Xylem Inc.

Welcome to the Xylem fourth quarter and fiscal year-end 2020 earnings conference call. At this time, all participants have been placed on listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touchtone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Matt Latino, Vice President of Investor Relations.

Thank you, Pasha. Good morning, everyone, and welcome to Xylem's fourth quarter and full year 2020 earnings conference call. With me today are Chief Executive Officer Patrick Decker and Chief Financial Officer Sandy Rowland. They will provide their perspective on Xylem's fourth quarter and full year 2020 results and discuss the first quarter and full year outlook for 2021. Following our prepared remarks, we will address questions related to the information covered on the call. I'll ask that you please keep to one question and a follow-up and then return to the queue. As a reminder, this call and our webcast are accompanied by a slide presentation available in the investor section of our website at www.xylem.com. A replay of today's call will be available until midnight on March 5th. Please note the replay number is 800-585-8367, and the confirmation code is 628-3413. Additionally, the call will be available for playback via the investor section of our website under the heading investor events. Please turn to slide two. We will make some forward-looking statements on today's call, including references to future events or developments that we anticipate will or may occur in the future. These statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC. Please note that the company undertakes no obligation to update any forward-looking statements publicly to reflect subsequent events or circumstances, and actual events or results could differ materially from those anticipated. We have provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics in the appendix. For purposes of today's call, all references will be on an adjusted basis, unless otherwise indicated, and non-GAAP financials have been reconciled for you and are also included in the appendix section of the presentation. Now, please turn to slide three, and I will turn the call over to our CEO, Patrick Decker.

Thanks, Matt, and good morning, everyone. As you'll see from our release this morning, the team delivered a strong performance in the fourth quarter, giving us good momentum entering 2021. Every segment and every end market made considerable gains on a quarter sequential basis. And for Xylem overall, the team outperformed expectations across the major metrics, those being revenue, earnings, and cash. As the year came to a close, we took full advantage of stabilizing markets. Both water infrastructure and applied water systems showed quicker resilience than anticipated. And we also affirmed our growth trajectory in measurement and control solutions, building on the large project wins we talked about last quarter by adding another headline AMI deal in Houston, Texas. We also gathered pace with our industry-leading digital portfolio, as the pandemic accelerated customer adoption of digital transformation. Revenue and orders trends both improved significantly. One caveat is that orders were still down slightly due to a scope reduction and a previous large win in India. Otherwise, orders grew in all three of our segments. Xylem's large installed base of core products and established markets provided exceptional resilience on underlying demand for essential services. At the same time, our global presence allowed us to capture the benefits of early recovery in places like China, which grew 18% in the quarter, and also in Europe, where we grew 6%. As a result of that positioning on a large and resilient installed base, combined with a vibrant growth platform, we enter 2021 with healthy backlogs. They're up 16% overall and up 30% shippable in 2022 and beyond. We know growth rarely happens in a straight line, and clearly the global challenges of 2020 put a hitch in year-on-year numbers, including margin. But I am very pleased with how we responded given these conditions. We took quick action on spending and on structural costs, and we also made significant productivity improvements. As a result, we returned to progress on margins in the third and fourth quarters, although we didn't entirely offset COVID's effects. Our supply chain execution ensured we kept customers served through the pandemic, and we helped them to deliver the essential services their communities depend upon. Our operational discipline delivered favorable bottom line outcomes, even in unfavorable market conditions, strengthening our financial position through the year. The team corrected for the volatile conditions so quickly that, in fact, we delivered free cash flow conversion north of 180 percent. Looking ahead, We're encouraged by early signs of market recovery. The ramp up of vaccinations offers hope for an eventual return to normalcy. But we're not there yet. We are still in uncertain times. But we've nevertheless entered 2021 in a very strong position. And we are on course to capitalize on our increased competitiveness, financial strength, and commercial momentum. With that, I now want to hand it over to Sandy for more detail on how our seconds performed.