Pentair PLC

All participants will be in a listen-only mode. If you need assistance, please signal 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 keypads. To withdraw your questions, you may press star and two. Please also note, today's event is being recorded. At this time, I would like to turn the floor over to Shelley Hubbard, Vice President of Investor Relations. Ma'am, you may begin.

Thank you, Operator, and welcome to Pentair's second quarter 2025 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 second 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. Please note that during the presentation today, 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. I will now turn the call over to John.

Thank you, Shelley, and good morning, everyone. Thank you for joining us today. Before we get to our record Q2 results, I want to take a moment to recognize our entire Pentair team. Your leadership has helped to elevate us to new levels of financial and operational execution in an extremely volatile environment. Thank you for putting our customers first and continuing to drive shareholder value. Now let's turn to the Q2 executive summary on slide eight. We delivered a record quarter across all four metrics. Sales, adjusted operating income, return on sales, and adjusted EPS, and one of the most continuously challenging dynamic landscapes globally. In Q2, sales increased 2% and pool grew 9%. Adjusted operating income increased 9%. ROS expanded by 170 basis points to 26.4%, and adjusted EPS rose 14% to $1.39. We also delivered record-free cash flow and repurchased $75 million of shares in Q2. Driven by continued confidence in our ability to execute, we have increased our full-year 25 guidance. We now expect sales growth of approximately 1% to 2% and adjusted EPS to be approximately $4.75 to $4.85, up 11% at the midpoint versus full year 2024. In Q2, we made an incremental investment in an exciting new startup known as Hope Hydration, whose mission is to deliver free water through its digitally connected water refill hydrostations which generate revenue from advertising and sponsorships. These hydro stations use EverCure technology from Pentair Water Solutions to bring free, high-quality, and chilled drinking water to cities, stadiums, airports, and commercial spaces. We are excited to help Hope accelerate their growth strategy, broaden their impact, and help to reduce the consumption of single-use plastic water bottles. Let's move to the strategic overview on slide nine. At Pentair, we are continuously evolving to drive consistent, long-term shareholder value. We have talked about our transformation initiatives, and more recently, 80-20. At the same time, our teams are also focused on driving growth within their businesses and investing in strategic growth initiatives, including high-performing talent, new and breakthrough product innovations, go-to-market strategies, and digital transformation. We remain on track to deliver our expected transformation savings this year, and we expect continued margin opportunity beyond 2026 as we accelerate the implementation of 80-20 and the transformation progress continues. The softer residential end market has enabled us to focus on improving our overall business and best position Pentair to leverage higher demand when residential end markets recover. We believe the catalyst to an improving housing market will be lower interest rates. Lastly, we continue to remain agile in a rapidly changing macroeconomic and geopolitical environment. Let's turn to slide 10. We shared this slide with you last quarter, which shows the success of our transformation program. Since the beginning of 2023, we have delivered over $200 million in transformation savings, net of investments, which includes the $44 million we drove in the first half of this year. We have committed to a total of $80 million in 2025 net of investments, and we see additional savings in 2026 to achieve our ROS target of 26% by 2026 year end. I'm very grateful for what our teams have accomplished, and I am energized with the opportunity to drive further benefits in the next several years. Before I hand the call over to Bob, let's turn to slide 11. There are several key themes that I wanted to share. We delivered a record quarter in Q2. We increased our full year 2025 guidance due to increased confidence in our strategy. We continue to build a foundation of optimal operational efficiency that can be leveraged when volume returns to normal. We have a balanced water portfolio and a capital light business model with 75% of our businesses going through two-step distribution and roughly 75% of our revenue representing replacement sales. And we have strong free cash flow, a solid balance sheet, and a balanced capital deployment strategy to accelerate earnings and return on invested capital. As a focused water company providing solutions to move, improve, and enjoy water, we continue to believe that we are well positioned to address opportunities from favorable secular trends by getting water to where it needs to be, and away from where it doesn't, and by filtering and purifying water for people to drink and enjoy. I will now pass the call over to Bob, who will discuss our performance and financial results in more detail.