Pentair PLC

One follow-up. Please note, this event is being recorded. I would now like to turn the call to Shelly Hubbard, Vice President of Investor Relations. Please go ahead.

Thank you, Anthony, and welcome to Pentair's third quarter 2023 earnings conference call. On the call with me are John Stouck, 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 as outlined in this morning's press release. On the Pantera Investor Relations website, you can find our earnings release and slide deck, which is intended to supplement our prepared remarks during today's call and provide a reconciliation of differences between GAAP and non-GAAP financial measures that we will reference. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. They are included as additional clarifying items to aid investors in further understanding the company's performance in addition to the impact these items and events have on the financial results. Before we begin, let me remind you that during our presentation today, we will make forward-looking statements, which are predictions, projections, or other statements about future events. 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 10-Q and Form 10-K. Following our prepared remarks, we will open up the call for questions. Please note that we will limit your questions to two, after which we ask you to then re-enter the queue in order to allow everyone an opportunity to ask questions. A quick reminder before I hand the call over to John. Similar to last quarter, we have included slides four through seven in our earnings slide deck, which provide a brief overview of Pentair. Please see these slides titled Strategic Framework, Pentair at a Glance, Pentair Overview, and Making Better Essential for more information. In reference to slide seven, Making Better Essential, we are proud to share two recent recognitions that Pentair has received for its work in social responsibility and ESG. We have been recognized as a constituent of the FTSE for Good Index Series, and we have been named one of America's Greenest Companies 2024 by Newsweek. This recognition from Newsweek evaluated Pentair's environmental performance in relation to our industry, assessing our progress against key environmental factors, including greenhouse gas emissions, water usage, waste profile, and commitment to disclosing sustainability data. Pentair's achievement supports our purpose to create a better world for people and the planet through smart, sustainable water solutions. We look forward to continuing to reduce the environmental impact of our operations and further integrate sustainability into our product innovation as guided by our social responsibility strategic targets. Please refer to our published 2022 Corporate Responsibility Report for more information on our sustainability strategy. I will now turn the call over to John.

Thank you, Shelly, and good morning, everyone. Let's begin with the executive summary on slide eight. We are very pleased with our third quarter results, which surpassed the guidance that we provided on our last earnings call. Q3 marked the sixth consecutive quarter of sales over $1 billion and the sixth consecutive quarter of adjusted margin expansion. Segment income increased 3% and ROS expanded by 140 basis points. Adjusted EPS was 94 cents versus our previous guidance of 84 cents to 89 cents. And year-to-date free cash flow was 453 million, up 115% over the prior year. As we look to the full year, We are updating our 2023 adjusted EPS guidance range to $3.70 to $3.75, which reflects the high end of our previous guidance. I want to celebrate these strong results with all our employees. Your resilience and dedication to serving our customers and delivering value for our shareholders during a year of global macroeconomic uncertainty is making a difference. Thank you for your leadership. Let's move to slide nine, titled Strategic Focus. Through our mission to help the world sustainably move, improve, and enjoy water, we are enabling the right investments to both deliver the core and build our future to drive long-term value for shareholders. In Deliver the Core, we have driven profitability and productivity across all three segments, industrial flow technologies, water solutions, and pool in 2023. We have also been making better essential through our products and solutions for people on the planet with a focus on sustainability, and we have been investing in our people to develop talent and build a higher performing culture. Another strategic focus of ours is to build our future to accelerate performance. In 2023, we have further invested in transformation, innovation, and M&A. In fact, we have seen great results across all three of these areas, with our transformation having begun to read out and new innovation launched this year with exciting new products coming in all three segments. And our Manitowoc ice acquisition is exceeding expectations. Regarding innovation, in 2023, our businesses have launched 25 new products. Examples include a new high-efficiency ice maker for convenience stores and fast casual restaurants designed in advance to meet the future EPA regulation for refrigerants, expansion of our Energy Star award-winning and smart IntelliFlow 3 pump series, the advancement of our beer membrane filtration solutions to operate continuously with higher levels of smart automation. In addition to these new product launches, our innovation teams continue to make great progress advancing our strategy to build our future as they focus on our longer-term growth themes centered on the pool of the future, reimagining residential commercial water treatment, and industrial waste-to-value solutions. Over the last three years, we have launched over 100 new products. Let's turn to slide 10, titled Transformation Update. We embarked on this transformation journey nearly two years ago with the intent to transform our business for the Pentair of the future. Our company has evolved substantially with the separation of Invent and then evolving to a leading diversified water company. Through our four key transformation themes, including pricing, sourcing, operational excellence, and organizational effectiveness, we are streamlining our processes and building additional capabilities which add more tools in our toolbox to drive growth and productivity. In Q3, transformation gained momentum and drove a substantial increase in productivity sequentially from Q2. After implementing Wave 1 in both pricing and sourcing, we expected transformation to begin to scale in the second half of this year, and we are pleased to note that our transformation initiatives remained on track. Let's turn to slide 11, titled CEO Summary. We delivered another strong quarter with significant ROS expansion. Our Manitowoc ice acquisition continued to exceed expectations. Our IFT and water solution segments more than offset pools' volume decline, and our transformation initiatives drove margin expansion. Our performance through Q3 resulted in another positive update to 2023 adjusted EPS guidance. All in, We are building a strong foundation to drive long-term growth and profitability across our diverse water portfolio. We have updated the full-year adjusted EPS guidance to a range of $3.70 to $3.75 from the previous range of $3.65 to $3.75. We are mindful of the uncertainty across the global macroeconomic and geopolitical landscape, and we continue to closely monitor macroeconomic developments and implement risk mitigation strategies when and where necessary. We have continued to accelerate transformation funnels while focusing on investing in the long-term growth of our company. We remain confident in our diversified water business model, long-term strategy, and our transformation initiatives, which we expect to continue to drive shareholder returns. We have a long, successful track record of generating strong cash flow and being disciplined with capital allocations. We achieved 47 consecutive years of dividend increases and are targeting high-teens ROIC. We have a strong balance sheet and an enviable five-year financial track record. I will now pass the call over to Bob, who will discuss our performance and financial results in more detail.