Pentair PLC

question, you may press star and then one on your telephone keypads. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Shelley Hubbard, Vice President, Investor Relations. Please go ahead.

Thank you, Jamie, and welcome to Pantera's fourth quarter 2024 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 fourth quarter and full year performance as outlined in this morning's press release. On the Pentair 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. Please note that during today's presentation, we will be making references to record financial results. These references reflect the time period post the invent separation in 2018. Following our prepared remarks, we will open up the call for questions. Please limit your questions to two and re-enter the queue if needed to allow everyone an opportunity to participate. As a reminder, you can reference our 2024 investor day presentation on our IR website. Please visit our Pentair investor relations website and click on events and presentations to find these materials. I will now turn the call over to John.

Thank you Shelly and good morning everyone. It has been a crazy last 96 hours and we are excited to finally share our 2024 results and 2025 guidance with you. Our guidance is shared today includes the recently announced China tariffs and we believe we have captured the risk of the potential Canada and Mexico tariffs within our 2025 EPS guidance range. Bob will provide more detailed information within his remarks regarding this dynamic situation. 2024 is another transformative year for Pentair, and we are very pleased with the strong performance of our balanced water portfolio. We were excited to share our vision in March at our investor day, and we exceeded our financial goals driven by transformation and executing our strategy as evidenced by record profitability and cash flow in 2024. We continue to demonstrate resilience across our move, improve, and enjoy water segments as we diversified and mitigated risk amidst the dynamic macroeconomic and geopolitical environment. Within flow, we continue to grow our commercial business and launch cutting edge innovation with our eccentric impeller, while evolving our go to market strategy and industrial solutions to drive profitability. In water solutions, our commercial filtration business posted strong sales and we launched our first commercial PFAS certified filtration product, which continued to gain momentum. And in pool, the aftermarket drove strong sales growth despite weakness in new and remodeled pools, which were impacted by higher interest rates. We also focused on new product development with new launches planned for 2025. Overall, we finished 2024 in a stronger financial and operational position than we started the year. I'm very proud of our entire team at Pentair who continue to deliver for our customers while creating value for our shareholders. Let's turn to the Q4 executive summary on slide four. We posted record Q4 adjusted operating income and ROS marking the 11th consecutive quarter of year-over-year ROS expansion. We also delivered triple-digit margin expansion across our flow, water solutions, and pool segments, which led to record ROS for all three segments driven by our transformation initiatives. In the fourth quarter, sales are down 1%, but better than expected from the beginning of the quarter, even with FX headwinds. Adjusted operating income increased 17% to a Q4 record of $231 million. ROS expanded by 370 basis points to a fourth quarter record of 23.8%, and adjusted EPS was $1.08, up 24%, another Q4 adjusted EPS record. Let's move to the full year executive summary on slide five. 2024 was another record year for adjusted operating income, ROS, and adjusted EPS, despite sales ending down 1%. Our team was very successful at mitigating top-line risk amidst macroeconomic weakness globally. In full year 24, we delivered sales of $4.1 billion, record adjusted operating income of $959 million, up 12%, record ROS of 23.5%, expanding 270 basis points, and record adjusted EPS at $4.33, up 15%. At our 2024 investor day, we disclosed our three-year targets with a goal of 24% ROF by 2026 year end. From solid execution across our flow, water solutions, and pool segments, which drove triple-digit margin expansion through transformation and early 2020 progress, we continued to drive operational efficiencies that exceeded our goals in 2024. especially record ROS of 23.5%, which nearly hit our target two years early. We are now increasing our 2026 ROS target to 26%. Bob will provide more details in a moment on why we have increased our confidence in achieving a higher ROS target by 2026. In 2024, we generated record free cash flow of $693 million and increased our dividend by approximately 9% with 2025 marking the 49th consecutive year of dividend increases, further solidifying our status as a dividend aristocrat. Lastly, we are introducing 2025 adjusted EPS guidance of $4.65 to $4.80, up 9% at the midpoint. We expect that transformation in 80-20 can deliver our targeted margin expansion in 2025 and beyond. Let's turn to slide six. Over the last five years, we have increased sales by over six and a half percent compounded annually while expanding margins 600 basis points. Nearly 500 of the 600 basis points were delivered in the last two years. All three of our segments have produced strong sales growth and significant margin expansion since 2019. We continue to expect great opportunity ahead to drive long-term sales growth across flow, water solutions, and pool to organic growth and potential tuck-in or bolt-on acquisitions. Let's turn to slide seven. We are helping the world sustainably move, improve, and enjoy water, life's most essential resource, through our three segments, each with over $1 billion in sales in 2024, and together creating a balanced and resilient water portfolio. We are pleased with the ROS achievements of each segment. We believe transformation in 8020 will continue to drive higher profitability going forward. Let's turn to slide eight. In 2024, our transformation program continued its momentum, delivering over $100 million in productivity savings net of investments. All four of our transformation pillars, which include pricing excellence, sourcing excellence, operational excellence, and organizational effectiveness, contributed to these productivity savings. As we continue to focus on reducing complexity, Streamlining our operations and optimizing our organization for future growth, we expect to deliver 80 million net of investments in productivity savings in 2025, driven by transformation and accelerated through 8020. In early 2024, we began to implement 8020 across our three segments with staggered implementation plans. I'm happy to share that our segments have moved beyond the stages of analysis, assessment, and are all developing action plans to implement these efforts into our operations. By year end, all segments have begun their Quad 4 exits while simultaneously improving our service and operations to better serve our Quad 1 customers. We expect these actions to drive core growth and profitability in 2025 and beyond while simplifying our business and operations. Let's turn to slide 9. Before I hand the call over to Bob, I wanted to reiterate some key takeaways. 2024 demonstrated another year of record-adjusting operating income, ROS, and adjusted EPS, driven by transformation and continued execution across all segments. We drove record-free cash flow, and we took a balanced approach to capital deployment through organic growth investments, dividends, share repurchases, and a small tuck-in acquisition and pool. We expect 80-20 to accelerate our transformation initiatives to drive focused, profitable growth in 25, and we are introducing full-year 2025 guidance reflecting growth in adjusted EPS of approximately 9% at the midpoint. Lastly, we continue to believe that we are well-positioned to address opportunities from favorable secular trends, which include concerns about access to clean and reliable water, increased awareness of human-made contaminants impacting water quality, aging commercial, public, and municipal infrastructure, interest in outdoor healthy living with people gathering at pools for exercise and fun, and favorable housing migration to the Sunbelt States, which represents a large mix of our pool sales. I will now pass the call over to Bob, who will discuss our performance and financial results in more detail. Bob?