Xylem Inc.

We stand by. Your program is about to begin. If you need any assistance during your conference today, please press star zero. Welcome to Xylem's fourth quarter and full year 2022 earnings conference call. At this time, all participants have been placed on 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 star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star 0. I would now like to turn the call over to Andrea Vanderberg, Vice President of Investor Relations.

Thank you, Operator. Good morning, everyone, and welcome to Xylem's fourth quarter and full year 2022 earnings call. With me today are Chief Executive Officer Patrick Decker, Chief Financial Officer Sandy Rowland, and Chief Operating Officer Matthew Pine. They will provide their perspective on Xylem's fourth quarter and full year 2022 results and discuss our outlook and guidance for 2023. 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 on the Investors section of our website, www.xylem.com. A replay of today's call will be available until midnight, February 14th. Please note the replay number, plus 1-800-8255. or plus 1-402-220-1111. 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'll 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 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. Please turn to slide three. We have provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics. For purposes of today's call, All references will be on an organic and adjusted basis unless otherwise indicated, and non-GAAP financials have been reconciled for you and are included in the appendix section of the presentation. Now, please turn to slide four, and I'll turn the call over to our CEO, Patrick Decker.

Thanks, Andrea, and good morning, everyone. As we indicated in our press release, the team delivered a very strong operational performance in the fourth quarter, exceeding our expectations across each segment and region. and strong backlog execution delivered 20% revenue growth for the quarter and healthy EBITDA margin expansion. That performance continued and built upon the team's solid delivery through the year, fueling healthy momentum coming into 2023. On a full year basis, revenue grew 11% and earnings per share grew 14%. Water infrastructure grew 15% in the quarter on robust utilities and industrial demand in the US and Western Europe, and the segment was up 12% for the full year. MNCS posted very strong fourth quarter performance. The segment was up 35% in the quarter on backlog execution from improved chip supply and continued strong demand, bringing full year growth to 8%. Applied water grew 17% in the quarter and finished 2022 with 14% growth for the full year. Overall, higher volumes and positive price-cost performance drove significant EBITDA margin expansion in the quarter, up 250 basis points versus the same period a year ago. The team delivered that growth and margin performance on continuing resilient demand globally. We saw healthy orders grow sequentially, and for the full year, orders were up 4%, demonstrating the durability of our business. I am so proud of the team's performance in serving our customers and of their commitment to our purpose, solving water. The global trends driving investment in water systems continue to intensify, and as today's results demonstrate, we are already very strongly positioned to address them. That said, our recent agreement to acquire Avoqua announced two weeks ago will create a powerful platform to address the world's most critical water challenges with greater capability, depth, and scale. We've begun the important work of integration planning to set the combined company up for success and are well into the process of seeking the necessary approvals. Until the deal closes, which we anticipate will be mid-year, we remain focused on delivering results for the stakeholders we serve today. On that standalone basis, we see continuing resilient demand in our largest end markets, particularly utilities, despite the possibility of macroeconomic softness, execution of our backlogs with ongoing price-cost discipline, further supply chain improvements, and a return to 100% free cash flow conversion. We expect that this will allow us to deliver 2023 organic revenue growth in the mid-single digits with solid EBITDA margin expansion, resulting in earnings per share between $3 and $3.25, up 10% versus last year at the midpoint of the range. We'll give more color on the outlook and guide in a moment, but first I'll hand it over to Sandy to dig in briefly on the quarter's results before we look ahead at 2023.