: from Nigel Ko with Wolf
Speaker #2: Research. Please go ahead. Oh,
[Analyst] (Wolfe Research): Oh, yeah, thanks. Good morning. Just wanted to follow up on that last point. You know, the 2 points or so of price, is that enough to cover the inflation? And obviously, Pool is stronger, so I'm assuming that the answer is yes. But thinking about Water Solutions, you know, you do have a lot of raw mats, especially in the ice business. So just wondering if we're covering inflation across the portfolio.
Nigel Coe: Oh, yeah, thanks. Good morning. Just wanted to follow up on that last point. You know, the 2 points or so of price, is that enough to cover the inflation? And obviously, Pool is stronger, so I'm assuming that the answer is yes. But thinking about Water Solutions, you know, you do have a lot of raw mats, especially in the ice business. So just wondering if we're covering inflation across the portfolio.
Speaker #11: Yeah, thanks. Good morning. Just wanted to follow up on that last point. The two points or so of price—is that enough to cover the inflation?
Speaker #11: And obviously, Pool is stronger, so I'm assuming that the answer is yes. But thinking about Water Solutions, you do have a lot of raw materials, especially in the ice business.
Speaker #11: So just wondering if we're
Speaker #11: Covering inflation across the portfolio. Right.
Speaker #4: Now, with what we've shared, we are covering inflationary pressures. I mean, obviously, if things change and there's more inflation, and there's more tariffs, we would need to go back and work with the channel to incrementally price to reflect what those new tariff impacts would be.
John Stauch: Right now, with what we've shared, we are covering inflationary pressures. I mean, obviously, if things change and there's more inflation and there's more tariffs, we would need to go back and work with the channel to incrementally price to reflect what those new tariff impacts would be.
John Stauch: Right now, with what we've shared, we are covering inflationary pressures. I mean, obviously, if things change and there's more inflation and there's more tariffs, we would need to go back and work with the channel to incrementally price to reflect what those new tariff impacts would be.
Speaker #4: be. And just
[Analyst] (Wolfe Research): Now, just to be clear, John, is that covering a price, or is some of the productivity, $70 million covering that as well? Because, you know, if we just layer in $70 million on top of your revenue guides, you know, it- Y- EPS guide does look quite conservative.
Nigel Coe: Now, just to be clear, John, is that covering a price, or is some of the productivity, $70 million covering that as well? Because, you know, if we just layer in $70 million on top of your revenue guides, you know, it- Y- EPS guide does look quite conservative.
Speaker #11: To be clear, John, is that covering a price, or is some of the productivity—$70 million—covering that as well? Because if we just layer in $70 million on top of your revenue guide, the UPS guide does look quite—
Speaker #11: conservative. Right now, our
John Stauch: Right now, our pricing assumptions for Pentair, total Pentair, are roughly a couple points, which would mean that that's roughly an $80 million price contribution that's offsetting roughly $80 million in overall company expected inflation.
John Stauch: Right now, our pricing assumptions for Pentair, total Pentair, are roughly a couple points, which would mean that that's roughly an $80 million price contribution that's offsetting roughly $80 million in overall company expected inflation.
Speaker #4: pricing assumptions for PENTAIR, total PENTAIR, are roughly a couple of points, which would mean that that's roughly an $80 million price contribution that's offsetting roughly $80 million in overall company expected inflation.
Speaker #11: Okay, that's very clear. And then just a quick one on FX. I think it's $9 million a pinch in Q4; $5 million for Water Solutions.
[Analyst] (Wolfe Research): Okay, that's very clear. And then, just a quick one on FX. I think it's $9 million a pinch, in Q4, $5 million for Water Solutions. Just wondering what that was, and is that just a Q4 impact, or do we see some of that coming through in 2026 as well?
Nigel Coe: Okay, that's very clear. And then, just a quick one on FX. I think it's $9 million a pinch, in Q4, $5 million for Water Solutions. Just wondering what that was, and is that just a Q4 impact, or do we see some of that coming through in 2026 as well?
Speaker #11: Just wondering what that was. And is that just a Q4 impact, or do we see some of that coming through in 2026 as well?
Speaker #11: Just wondering what that was. And is that just a Q4 impact, or do we see some of that coming through in 2026 as well?
Speaker #4: The question again was on FX at the company level or at the—
John Stauch: Question again was on FX at the company level or at the Water Solutions?
John Stauch: Question again was on FX at the company level or at the Water Solutions?
Speaker #4: water solutions? No,
Speaker #11: FX. $9 million for PENTAIR total, $5 million for water solutions. You had positive sales contribution, but negative EBITs. Just wondering what that was. And is that a factor in
[Analyst] (Wolfe Research): No, FX, it's got $9 million for Pentair total, $5 million for Water Solutions. Yeah, you had positive sales contribution, but negative EBITs. Just wondering what that was, and is that a factor in 2026?
Nigel Coe: No, FX, it's got $9 million for Pentair total, $5 million for Water Solutions. Yeah, you had positive sales contribution, but negative EBITs. Just wondering what that was, and is that a factor in 2026?
Speaker #11: 2026? No.
John Stauch: No, I mean, we're basically set, 2026, you know, at ending point. We always set the guide and plan at kind of the ending point of where we are today. There's a small tailwind for FX in next year's guide, but it's not really a meaningful number.
John Stauch: No, I mean, we're basically set, 2026, you know, at ending point. We always set the guide and plan at kind of the ending point of where we are today. There's a small tailwind for FX in next year's guide, but it's not really a meaningful number.
Speaker #4: We set 2026 at any point. We always set the guide and plan kind of at the ending point of where we are today. There's a small tailwind for FX in next year's guide, but it's not really a meaningful number.
Speaker #4: mean, we're basically
[Analyst] (Wolfe Research): Yeah, it was actually-
Nigel Coe: Yeah, it was actually-
Speaker #11: Yeah.
Speaker #11: It was actually Yeah. EBIT.
John Stauch: Yeah. And in particular, Water Solutions, you know, headwind in income related to, you know, a cash build in certain countries, and as the local currencies strengthened, we had a negative impact in the quarter. But we have strategies in place to offset that risk going forward.
John Stauch: Yeah. And in particular, Water Solutions, you know, headwind in income related to, you know, a cash build in certain countries, and as the local currencies strengthened, we had a negative impact in the quarter. But we have strategies in place to offset that risk going forward.
Speaker #4: Yeah. The particular water solutions, headwind in income related to a cash build in certain countries, and as the local currencies strengthened, we had a negative impact in the quarter.
Speaker #4: But we have strategies in place to offset that risk going
Speaker #4: forward. Okay.
[Analyst] (Wolfe Research): Okay, thanks a lot and good luck.
Nigel Coe: Okay, thanks a lot and good luck.
Speaker #11: Thanks, Bob. And good luck.
Speaker #4: Thank you.
John Stauch: Thank you.
John Stauch: Thank you.
Speaker #2: Our next question comes from Brian Lee with Goldman Sachs. Please go ahead.
Operator: Our next question comes from Brian Lee with Goldman Sachs. Please go ahead.
Operator: Our next question comes from Brian Lee with Goldman Sachs. Please go ahead.
Operator: Hey, hey. Squeezing me in. Maybe just a couple here. On M&A, I guess you guys have been pretty active over the last couple of years. You know, given where valuations are, kind of how would you characterize how attractive the pipeline of opportunities is today versus, you know, maybe last year?
Operator: Hey, hey. Squeezing me in. Maybe just a couple here. On M&A, I guess you guys have been pretty active over the last couple of years. You know, given where valuations are, kind of how would you characterize how attractive the pipeline of opportunities is today versus, you know, maybe last year?
Speaker #12: Squeezing me in. Maybe just a couple here. On M&A, I guess you guys have been pretty active over the last couple of years. Given where valuations are, how would you characterize how attractive the pipeline of opportunities is today versus maybe last year?
Speaker #12: year? There's a
John Stauch: There's a lot, so let's say quantity of opportunities are certainly emerging. I think what we're spending time on is understanding the quality, and we're going to do deals that we think are bolt-on or tuck in nicely to our current strategies. That is our first priority. If we were to step into slight adjacencies, we've got to be really comfortable that we understand the dynamics of the businesses and make sure that the multiples we're paying would create returns for shareholders, which is why we've been, you know, doing a little bit of buyback along with the dividend and waiting for our opportunity on the right M&A to come along.
John Stauch: There's a lot, so let's say quantity of opportunities are certainly emerging. I think what we're spending time on is understanding the quality, and we're going to do deals that we think are bolt-on or tuck in nicely to our current strategies. That is our first priority. If we were to step into slight adjacencies, we've got to be really comfortable that we understand the dynamics of the businesses and make sure that the multiples we're paying would create returns for shareholders, which is why we've been, you know, doing a little bit of buyback along with the dividend and waiting for our opportunity on the right M&A to come along.
Speaker #4: A lot. So let's say quantity of opportunities are certainly emerging. I think what we're spending time on is understanding the quality, and we're going to do deals that we think are bolt-on or tuck in nicely to our current strategies—that is our first priority.
Speaker #4: If we were to step into slight adjacencies, we got to be really comfortable that we understand the dynamics of the businesses and make sure that the multiples we're paying would create returns for shareholders, which is why we've been doing a little bit of buyback along with the dividend and waiting for our opportunity on the right M&A to come along.
Speaker #12: Yeah, and then maybe just going back to the resegmentation—I’m not sure if you covered this—but can you kind of level-set us on the revenue and margin profile of the Residential Flow business, and then maybe the timeline to realize some of these synergies from the resegmentation?
Operator: Yeah. And then maybe just going back to the resegmentation. I'm not sure if you covered this, but can you kind of level set us on the revenue and margin profile of the residential flow business, and then maybe the timeline to realize some of the synergies from the resegmentation? Is this pretty immediate or, you know, more of an effort that impacts beyond the 2026 outlook? Thank you, guys.
Operator: Yeah. And then maybe just going back to the resegmentation. I'm not sure if you covered this, but can you kind of level set us on the revenue and margin profile of the residential flow business, and then maybe the timeline to realize some of the synergies from the resegmentation? Is this pretty immediate or, you know, more of an effort that impacts beyond the 2026 outlook? Thank you, guys.
Speaker #12: Is this pretty immediate, or more of an effort that impacts beyond the '26 outlook?
Speaker #12: Thank you, guys. Yeah.
John Stauch: Yeah. So we did put the actual R&I business financials into the deck for 2023, 2024, and 2025. Going forward, they'll be in the 2026 actuals, so you can see what that margin profile looks like in the back. Combined, you know, the residential piece of Water Solutions was on the lower end of the average, right? So if you've got a couple close to 30% margin businesses, you could get to a low... You're definitely in the teens for the residential component. So when you put those two businesses together, they're on the lower side of the contribution for overall Pentair, which means they have the most amount of future ROS potential.
John Stauch: Yeah. So we did put the actual R&I business financials into the deck for 2023, 2024, and 2025. Going forward, they'll be in the 2026 actuals, so you can see what that margin profile looks like in the back. Combined, you know, the residential piece of Water Solutions was on the lower end of the average, right? So if you've got a couple close to 30% margin businesses, you could get to a low... You're definitely in the teens for the residential component. So when you put those two businesses together, they're on the lower side of the contribution for overall Pentair, which means they have the most amount of future ROS potential.
Speaker #4: So, we did put the actual R&I business financials into the deck for '23, '24, and '25 going forward. They'll be in the '26 actuals so you can see what that margin profile looks like in the back.
Speaker #4: Combined, the residential piece of Water Solutions was on the lower end of the average, right? So if you've got a couple of close-to-30% margin businesses, you could get to a low—you’re definitely in the teens for the residential component.
Speaker #4: So, in that 20, you put those two businesses together—they're on the lower side of the contribution for overall Pentair, which means they have the most amount of future ROS potential.
Speaker #4: So, in that 20, you put those two businesses together, they're on the lower side of the contribution for overall Pentair, which means they have the most amount of future ROS potential.
Speaker #12: Okay, makes sense. Thank you, guys.
Nick Brazas: ... Okay, makes sense. Thank you, guys.
Nick Brazas: ... Okay, makes sense. Thank you, guys.
Speaker #2: Our next question comes from Julian Mitchell with Barclays. Please go ahead.
Operator: Our next question comes from Julian Mitchell with Barclays. Please go ahead.
Operator: Our next question comes from Julian Mitchell with Barclays. Please go ahead.
Speaker #11: Hi, good morning. And thank you, Bob, for all the help the last five years. Maybe just—my question was to try and focus on the organic volume guide through the year, because based on the previous comment, it sounds like price starts out a big tailwind in Q1 and then fades quite dramatically as the year goes on.
[Analyst] (Barclays): Hi, good morning, and thank you, Bob, for all the help the last 5 years. Maybe just my question was to try and focus on the organic volume guide through the year, 'cause based on the previous comment, it sounds like price starts out a big tailwind in Q1, and then fades quite dramatically as the year goes on. So it implies that volumes, conversely, start the year down decently and then have a nice bounce in the back half. Maybe help us understand what's driving that volume assumption. Is there just some basic elasticity element here, something around comps? Maybe flesh out the confidence in the volume reversal to pick up in the back half.
Julian Mitchell: Hi, good morning, and thank you, Bob, for all the help the last 5 years. Maybe just my question was to try and focus on the organic volume guide through the year, 'cause based on the previous comment, it sounds like price starts out a big tailwind in Q1, and then fades quite dramatically as the year goes on. So it implies that volumes, conversely, start the year down decently and then have a nice bounce in the back half. Maybe help us understand what's driving that volume assumption. Is there just some basic elasticity element here, something around comps? Maybe flesh out the confidence in the volume reversal to pick up in the back half.
Speaker #11: So it implies that volumes, conversely, start the year down decently and then have a nice bounce in the back half. Maybe help us understand what's driving that volume assumption.
Speaker #11: Is there just some basic elasticity element here, something around comps? Maybe flesh out the confidence in the volume reversal to pick up in the back.
Speaker #11: half. Yeah.
Nick Brazas: Yeah, you're spot on with the comps and the comment around some decremental volume in the first part of the year, with incremental volume in the back half of the year, which leads to the flat full year volume. There's been a series of investments in several of our businesses to help drive some of that incremental growth in the back half of the year, and we're, we think that's gonna start to read out in pool in Q2, and then in our commercial water businesses in Q2 and through the rest of the year. So spot on on the growth in the back half for volume versus the first half.
Nick Brazas: Yeah, you're spot on with the comps and the comment around some decremental volume in the first part of the year, with incremental volume in the back half of the year, which leads to the flat full year volume. There's been a series of investments in several of our businesses to help drive some of that incremental growth in the back half of the year, and we're, we think that's gonna start to read out in pool in Q2, and then in our commercial water businesses in Q2 and through the rest of the year. So spot on on the growth in the back half for volume versus the first half.
Speaker #4: You're spot on with the comps and the comment around some decremental volume in the first part of the year, with incremental volume in the back half of the year, which leads to the flat full-year volume.
Speaker #4: There’s been a series of investments in several of our businesses to help drive some of that incremental growth in the back half of the year.
Speaker #4: And we think that's going to start to read out in pool in Q2. And then in our commercial water businesses in Q2 and through the rest of the year.
Speaker #4: So spot on on the growth in the back half for volume versus the first half.
Speaker #3: Yeah, I'll just add that I think if you take our Q1 guide, it's completely in line with where we've historically delivered the percentage of EPS and the percentage of revenue.
John Stauch: Yeah, I'd just add that, you know, I think if you take our Q1 guide, it's completely in line with where we've historically delivered the percentage of EPS, the percentage of revenue. So we believe it aligns nicely with the overall, you know, guide for the year. I think the difference in the 26 guide versus the two years prior is, I think the industry as a whole was optimistic on residential recovery, and generally was buying in Q1 to take advantage of what the Q2 demand would be for the residential recovery. We don't have that plan this year, and therefore, we think we're gonna take and have a more year-over-year in Q1 that's normal, meaning we're gonna be slightly upside down in volume in Q1 because of that year-over-year dynamic.
John Stauch: Yeah, I'd just add that, you know, I think if you take our Q1 guide, it's completely in line with where we've historically delivered the percentage of EPS, the percentage of revenue. So we believe it aligns nicely with the overall, you know, guide for the year. I think the difference in the 26 guide versus the two years prior is, I think the industry as a whole was optimistic on residential recovery, and generally was buying in Q1 to take advantage of what the Q2 demand would be for the residential recovery. We don't have that plan this year, and therefore, we think we're gonna take and have a more year-over-year in Q1 that's normal, meaning we're gonna be slightly upside down in volume in Q1 because of that year-over-year dynamic.
Speaker #3: So we believe it aligns nicely with the overall guide for the year. I think the difference in the '26 guide versus the two years prior is, I think the industry overall was optimistic on residential recovery and generally was buying in in Q1 to take advantage of what the Q2 demand would be for the residential recovery.
Speaker #3: And we don't have that plan this year. And therefore, we think we're going to take and have a more year-over-year in Q1 that's normal.
Speaker #3: Meaning we're going to be slightly upside down in volume in Q1 because of that year-over-year dynamic, but then we get easier comps as we work through the rest of the year.
John Stauch: But then we get easier compares as we work through the rest of the year, because as that... You know, again, we're expecting the next year to recover in the industry, and it's not recovering, then the buy-in from the inventory side starts to be muted in that back half of the year, and this year will be in a positive scenario regarding that with this guide.
John Stauch: But then we get easier compares as we work through the rest of the year, because as that... You know, again, we're expecting the next year to recover in the industry, and it's not recovering, then the buy-in from the inventory side starts to be muted in that back half of the year, and this year will be in a positive scenario regarding that with this guide.
Speaker #3: As that again, because we're expecting the next year to recover in the industry and it's not recovering, then the buy-in from the inventory side starts to be muted in that back half of the year.
Speaker #3: And this year will be in a positive scenario regarding that with this guide.
Speaker #11: That's helpful, thanks. And then just a quick one—I know we're at the top of the hour. Just to address, sort of, fully the question marks we get on increased competition in the pool industry from cheaper-sourced products and so forth: Are you seeing any sign of that behavior sort of becoming more prevalent at distributors and so forth, or do you think the competitive landscape in pool is unchanged versus a couple of years ago?
[Analyst] (Barclays): That's helpful, thanks. And then just a quick one, I know we're at the top of the hour. Just to address sort of full on the question marks we get on increased competition in the pool industry from cheaper sourced products and so forth, are you seeing any sign of that behavior sort of becoming more prevalent at distributors and so forth? Or you think the competitive landscape in pool is unchanged versus a couple of years ago?
Julian Mitchell: That's helpful, thanks. And then just a quick one, I know we're at the top of the hour. Just to address sort of full on the question marks we get on increased competition in the pool industry from cheaper sourced products and so forth, are you seeing any sign of that behavior sort of becoming more prevalent at distributors and so forth? Or you think the competitive landscape in pool is unchanged versus a couple of years ago?
John Stauch: Well, I wouldn't say unchanged. I would say that, you know, on the cleaner side, which we don't participate in, with our own cleaner strategy, they, you know, definitely you've got, you know, China-based AI product there on the cleaner side, which is, you know, involved in the industry. And then, on anything that's not technologically advanced or doesn't have automation or IoT, there's always the threat of a lower cost solution replacing it, which is why we're really focused on making sure we got a fully automated plant. We're driving automation solutions. We're driving higher levels of technology and value to our customers. And regarding those particular technological solutions, we don't see the China impact influencing our outcomes at all.
John Stauch: Well, I wouldn't say unchanged. I would say that, you know, on the cleaner side, which we don't participate in, with our own cleaner strategy, they, you know, definitely you've got, you know, China-based AI product there on the cleaner side, which is, you know, involved in the industry. And then, on anything that's not technologically advanced or doesn't have automation or IoT, there's always the threat of a lower cost solution replacing it, which is why we're really focused on making sure we got a fully automated plant. We're driving automation solutions. We're driving higher levels of technology and value to our customers. And regarding those particular technological solutions, we don't see the China impact influencing our outcomes at all.
Speaker #3: Well, I wouldn't say unchanged. I would say that on the cleaner side, which we don't participate in, with our own cleaner strategy, definitely you've got China-based AI products there on the cleaner side, which is involved in the industry.
Speaker #3: And then on anything that's not technologically advanced or doesn't have automation or IoT, there's always the threat of a lower-cost solution replacing it, which is why we're really focused on making sure we got a fully automated pad.
Speaker #3: We're driving automation solutions. We're driving higher levels of technology and value to our customers. And regarding those particular technological solutions, we don't see the China impact influencing our outcomes at all.
Speaker #2: Our final question comes from Jeff Hammond with KeyBanc Capital Markets. Please go ahead.
Operator: Our final question comes from Jeff Hammond with KeyBank Capital Markets. Please go ahead.
Operator: Our final question comes from Jeff Hammond with KeyBank Capital Markets. Please go ahead.
Speaker #1: Hey, good morning. Thanks for putting me in. Just on—maybe to go at transformation a little bit differently. You had buckets, kind of, in the last analyst day.
[Analyst] (KeyBank Capital Markets): Hey, good morning. Thanks for putting me in.
Jeff Hammond: Hey, good morning. Thanks for putting me in.
John Stauch: Good morning, Jeff.
John Stauch: Good morning, Jeff.
[Analyst] (KeyBank Capital Markets): Just on, maybe to go at transformation a little bit differently. You had buckets kind of in the last analyst day. Can you talk about what buckets kind of ran ahead and where there's still opportunities you look you know into the next transformation you know period? Seems like maybe you were a little behind on sourcing because of the volume not coming through, and then footprint.
Jeff Hammond: Just on, maybe to go at transformation a little bit differently. You had buckets kind of in the last analyst day. Can you talk about what buckets kind of ran ahead and where there's still opportunities you look you know into the next transformation you know period? Seems like maybe you were a little behind on sourcing because of the volume not coming through, and then footprint.
Speaker #1: Can you talk about what buckets kind of ran ahead and where there are still opportunities as you look into the next transformation period? Things like maybe you were a little behind on sourcing because of the volume not coming through, and then footprint.
Speaker #3: Jeff, I'm going to start off, and then I'll have Nick preview a little bit of where we're going. First of all, I think, as I said, we hit our transformation goals on a dollar basis, both on a margin basis.
John Stauch: Jeff, I'm gonna start off, and then I'll have Nick preview a little bit of where we're going. First of all, I think, as I said, we hit our transformation goals on a dollar basis, both on a margin basis. But if you go against the original expectations, we underperformed on one element, which was the volume leverage on operational efficiencies in the factory. We still have that as opportunity, meaning we've been driving the labor overhead efficiencies, the factory efficiencies, and when volume comes back, you'll see that start to work its way through the transformation savings of the organization. We overperformed in sourcing, and we did really, really well on pricing, to not only drive value, but also to offset the dynamics around tariffs. But I don't know what you want to add.
John Stauch: Jeff, I'm gonna start off, and then I'll have Nick preview a little bit of where we're going. First of all, I think, as I said, we hit our transformation goals on a dollar basis, both on a margin basis. But if you go against the original expectations, we underperformed on one element, which was the volume leverage on operational efficiencies in the factory. We still have that as opportunity, meaning we've been driving the labor overhead efficiencies, the factory efficiencies, and when volume comes back, you'll see that start to work its way through the transformation savings of the organization. We overperformed in sourcing, and we did really, really well on pricing, to not only drive value, but also to offset the dynamics around tariffs. But I don't know what you want to add.
Speaker #3: But if you go against the original expectations, we were—the volume leverage was underperformed on one element, which is factory. We still have that as an opportunity.
Speaker #3: Meaning we've been driving the labor overhead efficiencies, the factory efficiencies, and when volume comes back, you'll see that start to work its way through the transformation savings of the organization.
Speaker #3: We overperform in sourcing, and we did really, really well on pricing to not only drive value but also to offset the dynamics around tariffs.
Speaker #3: But I don't know what you want
Speaker #3: To add, we don't give up all of the analyst, yeah.
Nick Brazas: Yeah.
Nick Brazas: Yeah.
John Stauch: We don't give up all of the analyst day, but you can give them-
John Stauch: We don't give up all of the analyst day, but you can give them-
Nick Brazas: Yeah. Yeah, I, I would say that the $70 million that we've got, I just want to remind everyone again, that is net of investments, which means we're investing in our businesses and it's delivering the $70 million. The sourcing pipeline that we have for 2026 is robust, the operational efficiency pipeline is robust, and then we've got some org excellence opportunities as well. We'll talk to you about by category, by business, how we're thinking about transformation. Certain businesses are better poised for growth. We're gonna invest incremental dollars for them to grow, whereas other businesses have more of that sourcing, operational excellence opportunity that we're gonna focus on in 2022.
Nick Brazas: Yeah. Yeah, I, I would say that the $70 million that we've got, I just want to remind everyone again, that is net of investments, which means we're investing in our businesses and it's delivering the $70 million. The sourcing pipeline that we have for 2026 is robust, the operational efficiency pipeline is robust, and then we've got some org excellence opportunities as well. We'll talk to you about by category, by business, how we're thinking about transformation. Certain businesses are better poised for growth. We're gonna invest incremental dollars for them to grow, whereas other businesses have more of that sourcing, operational excellence opportunity that we're gonna focus on in 2022.
Speaker #3: Yeah, I would say day, but you can give up. That the $70 million that we've got, I just want to remind everyone again, that is net of investments, which means we're investing in our businesses and delivering the $70 million.
Speaker #3: The sourcing pipeline that we have for 2026 is robust. The operational efficiency pipeline is robust. And then we've got some org excellence opportunities as well.
Speaker #3: And we'll talk to you about, by category, by business, how we're thinking about transformation. Certain businesses are better poised for growth. We're going to invest incremental dollars for them to grow.
Speaker #3: Whereas other businesses have more of that sourcing operational excellence opportunity that we're going to focus on in '26, and
Speaker #3: Beyond. Jeff, I will say that—
John Stauch: ... Jeff, I will say that we expect to be more balanced between growth compet-- or growth contribution and transformation as we go forward, but transformation is a long way from over. Okay. I want to thank everybody for joining the call today. In closing, I wanted to reiterate some key themes on slide 20. We delivered our 15th consecutive quarter of margin expansion and drove another record year in sales and profitability. We introduced our 2026 sales and adjusted EPS outlook and remain confident in our long-term strategy. We expect a long runway of productivity, savings driven by transformation and 80/20, and our focused water strategy and strong execution continue to build a solid foundation with optimal operational efficiency to help drive long-term growth, profitability, and shareholder value.
John Stauch: ... Jeff, I will say that we expect to be more balanced between growth compet-- or growth contribution and transformation as we go forward, but transformation is a long way from over. Okay. I want to thank everybody for joining the call today. In closing, I wanted to reiterate some key themes on slide 20. We delivered our 15th consecutive quarter of margin expansion and drove another record year in sales and profitability. We introduced our 2026 sales and adjusted EPS outlook and remain confident in our long-term strategy. We expect a long runway of productivity, savings driven by transformation and 80/20, and our focused water strategy and strong execution continue to build a solid foundation with optimal operational efficiency to help drive long-term growth, profitability, and shareholder value.
Speaker #4: we expect to be more balanced between growth contribution and transformation as we go forward. But transformation is a long way from over.
Speaker #1: Okay. Good. Okay.
Speaker #3: I just want to thank everybody for joining the call today. In closing, I wanted to reiterate some key themes on slide 20. We delivered our 15th consecutive quarter of margin expansion and drove another record year in sales and profitability.
Speaker #3: We introduced our 2026 sales and adjusted EPS outlook, and remain confident in our long-term strategy. We expect a long runway of productivity and savings driven by transformation and 80/20.
Speaker #3: And our focus water strategy and strong execution continue to build a solid foundation with optimal operational efficiency, to help drive long-term growth, profitability, and shareholder value.
Speaker #3: Lastly, we believe we are well-positioned to address opportunities from favorable secular trends in water, with the right long-term strategy. I want to thank everyone, and we look forward to sharing our story and our Investor Day on March 4th.
John Stauch: Lastly, we believe we are well-positioned to address opportunities from favorable secular trends in water with the right long-term strategy. I want to thank everyone, and we look forward to sharing our story at our Investor Day on 4 March. Have a great day.
John Stauch: Lastly, we believe we are well-positioned to address opportunities from favorable secular trends in water with the right long-term strategy. I want to thank everyone, and we look forward to sharing our story at our Investor Day on 4 March. Have a great day.
Speaker #3: Have a great day.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
