Pentair PLC

Ladies and gentlemen, thank you for standing by, and welcome to the Panthers Q1 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. At the end of the presentation, there will be a question-and-answer session. To ask your question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to have the conference of Dr. Jim Lucas. Please go ahead.

Thanks, Jay, and welcome to Pentair's first quarter 2022 earnings conference call. We're glad you could join us today. I'm Jim Lucas, Senior VP, Treasurer, FP&A, and Investor Relations, and with me today is John Stauk, our President and Chief Executive Officer, and Bob Fishman, our Chief Financial Officer. On today's call, we will provide details on our first 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 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 10Q and Form 10K and today's release. We will also reference certain non-gap measures. Reconciliations of these non-gap measures to the most directly comparable gap 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 and a follow-up 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 solid first quarter that exceeded our previously communicated expectations. Sales expanded 15% in the first quarter, and we were encouraged to see price continue to read out positively. Inflation is unfortunately not showing any signs of moderating, which is why we expect to increase price even further to cover the incremental inflation headwinds. During the first quarter, we announced the agreement to acquire Manitowoc Ice, which I'll discuss in a little bit more detail shortly. We believe this is a great complementary acquisition that will help enhance our strong commercial water solutions business. Bob will give more details on our guidance later in the call. but we are updating our full year guidance to reflect a little more top line growth, and our full year adjusted EPS range remains unchanged at $3.70 to $3.80. We are entering our seasonally strongest quarter with continued momentum, and we believe that Pentair is well positioned for 2022 and beyond. Please turn to slide five, labeled building a track record of consistent growth. We believe in our strategy, And we are building a track record of consistent growth, despite the many external global supply chain and inflation challenges that most companies are facing. Growing the core is our number one priority, whether it is sales, income growth, or margin expansion. We must deliver in all areas. We are a leader in pool and continue to be well positioned to serve a large growing installed base. Water treatment is benefiting from consumers focusing on water quality, which benefits both our residential and commercial businesses. We have a sizable flow business with several strong positions in areas such as water supply, water disposal, fire suppression, and flood control. Our industrial solutions business continues to focus around its two biggest opportunities, beer membrane filtration and sustainable gas. I will touch on transformation in a moment, but we believe this is one of the biggest long-term opportunities for Pentair. This is not just about unlocking value and improving margins. Rather, it is about doing things better and more optimally and positioning Pentair for the best possible future. Our balance sheet has been one of our biggest strengths, and we are currently in the process of using it with the announced agreement to acquire Manitowoc Ice. While we have built an improved track record of growth the past couple of years, we believe there's still a long runway ahead for Pentair. Please turn to slide six, labeled Transformation to enhance value creation. Transformation is a word we chose carefully because we are not just focused on taking out costs. Transformation is about improving the way we do business. I remind the team consistently that we need to celebrate the successes of what we have been doing and the way we have done it, but that does not mean these are the right processes going forward. Transformation comes from our lean methodology. It is about identifying the current state, recognizing that you can be much better, and therefore creating the future state vision, and then building your transformation plan to achieve it. We are focused on four transformational areas, pricing, sourcing, operations and distribution, and organizational effectiveness. While 2021 was about planning, we are now moving to the execution phase. Our two biggest opportunities are in pricing and sourcing, where we brought in outside partners to help us transform these key processes. We continue to build funnels, and we are seeing momentum build as our outside partners help train us on how to unlock additional value within our four targeted areas. We are bringing greater focus and prioritization, and we are using data analytics to drive our decision making. We have seen many of our more complex businesses, such as Flow, make great strides in improving margins, and they are now turning the focus on targeted growth opportunities. Transformation is a key value creator for Pentair longer term. We look forward to updating you in more detail and sharing our targets and expectations for 2023 and beyond later in the year. Please turn to slide seven, labeled Advancing Total Water Management and Building a Stronger Commercial Water Solutions Platform. In early March, we announced our agreement to acquire Mantua Ice. We believe it's a great business that will allow us the opportunity to bring to our customers a total water management solution through our commercial water solutions business and expand our offerings. On a pro forma basis, we expect our commercial water solutions business to be a nearly $700 million business made up of three different growing categories. Everpure is a projected $225 million very high margin respected industry brand that allows us to provide our food service customers with high quality water for their specialty needs. Manitowoc is a projected $325 million high margin brand that has a proven track record of creating and delivering dependable ice machines. And KBI is a projected $125 million, lower margin, but significantly important and well-known service leader with a reputation for providing one-of-a-kind service, preventative maintenance, and infrastructure for commercial customers. Combined, these three businesses can offer end-to-end water filtration and ice solutions for food service customers. along with predictive services that identify and address customer issues before they arise. Together, we anticipate that we can deliver sustained commercial water solutions, double-digit revenue growth at mid-20s margins by providing ice and better, cleaner water to people all around the world. We expect the closing of the Manitowoc transaction to occur in the second or third quarter, subject to regulatory approvals. I would now like to turn the call over to Bob to discuss our performance and our financial results in more detail. Bob?