Dive Brief:

• Water treatment company Pentair is targeting “robust” growth for 2027 as it undertakes efforts to right-size its pool inventory and expand to new markets with key acquisitions, CEO John Stauch said Tuesday during its second quarter earnings call.
• The London-based company also announced Tuesday that it intends to acquire Taco Group, a hydronic and water-based solutions business, for $1.4 billion, according to a separate press release. The acquisition will help to support Pentair’s “increased exposure to key high-growth end-markets,” primarily focused on North America, according to the release.
• “The acquisition establishes a new growth engine, enhancing exposure to energy efficiency, comfort cooling and HVAC, and data center infrastructure build-outs,” Interim CFO Bob Fishman said during the earnings call, according to a transcript. “While the real opportunity is top-line growth, we expect to generate approximately $30 million in run rate cost synergies over the next few years through Pentair's purchasing power and economies of scale.”

Dive Insight:

The Taco purchase price represents a multiple of about 10.5x Pentair’s expected 2026 adjusted EBITDA, according to the announcement, including about $165 million in tax benefits, Pentair said. Taco is expected to generate about $540 million in revenue in fiscal year 2026, according to the announcement.

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

The acquisition comes as the company, which provides home pool, spa and water treatment products, continues to navigate economic headwinds including the impact of tariffs, as well as the declining performance of its pool product segment.

For the quarter ended June 30, Pentair’s core sales slumped by 17% to $933 million, a dip was primarily driven by the $170 million impact from destocking of pool channel inventory, Fishman said.

Fishman stepped in to serve as interim CFO in mid-July after Pentair’s finance chief Nicholas Brazis abruptly stepped down after five months in the seat to take the CFO role for cable manufacturer Southwire, CFO Dive previously reported. Fishman previously served six years as Pentair’s CFO before departing with Brazis’ appointment.

Sales for the pool segment were down by 42% YoY, according to its earnings presentation. However, “despite the recent challenges in Pool, we continue to invest in growth initiatives that support our long-term strategy,” Fishman said.

That included undertaking a “comprehensive” review of its pool business, which showed the company needs to take steps to “deepen dealer engagement and accelerate customer-driven innovation” in order to bolster its performance, Stauch said.

“We believe the Pool challenges are temporary, and we remain confident in the attractive nature of the segment and our position as a market leader,” Stauch said.

Pool sales are expected to be down by between 23% to 25% for the third quarter as Pentair continues to destock its inventory for the 2027 season, Fishman said.

The business also reported a 20% slump in adjusted operating income for Q2, which hit $237 million, according to the earnings presentation. That included a negative $35 million in tariff refund impacts, the company said.

For the full year, the company expects total sales to be down by about 4% to 7% YoY or a midpoint of about $4 billion, in line with previously issued guidance from July 14, Fishman said.