Pentair PLC

Good day, and thank you for standing by. Welcome to the second quarter 2021 Pintare Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your speaker today, Jim Lucas. Please go ahead.

Thanks, Michelle, and welcome to Pentair's second quarter 2021 earnings conference call. We're glad you could join us. I'm Jim Lucas, Senior Vice President, Treasurer at FP&A and Investor Relations. With me today is John Stauch, our President and Chief Executive Officer, and Bob Fishman, our Chief Financial Officer. On today's call, we will provide details on our second quarter performance as outlined in this morning's press release. Before we begin, let me remind you that during our presentation today, we will make forward-looking statements. 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 Ted Thayer. 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 and today's release. We will also reference certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures can be found in the investor relations section of Pentair's website. We will be sure to reserve time for questions and answers after our prepared remarks. I would like to request that you limit your questions to one-on-one follow-up in order to ensure everyone an opportunity to ask their questions. I will now turn the call over to John.

Thank you, Jim, and good morning, everyone. Please turn to slide number four, titled Executive Summary. We were pleased to deliver a strong second quarter with sales up over 30 percent, adjusted EPS growth greater than 40 percent, and free cash flow up over 100 million in the first half of the year. I would like to thank our Pentair teams for helping deliver these results, even in the face of unprecedented material shortages and inflation. Our orders continue to grow and our backlog ended the quarter at record levels. We believe our order trajectory gives us increased confidence, not only in our ability to keep growing in the second half, but it also gives us comfort that the top line momentum we have built the past several quarters will carry over into next year. Our transformation work is on track and we have built a strong pipeline of initiatives across the enterprise. Regarding the current inflationary environment, we have implemented further price increases, and we expect the price-cost gap to further narrow in the second half. Our cash flow remains robust, and our balance sheet is in a very solid position. We have a strong M&A pipeline tied to our strategic growth initiatives, and we plan to remain disciplined with our capital allocation. We are introducing third-quarter guidance and raising our full-year expectations once again. which Bob will give more detail on later in the call. Our forecast reflects our expectations that material shortages and inflation are not going away, nor will they improve materially. We believe we have better visibility than we have had in the last few quarters and that our proven focus around manufacturing and sourcing gives us the tools to navigate the current environment. We are encouraged to see our commercial and industrial businesses recovering and our residential businesses remaining seasonally strong, and as mentioned earlier, our backlog support continued growth. Please turn to slide five, labeled Building a Track Record of Consistent Growth. At our June 10th Investor Day, we introduced several targets for 2022 to 2025, including mid-single-digit sales growth, 300 basis point margin expansion, and a 10% plus CAGR for adjusted EPS. Our 2025 targets were based on our guidance as of June 10th, which we are raising once again following our strong second quarter performance. Our longer-term target provided at Investor Day would now be based off of our revised guidance. We have experienced significant growth since the second half of 2020, and we believe the momentum that we have created will continue into the foreseeable future. We continue to believe that we have a well-positioned portfolio benefiting from many positive secular trends. Our pool business serves a large installed base, water treatment helps solve water quality issues for residential commercial customers, and industrial and flow technology serves some attractive niches like biogas in addition to a large installed base of pumps. While our consumer businesses are seasonal, we do not believe them to be cyclical. While our focus is on driving the core to create consistent value creation, we are investing in a few strategic growth initiatives to accelerate the top line. These include getting closer to the consumer and pool, expanding water treatment further into services, and biogas and carbon capture within industrial flow technologies. As we drive transformation more broadly across the entire enterprise, we expect that this will drive both ROS expansion and help fund growth initiatives. Finally, we believe our balance sheet provides a great degree of flexibility to drive further upside, primarily through M&A tied to our strategic growth initiatives. I would now like to turn the call over to Bob to discuss our performance and our financial results in more detail, after which I will provide an update on our overall strategic position. Bob?