Pentair PLC

Good day, and thank you for standing by. Welcome to the Q3 2021 Pentair 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'll need to press star 1 on your telephone. If you require any further assistance, press star 0. I would now like to hand the conference over to your speaker today, Jim Lucas. Thank you. Please go ahead.

Thank you, Stephanie. And welcome to Pentair's third quarter 2021 earnings conference call. We're glad you could join us. I'm Jim Lucas, Senior Vice President, Treasurer at P&A and Investor Relations. And with me today is John Stauff, our President and Chief Executive Officer, and Bob Fishman, our Chief Financial Officer. On today's call, we will provide details on our third quarter performance of Outline 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 Pentair. These risks and uncertainties can cause actual results that 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 Penn State'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 and a follow-up in order to ensure that everyone has 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. I'd like to start by thanking our Pentair teams for delivering an outstanding third quarter in the face of unprecedented material shortages and inflation. We are pleased to once again deliver strong double-digit sales and EPS gains. While it is easy to focus on the supply chain and inflation challenges that we all currently face, it is also important to appreciate how strong 2021 has been for Pentair. Year-to-date, we have delivered 25% sales growth, nearly 40% segment income growth, we've expanded margins 170 basis points, and grown EPS 40%. We have said that we view our businesses as more seasonal than cyclical, and our robust backlogs give us further confidence in our ability to continue our strong momentum in Q4 and into 2022. In addition to the strong sales and earnings growth, we have generated over $500 million of free cash flow this year, and our balance sheet is strong. We ended the quarter under a one-time lever, and I am especially proud of our 19% ROIC. We've completed two acquisitions this year that further advance our strategy. We acquired KBI earlier this year that added commercial services capabilities to our growing water treatment business. We recently completed the Pleco acquisition that brings strong aftermarket filtration products not only to our flagship pool business, but also to our industrial filtration business. Given the strong third quarter performance, we are tightening our full year guidance range, which Bob will give additional color on shortly. There remains a lot of uncertainty as we end the year, given the ongoing material shortages, logistical challenges, and inflation. In fact, we experienced more inflation in the third quarter of 2021 than we did in the full year of 2020. We have gone out with multiple price increases across most of our businesses this year. There's a lag from when price increases are announced and when we recognize them, particularly given our strong sales and backlog growth this year. The good news, however, is we should have strong pricing tailwind entering next year. This has been a great year, and we believe we have a lot more runway ahead to become an even stronger company. Please turn to slide five, labeled Building a Track Record of Consistent Growth. We believe our strong performance over the past several quarters reinforces that we are in the right spaces for the future. Our portfolio of industry-leading products and now services help consumers move, improve, and enjoy their water in addition to a growing industrial filtration business focused on faster-growing niches such as sustainable gas. We are building a track record of consistent growth. Our residential businesses have enjoyed robust growth, and we believe there's more to come. Our commercial and industrial businesses have been recovering back to 2019 levels, and backlogs have been building in these longer cycle businesses. We're making great progress in building out our strategic growth initiatives. As I mentioned previously, we have completed two acquisitions this year that furthered our pool and our water treatment strategies. We're also driving transformation to both unlock value and to fund growth. While some of our businesses are further along the journey, we have identified a strong funnel of opportunities to help us become more productive, better serve our customers, and drive growth and margin expansion. Our balance sheet is another lever available that offers great flexibility to invest in our core, return cash to shareholders, and to fund strategic acquisitions. 2021 has been a great year for Pentair, and we believe there's a lot more yet to come. 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.