Good morning, and welcome to the Pentair Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode for the duration of the call, and should you need any 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, then one on your telephone keypad, and to withdraw a question, please press star then two. Please also note that this event is being recorded today. I would now like to turn the conference over to Shelly Hubbard, Vice President of Investor Relations. Please go ahead. Thank you, Joe, and welcome to Pentair's Second Quarter 2023 Earnings Conference Call. On the call with me are John Stauch, 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's 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 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. Following our prepared remarks, we will open up the call for questions. Please note that we will limit your questions to two, after which we ask you to then reenter the queue in order to allow everyone an opportunity to ask questions. Before I hand it over to John, I wanted to highlight slides four through seven in our earnings slide deck that include our strategic framework, Pentair at a glance, a Pentair overview, and our newest slide illustrating our ESG highlights and progress. These four slides provide a good snapshot of who Pentair is, especially for those new to our company. Our strategic framework states our purpose, mission, vision, and values that drive our performance as a smart, sustainable water solutions company. Pentair at a glance on slide five provides a great snapshot of our company, our performance, our installed base, and our 47-year track record of annual dividend increases, which places us in a small group of companies. The Pentair overview on slide six provides our historical sales and ROS performance on a consolidated level and by segment. Lastly, our ESG highlights and progress shown on slide seven are a testament to the important work our teams do to integrate sustainability into our operations, product innovation, and long-term strategy. We are very proud of our achievements to date, especially considering the early stages of our program, which began just about three years ago. I will now turn the call over to John. Thank you, Shelly. Good morning, everyone. Let's begin with our record Q2 results and the executive summary on slide eight. In Q2, we achieved record sales, segment income, return on sales, EPS, and free cash flow following the separation of nVent from Pentair in 2018. Specifically in Q2, sales increased 2% to nearly $1.1 billion. Segment income increased 14% to $234 million. ROS expanded by 230 basis points to 21.6%, driven by margin expansion across all three segments. Adjusted EPS rose 1% to $1.03, and free cash flow was $433 million. With another strong quarter financial results, we are raising our 2023 adjusted EPS range to $3.65-$3.75, which increases the midpoint of our range to $3.70. We also continue to strengthen our balance sheet and reduced our net debt leverage ratio to 2.2x EBITDA at quarter end, down from 2.6x in Q1. We believe our record second quarter performance demonstrates the power of our global, diversified water portfolio and strong execution across all three segments: IFT, Water Solutions, and Pool. Our strategy to help the world sustainably move, improve, and enjoy water, life's most essential resource, is proving its resilience. For example, like last quarter, sales growth in our IFT and Water Solutions segments more than offset the expected sales volume declines in Pool year-over-year. Margin expanded across all three segments, driven primarily by price, cost actions to rightsize our direct labor and Pool, the elimination of 2022 manufacturing and supply chain inefficiencies, and continued progress on our transformation initiatives that are beginning to read out. Lastly, I want to thank our employees across the globe for their hard work, dedication, and contribution to delivering another strong quarter for customers and shareholders. Let's move on to slide nine, titled Q2 Segment Highlights. Within IFT, we achieved record sales driven by double-digit growth across our commercial and industrial businesses. Commercial and infrastructure flow delivered strong sales growth across all categories, primarily due to our strong backlog, aftermarket, and replacement sales in our pump portfolios, carryover pricing actions from 2022, and stabilization in the supply chain. Industrial Solutions also delivered strong sales growth, driven by global key account expansion, new business partnerships, and aftermarket and replacement sales in our components and membranes portfolios. Record margins in Q2 were primarily driven by price and transformation. In addition to implementing our transformation initiatives in IFT, we have also focused on capturing the right projects with improved offerings to drive margin expansion. In Water Solutions, our commercial offerings drove very strong sales growth and margin in Q2, which benefited in part from the continued recovery of food service and hospitality venues post the pandemic, and a shift in consumer behavior from products to services. In fact, in 2023, the number of locations of the top five hundred chain restaurants in the US now exceeds the 2019 benchmark, according to the Technomic Top Five Hundred Chain Restaurant 2023 report. We also saw strength in commercial filtration sales in North America. Our Manitowoc Ice acquisition continued to outperform our expectations, delivering strong sales and margins that were accretive to the Water Solutions segment. Over the last few years, Manitowoc Ice has expanded its sales, driven by a focus on its consumer with a targeted go-to-market strategy, effective management of macro supply chain challenges, and reliability in its supply chain to deliver product with better lead times. We are very pleased with the acquisition and how it complements our commercial water solutions businesses, enabling us to provide end-to-end water solutions for customers, from filtration to ice to services. Lastly, we believe that the residential water treatment is nearing the bottom of the cycle. We believe our residential business is stabilizing and lead times have improved. Awareness of PFAS, or forever chemicals, that have been found in drinking water continues to rise. We are proud to say that we have products today for residential consumers that reduce PFAS to current certification levels, and we continue to drive new innovation and invest in R&D to be able to provide more products that are certified to reduce PFAS. We believe we have positioned the company well to be a leader in this space. Within Pool, 2023 has been a softer and difficult year, as we expected, given the higher than historical demand in 2021 and 2022, coupled with supply chain challenges that disrupted our lead times during those periods. Our lead times have returned to approximately five days on most of our products. However, the channel continues to work through higher inventory, creating a sell-in versus sell-through imbalance for Pentair in 2023. Despite these lower volumes, in Q2, we drove significant margin expansion from price, cost actions to right-size labor to lower volumes, eliminated 2022 sourcing and manufacturing inefficiencies, and delivered transformation savings. We continue to expect Q3 to reflect a bottom in pool volume for Pentair, as we expect higher channel inventories to correct, allowing for sell-in to be more closely aligned with sell-through. We have noted in the past that our typical pool sales mix reflects 40% from new and remodeled pools and 60% from the aftermarket break and fix replacement sales. While the number of new pools this year is lower than the elevated number of new pools built during the pandemic, the installed base of U.S. Pools has continued to grow. Despite the short-term reset in 2023, we believe pool remains an attractive market. Before I turn it over to Bob, let's turn to slide 10, titled CEO Summary. We delivered another quarter of quality earnings with ROS expansion across all three segments. Our IFT and Water Solutions segments more than offset Pool volume declines, and our transformation initiatives are well underway. Our strong first half has resulted in another 2023 guidance increase, and we believe our Pool business is well positioned for return to growth following the channel inventory correction, which we expect to be completed by Q3 quarter end. All in, we are building a strong foundation to drive long-term growth and profitability across our diverse water portfolio. We are introducing Q3 guidance and raising the full-year adjusted EPS range to $3.65-$3.75. The midpoint of $3.70 is up $0.05 from prior guidance due to strong Q2. We have also updated our segment sales expectations to reflect stronger sales in IFT and Water Solutions, driven by a strong first half of 2023, and lower expected sales in our Pool segment. We continue to closely monitor macroeconomic developments and remain mindful of an uncertain operating environment. We continue to implement risk mitigation strategies, and we are accelerating transformation funnels as necessary while focusing on investing in the long-term growth of our company. We remain confident in our diversified water business model, long-term strategy, and our transformation initiatives, which we expect to continue to drive shareholder returns. We have a long, successful track record of generating strong cash flow and being disciplined with capital allocation. We have achieved 47 consecutive years of dividend increases and are targeting high teens ROIC. We have a strong balance sheet and an enviable five-year track record in financials. I will now pass the call over to Bob, who will discuss our performance and financial results in more detail. Bob? Thank you, John, and good morning, everyone. Let's start on slide 11, titled Q2 2023 Pentair Performance. We delivered record second quarter sales of nearly $1.1 billion, up 2% year-over-year. This is compared to a previous sales record in last year's Q2 of $1.06 billion, post the separation of nVent from Pentair in 2018. Our IFT and Water Solutions segments continued another quarter of strong sales performance, which more than offset lower Pool volumes. Sales growth in Q2 included strong price contribution and the Manitowoc Ice acquisition, which closed in July of 2022. The volume decline in Q2 was primarily related to our Pool and other residential businesses, which was partially offset by strength within commercial and industrial. Please note that where I reference record results, I'm referring to Pentair's performance post the separation of nVent from Pentair in 2018. Core sales improved 9% in both IFT and Water Solutions, with Pool declining 28%. Compared to the prior year periods, Pool sales increased 19% in Q2 2022, and 49% in Q2 2021. Second quarter segment income increased 14% to a record $234 million, and return on sales expanded 230 basis points year-over-year to a record 21.6%. This improvement was driven by price more than offsetting inflation, accretive segment margins from our Manitowoc Ice acquisition, the elimination of 2022 manufacturing and supply chain inefficiencies, and productivity benefits from our transformation initiatives. We delivered record adjusted EPS of $1.03. Net interest expense was $33 million. Our adjusted tax rate was 15% during the quarter, with a share count of 166.1 million. Please turn to slide 12, labeled Q2 2023 Industrial & Flow Technologies Performance. Industrial & Flow Technologies sales increased 9% year-over-year, driven by commercial sales growth of 28% and industrial sales growth of 13%, which more than offset a decline in residential sales of 4%. Segment income grew 27%, and return on sales expanded 250 basis points to 18.2%, marking the fourth consecutive quarter of equal to or greater than 200 basis points of improvement. The strong margin expansion was a result of price offsetting inflation and continued progress on our transformation initiatives. Please turn to slide 13, labeled Q2 2023 Water Solutions Performance. In Q2, Water Solutions sales increased 51% to $336 million, driven by our Manitowoc Ice acquisition, volume, and price. Manitowoc Ice has continued to exceed our expectations. Q2 sales were approximately $135 million, up roughly 30% compared to the prior year period. Segment income grew 130% to $75 million. Return on sales expanded 760 basis points to 22.2%, driven primarily by our Manitowoc Ice acquisition, as well as efficiencies from our transformation initiatives. Within our residential business, we are seeing North America stabilize. We have also been evaluating our SKU mix and reducing complexity. Please turn to slide 14, labeled Q2 2023 Pool Performance. In Q2, Pool sales declined 28% to $334 million. The volume decline of 36 points was primarily due to channel inventory corrections in Q2. This year, a strong Q2 2022 comparison and cooler and wetter than usual U.S. weather. The pricing benefit of eight points helped partially offset the volume decline. Despite lower pool sales in Q2 2023, return on sales expanded 190 basis points due to price significantly offsetting inflation, right sizing direct labor to align with lower volumes, the elimination of 2022 manufacturing and supply chain inefficiencies, and benefits from our transformation initiatives. Please turn to slide 15, labeled Pentair Pool Sell-In versus Estimated Industry Sell-Through. This slide provides an illustration of our pool sale sell-in and the estimated comparison to industry channel sell-through since 2019. Here you can see the imbalance of sell-in and sell-through beginning in 2020 and continuing to expand in 2021 and 2022 due to record inflation and supply chain disruption. In 2023, we have returned to normal lead times and sell-through is returning to normalized levels. We expect sell-in and sell-through to rebalance by 2024. following approximately $150 million of channel inventory correction in 2023. We expect this 2023 inventory correction to become a tailwind in 2024. Please turn to slide 16, labeled Transformation Initiatives. Our transformation initiatives focus on four key themes: pricing excellence, strategic sourcing, operations excellence, and organizational effectiveness. As we've mentioned in past quarters, we expect strategic pricing actions to benefit the top line of all three of our segments. We expect our other three transformation initiatives to help improve our overall cost structure. As a result, we are targeting ROS of approximately 23% by the end of fiscal 2025, expanding margins over 400 basis points as compared to fiscal 2022. Please turn to slide 17, labeled Transformation Runway. As you look at each of the four key themes, you can see that the work within these transformation initiatives is in various different stages. For example, in 2023, we are beginning to see early readouts from wave one within pricing, sourcing, and operations. We are beginning wave two within each of these three themes and expect margin benefits to read out in 2024. You can see how each new wave compounds on the other to drive expected margin expansion year over year through 2025 and beyond. In pricing excellence, the strategic pricing playbook has been developed, which is planned to be rolled out by category within each segment. We have completed internal training and plan to implement these actions over the next few months. In strategic sourcing, the implementation of wave one is underway, with savings currently reading out. We expect to kick off wave two later this summer, with readouts beginning in 2024. Incremental to our strategic sourcing waves, we have seen benefit from our rapid renegotiation process that is part of our transformed sourcing excellence work. In operations excellence, we have completed the consolidation of two facilities while continuing our execution on lean transformation plans across our sites. In organizational effectiveness, we are in the earliest stages with wave one and expect margin benefits to be realized beginning in 2024. Due to the staggered nature of these transformation initiatives, you can see that what we expect wave three to begin to read out post 2025 in operations excellence and organizational effectiveness. Overall, we are excited about the savings we have begun to realize from the early waves and remain confident that our teams can execute on pricing actions and savings we have identified, particularly in sourcing. Please turn to slide 18, labeled Balance Sheet and Cash Flow. With our record free cash flow in Q2 of $433 million, up $144 million from the prior year period, and the repayment of debt, we have lowered our pro forma net debt leverage ratio to 2.2x, down from 2.6x in Q1. As a reminder, our second quarter is typically our highest free cash flow quarter. We expect our full-year free cash flow to be in line with our historical performance of approximately 100% net income. Our return on invested capital was 14.9%, which includes debt from the Manitowoc Ice acquisition, but only approximately four quarters of Manitowoc EBITDA contribution. Our target ROIC is high teens. In Q2, we entered into interest rate swap and collar agreements in order to hedge our variable rate debt. Our variable to fixed debt is now 48% and 52%, respectively, with an average rate of approximately 5.3%. We have no significant long-term debt maturing for the next five years, and the majority of our debt is in term loans going out three to five years. We plan to remain disciplined with our capital and continue to focus on debt reduction amid the higher interest rate environment. Moving to slide 19, titled Q3 and Full Year 2023 Pentair Outlook. For the full year, we are raising our adjusted EPS guidance to approximately $3.65-$3.75, increasing the midpoint to $3.70. For the full year, we expect sales to be roughly down 2% to flat, which is unchanged from our prior guidance in Q1. Segment income to increase 10%-12% as compared to up 7%-10% in prior guidance, with corporate expense of approximately $80 million, net interest expense of roughly $125 million, an adjusted tax rate of approximately 15%, and a share count of 165 million-166 million. Our assumptions on corporate expenses, net interest expense, adjusted tax rate, and share count remain unchanged from guidance provided last quarter. The third quarter, we expect sales to be down approximately 7% versus last year's near-record Q3. This is mainly attributable to lower year-over-year Pool sales, as we expect the channel inventory correction to be completed by quarter end. We are also introducing adjusted EPS guidance for the third quarter of approximately $0.84-$0.89. We expect segment income to decrease 1%-6%, with corporate expense of approximately $21 million, net interest expense of roughly $31 million, an adjusted tax rate of approximately 15%, and a share count of 165 million-166 million. Moving to slide 20, titled Full Year 2023 Guidance at Midpoint. At the midpoint, we continue to expect total Pentair sales to be down approximately 1% to approximately $4.1 billion. Due to strong Q2 performance in IFT and Water Solutions, we have updated our segment sales assumptions as follows: We now expect IFT sales to be up approximately mid-single digits, up from low single digits. Within IFT, we expect residential to be down approximately mid-single digits and commercial and industrial to be up low double digits. Water Solutions sales are expected to be up high teens versus mid-teens. Commercial is expected to rise approximately 50%, with residential sales down roughly 10%, and the expected Pool sales range remains unchanged at approximately down mid-teens, although we now expect sales to be down at the higher end of this range due to a softer Q2. As we have discussed in prior quarters, our Pool sales consist of approximately 40% from new and remodeled pools and 60% from aftermarket. Within our current Pool guidance, we now expect new pools and remodels to be down approximately 25%-30% versus previous assumptions of down approximately 25%, and inventory and aftermarket to be down roughly 20%, unchanged, with approximately two-thirds of the decline relating to inventory corrections. We expect price to be up roughly mid-single digits. We expect Pool sales to return to more normalized sell-in in 2024, after absorbing significant inventory correction headwinds in the current year. Segment income is now expected to increase approximately 11% at the midpoint, as compared to 9% previously, with ROS expansion of over 200 basis points to 20.9%, up 40 basis points from our Q1 guidance. Overall, we are excited about the future. We believe the diversification of our portfolio has proven that we can weather challenges in one segment while continuing to grow total Pentair sales and expand margins across all three segments, despite significant volume declines in our residential businesses. We are seeing progress in our transformation initiatives, generating strong free cash flow and further strengthening our balance sheet with the repayment of debt. Before I turn the call over for Q&A, I wanted to highlight why we believe that Pentair is a compelling investment opportunity. Please turn to slide 21. There are six distinguishing characteristics that we believe sets Pentair apart. We are an industry leader with a diversified brand portfolio and a focus on driving innovation across all three segments. We have a transformation strategy that is expected to drive operational efficiencies and margin expansion. Our ESG focus is on making life better for people and the planet with our smart, sustainable water solutions. We recently published our 2022 Corporate Responsibility Report, highlighting progress towards our strategic targets. We have favorable secular trends driving end-market growth. We have a strong balance sheet and cash flow, which we expect to drive additional value creation, and we are a Dividend Aristocrat with 47 consecutive years of increased dividends. I'd now like to turn the call over to the operator for Q&A, after which John will have a few closing remarks. Joe, please open the line for questions. Thank you. We will now begin the question-and-answer session. In the interest of time, we ask that you please limit yourself to one question and one follow-up. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw a question, please press star, then two. At this time, we will pause just momentarily to assemble our roster. Our first question here will come from Julian Mitchell with Barclays. Please go ahead. Thanks. Good morning. My first question, I suppose, was really around, you know, when we're looking at a couple of the guidance increases in the non-Pool divisions, just wanted to try and understand the cadence of sales a little bit better through the back half. You know, if I look at the Water Solutions business, for example, it looks like the guide implies, you know, pretty heavy sequential declines in Q3 and Q4. Just wanted to make sure I understood that right. Also within IFT, you know, the guide's implying year-on-year growth evaporates in the back half. Is that just a function of comps or something changing in the end market sell-through? I think we would describe it as more moderating, Julian. I think clearly, you know, our Manitowoc performance from a year-over-year basis, there's a huge acquisition component year-over-year, but there's also their organic growth of nearly 30%, as Bob mentioned in his comments. Those are the result of industry demand and our ability to fulfill those industry demand, eventually we start to moderate and compare against year-over-year comps that are more normalized. In the IFT side, I think what we're seeing is really strong growth in commercial industrial, again, backlog related, that will again moderate the back half of the year. Moving to what I would say is more normalized growth rates that we would expect on a longer-term basis, Julian. Understood. Thank you. Then just my quick follow-up, on the Pool segment. On that point on inventories, there's obviously the sort of the weather impacts early in the second quarter, which have been very well flagged for months now. Is your point that that, you know, maybe delayed the requisite inventory depletion early on, but what's happened, say, so far in Q3, that's why you feel confident that the inventory depletion is on track to be finished by the end of September? You know, maybe just any color on how your conversations with channel partners and what you see on sell-through, how has that evolved in the last two to three months? I think just on the Q2 numbers for Pool, I mean, it's solely, in my opinion, related to more inventory coming out of the channel than we expected. I think the channel's done an amazing job of working and moving and migrating the inventory around branches to where it's needed, and they are aggressively working to eliminate that extra inventory from the channel. I think as we talk to our channel partners for Q3 and Q4, we continue to believe that all of the inventory or the excess inventory will be worked out in Q3, reflecting our current guide, and we would be talking on more normal early buy discussions as we ramp into Q4 as we anticipate the 2024 demand and coming back to a more normalized seasonal performance. That being said, Pool is, in our opinion, really low in Q3 from our revenue forecast as it deals with that, volume decline for us related to that inventory and channel correction. Our next question here will come from Andy Kaplowitz with Citigroup. Please go ahead. Hey, good morning, everyone. Hey, Andy. John and Bob, maybe give us a little more color into, you know, the progress on transformation, because, you know, if you look at the segments, obviously, you know, IFT, for example, you know, 18.2 seems, you know, quite a bit ahead of plan. What has gone right for you guys here over the last couple of quarters, and would you expect that progress to continue? I would say we're very pleased with, you know, wave one, across the board, particularly pleased within sourcing. As a reminder, wave one consisted mainly of motors and drives, casting, electronics, logistics, packaging. Then wave two, you can think of that as being metals, resins, purchase finished goods, and a component of indirect spend. We've seen a lot of benefit within the transportation area, within wave one, and 2024 is setting up for benefits in the other components of the wave one spend. One of the areas that we've done a really nice job is capturing deflation, particularly across resins, plastics, motors, metals, and castings, where our team went in and did an expedited response to what they saw in the global marketplace. We're able to strengthen relationship with suppliers and actually take advantage of pricing that was coming down in a number of different commodity groups. I would say within the ocean space, the expedited air, on the air consumption, that's down over 50% from where it was last year, and ocean rates are down some 65%. The final thing I would say is that we've done a really nice job of right-sizing to the volumes that we expected from a direct labor perspective, and that's all about having headlights into the business and taking the corrective action. Finally, there were a lot of inefficiencies in 2022. Spot buys, expedites, partial truckloads, partial completion of products where we'd have to push a 90% complete product off the line and wait for a part to come in. We had overtime, attrition. We've done a really nice job of addressing those inefficiencies as part of the transformation as well. Across the board, we're very pleased, and I'm very thankful to the team that works on this every day. Bob, it's good color. Then maybe a somewhat related question around pricing, and particularly in Pool. You know, I know it's one of your initiatives there, too, but, you know, maybe you could talk about your ability to hold price, you know, given the way the markets are. Have you seen any deterioration? Obviously, your margins were still good, and how would you think about Pool margin moving forward? I think as we head into 2024, you know, we're certainly pleased with the way prices held up in 2023, in relationship to what Bob said, and I think that's indicative of the way that our ROS expansion has unfolded. I think we're going into more normalized pricing environments now, Andy, and I think that means that we have to rely on those price increases and work hard on the productivity aspects to drive the margin. I think we're gonna see normal, then I think it depends on how these industries fare as to what would be the expected hold rate or the realization rate of those price increases in 2024, it's way too early to tell. Our next question here will come from Bryan Blair with Oppenheimer. Please go ahead. Thank you. Good morning, everyone. Morning. Morning. I wanted to ask about transformation, obviously driving, you know, pretty strong results already, and you've noted that you're, you know, early stage in the respective waves of those initiatives. As we look to your 2025 ROS target, to level set, what are you baking in for core growth between now and then? What level of reinvestment is contemplated? The reason I ask is that just the simple math, if we assume any core growth and, you know, kind of moderate realization of the sourcing opportunity that you've identified, that seems to drive, you know, ROS above the targeted range, the other levers, you know, imply pretty solid offset. Yeah, I think that's fair. Bryan, I think I would talk about as Bob mentioned, we're really pleased on the early indications of transformation. A reminder, you know, we're using outside partners to give us benchmark looks at what's possible, and working with us to give us breakthrough thinking and putting in establishing core processes to drive this transformation, so we feel like it's gonna be consistent and predictable. The one thing that I would share with you, though, as you look at our targets, is they're also inclusive of investments. We have a lot of energy around investing in our channels, our obsession around customer experiences, improving those customer experiences, and investing in innovation, and those are offsets to the transformation benefits that we would expect. As you can imagine, you know, Pool has been an innovation leader for many years. It's been playing a little bit of defense lately, and we want to put our foot to the pedal there and really drive on both product innovation and go-to-market innovation. Expect us to invest back in our businesses. Understood. It all makes sense. Appreciate the color. I know your team's been focused on debt reduction since the Manitowoc Ice close, but your balance sheet's already in, you know, pretty solid shape. You're generating really robust cash flow. Given your financial position and, you know, clearly successful integration of Manitowoc Ice, just wondering if your team will get back to bolt on or tuck in M&A over the near term. I would say that the focus for this year continues to be on debt paydown, where interest rates are. We think that's the wisest use of the capital, and then that creates optionality going into 2024 around share repurchase and M&A. Our next question here will come from Mike Halloran with Baird. Please go ahead. Hey, good morning, everyone. Good morning. Good morning. A couple commercial questions here. First, on Manitowoc Ice, can you just give some context to what's going on in the channel right now? You know, I guess a little from an inventory perspective, but more from what are the customers saying from a demand perspective, how do you think about the sustainability of what you're seeing underneath the hood? Some comments on how Manitowoc Ice is performing well to peers would be great. I think if you look back at the, you know, eight years prior to 2019, you know, seven, eight years, like, this has historically been a 5%-6% steady grower. You know, with some years that might be slightly higher or slightly lower based upon, you know, how the restaurant and hospitality market unfolds. You know, clearly, if you take 2019 as a starting point to where we expect 2023 to finish, you know, think about being high single digits. What we want to remind people is there's a significant catch-up to the significant downturn that hospitality industry has faced, and that's a big part of the startup and the demand. As I referenced in my note, we're now back slightly above the 2019 restaurant numbers. I think we're gonna see more of the historical trend pattern as we look forward in this business going forward. Our ability this year to grow faster was the share capture that was really based upon having gone through the supply chain work that we're doing elsewhere in Pentair. Ironically, and completely coincidentally, Manitowoc is using the same source partner that we're using on the rest of Pentair and started that sourcing initiative three to four years earlier than us. They were able to put the supply chain into place that allowed them to be prepared and ready to partner to get these increased demands, and that's been a big benefit to the Manitowoc business. It's also very encouraging for us on what the rest of Pentair can realize as well. Oh, no, good point. Thanks. kind of answered I was gonna ask on the commercial question for the second part there on an outlook side. Let me pivot to the IFT piece. you know, it's nice to see the margins kind of trunch higher these last couple of quarters. I was just hoping to get a little bit more context to how you think about. what that progression forward looks like for the segment, specifically, how much impact the mix is gonna have? Clearly, the transformational piece is a core part of that progression. If there's any moving pieces below the hood that we should think about as we look to the back half of the year there. Yeah, a special call out to our commercial and infrastructure team on, you know, just getting to margins and ROSs that, quite frankly, Mike, I didn't think were possible, right? I think they're doing it while they're growing, which is extremely encouraging. That being said, I think as we go forward, it's gonna be about how we continue to win projects and jobs that have aftermarket service componentries to them, how we can grow at mid-single digits while maybe more likely maintaining these margins. Because as you know, when you get these tailwinds in the industry, it's easy to be selective. It's harder to be selective when the jobs get tougher to find. I think that's the discipline we're putting into the group, but it's really encouraging to see the progress they made. I think they still see opportunities to expand the ROS. Again, this is an area we'd wanna invest in. As you know, one of the things that is always talked about is blue water, right? We're really strong on the fire pump side, and we've been able to find synergies by bringing the clean water side to some of the projects we've worked on, and we've been able to do that at the appropriate margins. It's really encouraging to see that growth and the margins at the same time, Mike. Our next question here will come from Brian Lee with Goldman Sachs. Please go ahead. Hey, guys. Good morning. Thanks for taking the questions. A lot of mine have been covered, but I had a couple maybe modeling specific ones. I guess on the record ROS, when I look at the full year guide, I know this might be a little bit just timing related or, you know, and maybe a little bit of nitpicking, but it seems like the implied ROS is down here in 4Q. Can you kind of walk us through some of the puts and takes just in exiting the year, as you think about, you know, driving more expansion into 2024, as your comments suggested? The guidance that we've given actually has us expanding ROS year-over-year, both in Q3 and even more significantly in Q4. That is one of our rallying cries, is to continue to expand ROS, year-on-year. Again, a little bit less than in Q3 because of the headwind of the Pool business, but overall, transformation continues to read out in the back half of the year. Okay, understood. Yeah, we'll go back and take a closer look at the model. Then maybe just on Pool, you know, it sounds like you're pretty confident around, you know, trends bottoming here, inventory, sell-through, sell and normalization. I know it's probably too early to tell, but any initial thoughts around what all of that points to if, you know, the rest of this year kind of goes according to plan in Pool? Are we thinking about a reasonable base case, you know, back to, like, mid-single digit volume, maybe low single digit type pricing tailwinds in 2024? Just sort of what's the setup as you think about what the normalization, and how quickly it plays out, gets you to in terms of a reasonable base case to get back to normal growth trends in 2024, potentially? You know, one of the reasons why we added that, that extra chart was to try and give some view of the headwinds this year and what could be a potential tailwind for next year. We did quantify the inventory correction at about $150 million. And so that will not repeat next year. In itself, that's $150 million good guy in 2024. We're not giving any view as to what, you know, aftermarket might grow. Still too early from that perspective. From an overall pricing perspective, you know, price has been sticky from our perspective, and that we do expect, you know, price increases as we go into next year. Our next question here will come from Andrew Krill with Deutsche Bank. Please go ahead. Hi. Thanks. Good morning, everyone. Wanted to go back to Water Solutions. You know, here, the margins were, you know, very strong in the second quarter, and historically, you know, they've had a, a nice sequential step-up going into three Q. I know Manitowoc kind of changes the mix a bit, but, you know, do you still expect a, a meaningful increase sequentially there for the margins? Yeah, we sequentially will be roughly in line, I would say, to maybe slightly down because we just won't drive that amount of volume and necessarily get the leverage that we saw from a nice perspective. But overall, when we look at the different pieces, the filtration, as well as the residential piece within Water Solutions, we continue to see transformation playing a big role. I would say year on year, significant ROS expansion in Q3 for Water Solutions. A little bit of pressure as you go from Q2 to Q3, just because to John's earlier point, you know, seasonality does start to return to more normalized levels. Okay, great. Makes sense. To the extent you're willing to comment on, you know, weather seems like it's normalized so far in July. Just any comments you can give on July trends so far for Pool and then maybe just for the broader company as well? Thank you. I hate to bring the weather word into the focus, as I said earlier, I don't think it played as much into our Q2 pool softness as the inventory correction did. You know, weather usually and tends to work its way out eventually, you know, throughout the period. I would say right now we're seeing heat trends that, you know, have some positives in, in certain areas to driving demand, and at the same time, when it gets this hot, you don't necessarily need heaters. I would not bring weather into our forecast at all. I think everything we know today, from our weather forecasting has been included in our guide, we don't expect weather to be a big part of our discussion going forward. Our next question here will come from Stephen Tusa with JPMorgan. Please go ahead. Hey, guys. Good morning. Hey, how are you doing? Hi, Steve. Not too bad. I'm not gonna ask you about the assumptions that underlie your weather forecast. I mean, Yeah. Just on, you know, the kind of phases of this transformation, you know, you mentioned logistics. I mean, obviously, the logistics prices in general are down. How do you like disaggregate what you guys are doing versus just like the normal deflationary cycles that are happening in these types of materials? From our perspective, and I'm not trying to be flippant here, but even in the deflationary environment, there's work to be done. We need to go back to the suppliers and point out, you know, commodity prices that are coming down. Our view is that, you know, either through our negotiation process, either through the structured 11-gate process within wave 1 and wave 2, we have to understand the market, first of all, make sure we're asking for price decreases or longer-term price stability. It's all part from our perspective of that strategic sourcing initiative. Steve, I agree everything Bob said, and, you know, we're happy, but it is a benefit of the deflationary and work we do to negotiate. Also, we have reduced our carriers by almost two-thirds, and we did do a series of route optimizations and choose partners that are best to serve the routes and the lines that we need, and that was a big part of the work that's generating the savings. Right. That makes sense. Can you just remind us what the benefit from transformation is for next year? I'm not sure if you mentioned that earlier in the call. Did not. Can you just update us on what you expect that to be? What we've said up till now is we'll go from what will be roughly a 21% ROS this year to 23% by 2025, and our view is that's roughly linear as we get to that 23%. Transformation plays a big piece of that margin expansion. What%? Larger than that increase, because we're also putting back investment, Steve. I, you know, I think the next wave that we'll start to realize is the significant wave one benefits of the purchasing savings and direct material that we're doing. You could assume that, as Bob said in prior comments, that that's a double-digit savings against about a third of the material buy. Sorry, one more on all this. Where will that show up in the bridges? Will that show up as in all parts of the bridges or productivity? It won't be part of, like, inflation. If you execute better on some of those purchasing initiatives, you know, maybe that shows up in net inflation. You're saying that the transformation will be bucketed in that productivity bar? Correct. Okay, great. Price bar and productivity bar, correct. The price bar as well? Well, price is the transformation work we're doing on the strategic price initiatives, right? It's a piece of the price contribution. The productivity or the transformation is a piece of the productivity contribution. Okay. Okay. That's it. That's helpful. All right. Thanks, guys. Our next question will come from Jeff Hammond with KeyBanc. Please go ahead. Hey, good morning, guys. This is David Tarantino on for Jeff. Morning. Maybe just to attack the margins a bit different. Margin's been pretty impressive the last couple of quarters. Could you parse out what the price cost tailwind just kind of from carryover and normal pricing actions, and what was kind of the early benefits from the transformation program? Yeah, when you look at, you know, price has read out nicely in the first two quarters, that will moderate in the back half and basically land around that mid-single-digit price benefit for the year. We are taking advantage primarily of carryover pricing with that advantage. Just as a reminder, there were many years, or at least a couple of years, where we were catching up, and price versus cost was a headwind. It has been a tailwind over the last few quarters, but think of that as mainly carryover pricing decisions we made last year that benefited the first half. Great. Thank you. Then maybe just to clean up one on Pool, maybe outside of the destock, how would you describe the sell-through in the channel versus expectation? Seems like trends are maybe a bit softer. Then on that, kind of, maybe could you level set us on what you would expect the magnitude of the pre-buy, like what's implied in the guide, given we've had. an unusual, recent couple of years. Yeah, I'll take the first one. I think sell-through, as a whole this year through the first couple quarters, is slightly behind our original expectations. I think that is a combination of, you know, some of the pre-buys that happened in previous periods. It's also probably discretionary items that are being pushed out as consumers are dealing with the rest of their finances. Then, as has been mentioned from the industry, I think some of the finance pools are slower than they were originally anticipated. As we go forward and you look at early buy, we talk about normalized early buy. You know, about half of our Q4 shipments fall into those early buy categories. The rest of the Q4 shipments are generally more standard orders. You know, we work those programs through the end of Q3 into Q4. Generally, we know what those orders are and would know what those orders are at the Q3 earnings call. Our next question here comes from Damian Karas with UBS. Please go ahead with your question. Hey, good morning, everyone. Maybe in the spirit of the summer, a couple follow-up questions on Pool. Business is obviously operating at a really healthy level of profitability despite the demand pressures you're facing now. Just curious how you're thinking about Pool margins and what the. Damian, you're breaking up just a little bit. I apologize. Can you hear me? If you wouldn't mind repeating the question, please. Yeah, absolutely. I just wanted to ask you about Pool margins. I mean, you know, it's very profitable right now, despite the volume pressures. How are you thinking about what that trajectory should look like next year as, you know, the inventory headwinds reverse and you get a demand recovery? Repeat on the question? We'll move on to our next question from Nathan Jones with Stifel. Please go ahead. Good morning, everyone. Morning. Hi, Nathan. Can you hear me? Yes. You can? Yes. Okay, great. I would ask one on IFT. volume has been pretty flat overall for the last couple of quarters, but you've talked about, you know, being more selective on projects. I'm wondering if you could talk a little bit about how much the growth is where you want to grow versus maybe how much the declines are where you're not looking to grow. You know, when you think of flow, Nathan, you got to remind us that we got a residential, you know, business around pumps, and that has been flowing down and soft, right? That's reflecting the residential trends in the Water Solutions as well as Pool. When we talk about flow as an overall growth, what we're really seeing is growth in infrastructure. Commercial, as a reminder, commercial buildings aren't just office buildings. They also include data centers, they include warehousing, they include any type of infrastructure that would require or need fire pumps, as well as water coming into that building and wastewater exiting that building. That has been a strategic point of ours, and we want to grow in those spaces. We're strong in those spaces, really what you've got is a residential, commercial, and infrastructure mix here. Okay, maybe then, just one more on the Water Solutions business. I think there's been some inventory destocking going on there as well, that you had expected to probably end in 2Q. Is that the case and we're kind of a bit more back to sell in matching sell-through in that business? Yeah, we're actually through most of the inventory challenges in the residential, Water Solutions, side of the business, Nathan. What we have as a reminder is we exited, you know, direct-to-consumer businesses that we had, and we did that in Q4 of last year. We're working through those year-over-year comps, related to those decisions. The underlying, you know, growth of our core, systems and our core components business is moderating, but it doesn't yet have inventory challenges, or doesn't have inventory challenges. Our next question here will come from Joe Giordano with Cowen. Please go ahead. Hey, good morning, guys. Morning. Hi, Joe. Yeah, we've touched on this, but IFT, so like more than 100% of the growth is price right now, and the volumes are modestly negative. You know, as you look into the second half, price moderates, like, does volume from where we are today, do you expect that as the year progresses to further deteriorate, or does that start to pick up some of the likely moderation of price? We continue to believe on the flow side, and remember, IFT has an Industrial Solutions business as well as flow. I mean, flow has traditionally, we would think it is a low single digits to mid single digit contributor, and we're moderating back to those growth rates as we get to the second half, which we believe is normal. Then what we've got to do is make sure the mix of the businesses start to contribute more to the margin expansion side. We've gotten a lot of productivity and a lot of strategic projects out of C&I, but as a reminder, R&I tends to be the higher margin side of that business, and so we would expect that contribution to get more normalized as we go forward. Meaning volumes like don't necessarily inflect higher in the second half. Is that... Am I reading that? That's correct. Yes. Okay. Then, you guys you commented on Pool that you've done well, and like adjusting headcount appropriately to the lower levels here. You know, you sizable revenue declines and margins up nicely. How do we think about margins as the volumes start to come back, like, as you need to add headcount? Like, is this a good level to build off of, just like, you know, 30 something% rate, or could there be kind of like, yeah, for like a better way to say it, like a lack of incremental margin expansion on revenue growth as that inflates? It's a good basis to build off of. You know, as we grow from here, we begin to get volume leverage on the overhead structure of the business. The only thing that would be an add back is rebates and commissions that would be relative to selling the product, you know, throughout the channel. When you take all that, growth is a really good thing, and this is a really good level to model off of. Okay, with that, I want to. This concludes. With that, I'd like to provide some closing comments. Thank you to everybody for joining us today. You know, I wanted to reiterate our earnings call key themes. First, we had solid execution within our diversified portfolio, along with price and transformation. These initiatives drove Q2 sales growth with margin expansion across all three segments. Second, we continue to expect strength in our IFT and Water Solutions segments, as well as transformation efficiencies to offset lower Pool volume in 2023. Third, we raised our 2023 guidance due to strong Q2 and our confidence in the sustainability of our performance, driven by a diversified portfolio. Fourth, our transformation initiatives are reading out and expected to drive greater benefits beginning in Q4 and beyond, as we implement actions towards identified savings. Finally, we expect to continue to deliver value creation beyond this fiscal year. Thank you, everyone. Have a great day. The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.