Pentair PLC

Welcome to the Pentair second quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please send a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your questions, you may press star and two. Please also note that today's event is being recorded. At this time, I'd like to turn the conference call over to Jim Lucas, SVP, Treasurer, FP&A, and Investor Relations. Please go ahead.

Thanks, Jamie, and welcome to Pentair's second quarter 2022 earnings conference call. We're glad you can join us. 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 second quarter performance as outlined in this morning's press release. Before we begin, let me remind you that during our presentation today, we'll 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 PINTAIR. 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 Pinter'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. Pentair delivered another strong quarter with sales, segment income, and adjusted EPS all up double digits. We were particularly encouraged with our margin expansion, both sequentially and year over year, as price more that got offset continued inflationary headwinds. We're also excited to have received all of the necessary regulatory approvals related to our acquisition of Manitowoc Ice, and we expect to close the acquisition later this week. With the significant growth of pools since 2019 and a water solutions business expected to exceed $1 billion in sales on a pro forma basis, including Manitowoc ice, and to be predominantly a commercial platform, we'll be moving to three segment reporting segments starting January 1st, 2023. The three segments will be pool, water solutions, industrial flow technologies. I'll provide more details on the new segment structure shortly. We're also introducing Q3 guidance of $0.93 to $0.95 and tightening our full year guidance to a range of $3.70 to $3.75. Bob will give more details on guidance later in the call, but we're seeing headwinds from FX translation, as well as higher interest expense with the rise in rates over the past several months. We continue to believe we are well positioned in attractive markets. Transformation is helping strengthen our performance and the addition of Manitowoc ice and our new segment structure positions us to continue delivering for all of our stakeholders. Please turn to slide number five, labeled Building a Stronger Commercial Water Solutions Platform. We introduced this slide in March when we announced our plans to acquire Manitowoc Ice. Manitowoc Ice is an iconic brand and a great business that we expect to help our commercial water solutions business to deliver scaled, 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. This combination will transform our current water treatment business, which historically has been roughly two-thirds residential and one-third commercial focused. With Mantua Ice, we expect water treatment to be $1 billion on a pro forma basis, with commercial representing nearly two-thirds of the business, and improved profitability in addition to even greater growth prospects. Please turn to slide six, labeled Aligning Organization for accelerated success. To further expand on our announced segmentation move, the addition of Mantua Ice will provide us with an expanded and scaled end-to-end commercial water solutions platform for important global customers. It will also reshape our water treatment business to be more commercial, focused by both revenue and contribution of income than our residential business. In addition, our pool business has nearly doubled in revenue and income since 2018, which further supports a change in our consumer solution segment structure. As a result, pool and water solutions will each become individual segments, and each will be focused on the respective growth and transformation plans in line with our expectations. Our existing industrial flow technology segment will remain the same. As a result of this new structure, we have also announced a number of management changes effective January 1, 2023, when the new structure will take effect. We believe this new segment structure will help us accelerate our efforts to improve customer service, differentiate our products, and drive profitability for our shareholders. Please turn to slide seven, labeled transformation to enhance value creation. As we have shared over the past several quarters, our transformation strategy is taking shape. We are creating new tools for our toolbox, and each business is identifying their own respective opportunities to transform their business models for future success. Overall, we are focused on four areas, pricing, sourcing, operations, and organizational effectiveness. The team has been working hard to build funnels in all four categories, and we are gaining significant traction within sourcing. During the second quarter, we held a supplier show and gathered over 800 attendees representing over 450 suppliers. We have identified additional suppliers as we evaluate the entire supply chain. This event showcased the diversity of our product offerings and many suppliers, both new and existing, have gained a better understanding of how to partner with Pentair going forward. We are well underway in our efforts of evaluating the larger supplier categories and are looking forward to sharing more on our progress in the future. We believe transformation is a key value created for Pentair longer term, and we look forward to updating you in more detail and sharing our detailed targets and expectations for 2023 and beyond early next year. I would now like to turn the call over to Bob to discuss our performance and our financial results in more detail.