Xylem Inc.

Stand by, your program is about to begin. Welcome to the Xylem second quarter 2022 earnings conference call. At this time, all participants have been placed in a 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 telephone keypad. 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 Andrea Vanderberg, Vice President, Investor Relations.

Good morning, everyone, and welcome to Xylem's second quarter 2022 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 second quarter 2022 2022 results and discuss the third quarter and full year outlook. Following our prepared remarks, we'll 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, www.xylem.com. A replay of today's call will be available until midnight on August 9th. Please note the replay number is plus one 800-839-5676 or plus 1-402-220-2565. 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 Zion's most recent annual report on Form 10-K and 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've 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 we'll turn the call over to our CEO, Patrick Decker.

Thanks, Andrea, and good morning, everyone. We're pleased to report that the team delivered a very strong second quarter performance on all key metrics and well ahead of our guidance. The result builds on the momentum and underlying demand we saw in the first quarter, with disciplined operational execution on strong fundamentals and a moderate easing in chip supply constraints. Revenues grew 6% organically, surpassing our guide. The team's commercial performance was outstanding in all segments, and supply improvements in MNCS and water infrastructure enabled increased conversion of orders into revenue. Geographically, the growth was broad-based. Western Europe was up 9%, North America 6%, and emerging markets, excluding China, was up double digits. While China was down due to COVID lockdowns, backlogs continued to grow on underlying demand. In addition to organic revenue growth, the team posted 6% orders growth, That order's momentum reflects strong performance across each segment. Water infrastructure set the strongest pace, growing orders 21% in the quarter. Our backlogs were up sharply versus last year, with digital solutions comprising more than half the total backlog. EBITDA margin also came in well ahead of our guidance. We delivered strong quarter-on-quarter expansion driven by disciplined execution. All of that good work delivered earnings per share of 66 cents, which soundly beat our expectations. As you can see, some incremental improvement in chip supply came earlier than anticipated, and it had a strong positive impact on the quarter. To be clear, we don't believe chip supply will improve much more quickly than previously expected. What we are seeing is a gradual improvement in supply, which provides further confidence in our second half outlook. The team also delivered pricing actions to mitigate inflation across all segments. And I want to give a big shout out to the entire team, including our distribution and channel partners, for managing through a dynamic market environment. We combined those discipline actions with productivity savings from simplifying the way we work and entirely offset inflation in the quarter. We expect demand to remain resilient due to the essential nature of the services our customers need from us. So as you've seen in this morning's release, we are raising our organic revenue guidance to 8% to 10% growth for the full year. And we're raising the bottom end of our EPS range by $0.10. We'll come back and discuss our full review of the macro environment in a few minutes. But let me hand it over now to Sandy for some additional color on the second quarter.