Pentair announced third quarter 2016 sales of $1.2 billion. Sales were up 9 percent compared to sales for the same period last year. Excluding currency translation ("FX") and contribution from acquisitions, core sales declined 2 percent in the third quarter.
Third quarter 2016 earnings per diluted share from continuing operations ("EPS") were $0.64 compared to $0.52 in the third quarter of 2015. On an adjusted basis, the company reported EPS of $0.78 compared to $0.70 in the third quarter of 2015. Segment income, adjusted net income, free cash flow, and adjusted EPS are described in the attached schedules.
Third quarter 2016 operating income was $183 million, up 20 percent compared to operating income for third quarter of 2015, and return on sales ("ROS") was 15.1 percent, an increase of 140 basis points when compared to the third quarter of 2015. On an adjusted basis, the company reported segment income of $216 million for the third quarter, up 15 percent compared to segment income for the third quarter of 2015, and ROS was 17.9 percent, an increase of 110 basis points when compared to the third quarter of 2015.
Net cash provided by operating activities of continuing operations was $139 million and free cash flow from continuing operations was $125 million for the quarter. The company continues to expect to deliver full year free cash flow of approximately 100 percent of adjusted net income.
Pentair paid dividends of $0.34 per share in the third quarter of 2016. Pentair previously announced on December 8, 2015 that its Board of Directors approved a 5 percent increase in the company s regular annual cash dividend rate for 2016 to $1.34 from $1.28. 2016 marks the 40th consecutive year that Pentair has increased its dividend.
"We delivered third quarter earnings in line with our expectations on the back of strong cost and cash flow execution," said Randall J. Hogan, Pentair Chairman and Chief Executive Officer. "We are updating our fourth quarter guidance to reflect the ongoing sluggish industrial environment, and we no longer expect to see the typical end of year push on capital spending. We do not believe it is prudent to enter our planning cycle for next year expecting any dramatic recovery in growth and therefore we are aggressively aligning our cost structure with the reality of a continued slow growth world. We remain on track for the sale of our Valves & Controls business to be completed at the end of this year or early next year, at which point we expect to have a dramatically stronger balance sheet and be positioned to allocate resources in a disciplined manner."
The company updates its 2016 GAAP EPS to approximately $2.50 and on an adjusted basis to approximately $3.00. The company anticipates full year 2016 sales of $4.9 billion, or up approximately 7 percent on a reported basis and down approximately 1 percent on a core basis. The company expects to deliver full year free cash flow of approximately 100 percent of adjusted net income.
In addition, the company introduced fourth quarter 2016 GAAP EPS guidance of approximately $0.63 and on an adjusted basis approximately $0.73, down approximately17 percent on an adjusted basis versus the same quarter last year. The company expects fourth quarter revenue to be approximately $1.22 billion, which would be down approximately 6 percent on a reported basis and down approximately 6 percent on a core basis compared to fourth quarter 2015 revenue.