Good morning, everyone, and welcome to the Pentair Q2 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should 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. To withdraw your questions, you may press Star and two. Please also note that today's event is being recorded. At this time, I'd like to turn the floor over to Shelly Hubbard, Vice President, Investor Relations. Ma'am, please go ahead. Thank you, and welcome to Pentair's Q2 2024 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 Q2 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 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. Following our prepared remarks, we will open the call up for questions. Please limit your questions to two and reenter the queue if needed to allow everyone an opportunity to ask questions. As a reminder, you can reference our Pentair Investor Overview and Investor Day presentations on our IR website. Please visit our Pentair Investor Relations website and click on Events and Presentations to find these materials. I will now turn the call over to John. Thank you, Shelley, and good morning, everyone. Let's begin with our record Q2 results and the executive summary on slide four. During the Q2, we achieved record sales, adjusted operating income, return on sales, adjusted EPS, and free cash flow, following the separation of nVent from Pentair in 2018. We delivered these results on top of a record from the prior year period. I would like to thank our 10,000+ Pentair employees for their continued commitment towards delivering for our customers and creating value for our shareholders. You worked tirelessly and impressively to deliver another quarter of remarkable income growth and margin expansion. Thank you. In Q2, sales increased 2%, adjusted operating income increased 16%. ROS expanded by 310 basis points, driven by margin expansion across all three segments. Adjusted EPS rose 18%, and free cash flow was over $500 million. Driven by a disciplined capital allocation strategy and record free cash flow, we continued to strengthen the balance sheet, and we purchased $50 million worth of stock in the Q2. We also continued to elevate our dividend. As a dividend aristocrat, we have increased our dividend to shareholders for 48 consecutive years. As we look to the remainder of the year, we are increasing our adjusted EPS and ROS guidance. This is driven by our strong results in the first half of this year and continued confidence in our ability to execute in a dynamic macroeconomic and geopolitical environment while implementing and executing on our major initiative, transformation, now inclusive of 80/20. Our expected 2024 EPS increased to approximately $4.25. This represents the high end of our previous guidance. Bob will provide more details later in the call. We believe our record Q2 performance demonstrates the power of our sustainable and balanced water portfolio, as well as strong execution across all three segments: Flow, Water Solutions, and Pool. Our strategy to help the world sustainably move, improve, and enjoy water, life's most essential resource, continue to prove its resilience. We believe we are well positioned to capture opportunities from favorable secular trends, such as: water availability, with growing concerns over access to clean, safe, and reliable water; increased awareness of water challenges led by growing concerns around human-made contaminants impacting water composition, taste, and water quality; growing environmental concerns as consumers are looking to reduce their carbon footprint and impact on the environment; aging commercial, public, and municipal infrastructure; outdoor healthy living, as people are interested in gathering at pools to exercise, stay cool, and have fun; and favorable housing migration to the Sun Belt states, which represents a large mix of our pool sales. Let's turn to slide five. Over the last 90+ days, we've seen reports that suggest a continuation of slower global growth throughout the remainder of the year.... As we look at each of our three segments and the verticals within each, we believe that there are areas of great opportunity and some that we expect to remain slightly pressured. All in, this is where we believe our balanced water portfolio diversifies the risk and enables us to control what we can and mitigate challenges where possible. For example, in Flow, we reached record sales within commercial and have seen higher activity from IIJA funding on infrastructure projects. Higher interest rates and a slow housing market continue to impact our residential vertical, and our industrial vertical has experienced some delay in CapEx spending by some key customers. Within Water Solutions, our North America commercial filtration business remains strong, and our commercial ice business performed as expected, while international has been impacted by economic pressures. Residential continued to be impacted by higher interest rates. That said, we are really excited about the launch of our first commercial PFAS-certified filtration product in Q2, which further expanded our existing PFAS-certified filtration product line. Customers showed strong interest in wanting to learn more about this product. We are proud of this new innovation and the teams that brought this product to market. With heightened awareness on water quality and interest in point-of-use filtration, we are excited to see this product line grow long term. Lastly, in Pool, sustained higher interest rates and a slower housing market have continued to impact pool demand, predominantly in new and remodeled pools. New in-ground pools built in 2024 are now expected to be near the 60,000 pool range, compared to roughly 72,000 in 2023 and roughly 78,000 in 2019. Given this economic weakness, our recent dealer survey noted that the industry is expecting slightly lower growth than it did 90+ days ago. However, our aftermarket business performed well in Q2, which in part drove double-digit pool sales growth for Pentair. Despite the near-term economic challenges for the pool industry, we remain confident in Pentair's ability to drive long-term growth and margin expansion. We believe it remains a very attractive industry with megatrends that are in our favor. A majority of our revenue is concentrated in 5 Sun Belt states, which are benefiting from the higher migration to warmer weather. We're also seeing a trend toward lifestyle and wellness with family and friends, gathering outdoors in pools for exercise and to have fun. As climate change remains a top concern, Pentair is well positioned for secular trends and preferences for smart, sustainable products. We are the pioneers in introducing variable speed pumps, which save energy and money. Let's turn to Slide six. Last quarter, I mentioned that our transformation initiatives remained on track to deliver margin expansion, as we highlighted at our March Investor Day. Approximately 50% of our total revenue has adopted and implemented value-based pricing as part of our strategic pricing initiatives. We are well into wave two of our sourcing initiatives, which is beginning to drive benefits in our financial results. We have continued to drive operational footprint optimization and plan to continue this going forward. In Q2, transformation drove record quarterly productivity. Additionally, we trained about 1,000 employees on 80/20, reflecting about 50% of Pentair's revenue streams. We're starting to execute on some quick wins and continue to see larger, longer-term opportunities as we expect 80/20 to further enable our transformation success. It is important to recognize that reducing complexity of low-value products for lower-value customers is the premise of 80/20. By doing this, resources are freed up that should allow us to perform better for the core customers who buy our core products. When we do this, we expect to see higher core growth rates in our businesses longer term. I'm excited about the initial fact-based data that we have analyzed, and I am encouraging the business leaders to move quickly to exit their complexity and focus on the core. We expect to have a further update on our progress and the impact on 2025 after we have completed the initial training and implemented the actions across the entire Pentair portfolio, which we expect to complete by the end of 2024. Before I turn it over to Bob, let's turn to Slide seven. We continue to drive strong margin expansion and operating income dollars through transformation despite economic weakness. Our transformation initiatives are well underway, and our 80/20 analysis kicked off in recent months with strategic actions that are in the early stages. We have increased confidence in our long-term value creation, and we expect to deliver ROS of approximately 23%, about 100 basis points higher than previously guided, and about 13% adjusted EPS growth in 2024. All in, we continue to build a strong foundation that we expect to drive long-term growth and profitability across our diverse water portfolio. 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 eight. We delivered another strong quarter of quality earnings. Sales rose 2% to $1.1 billion, while adjusted operating income increased 16% to $271 million. ROS expanded 310 basis points to 24.7%, driven by sales growth and transformation.... All three metrics achieved new records post the separation of nVent from Pentair in 2018. Core sales were up 2% year-over-year, driven by 18% growth in pool, which was somewhat offset by a 3% decline in flow and a 7% decline in Water Solutions. Both flow and Water Solutions reported record sales in the prior year period due to supply chain improvement and our ability to ship a large portion of backlog orders. Sales across all three segments increased sequentially from Q1, as expected. Our Q2 sales have typically been our highest sales quarter of the year. We are very pleased to see pool return to growth for the first time in eight quarters. All three segments drove significant margin expansion in the Q2. Lastly, we delivered record adjusted EPS of $1.22 post the nVent split, which exceeded the high end of our guidance by $0.05 and was up 18% year-over-year. Please turn to slide nine. Flow sales declined 4% year-over-year compared to a record quarter last year. Residential sales declined 10% as compared to the prior year quarter, but reflected an improvement sequentially from Q1. Commercial sales rose 2% compared to a record prior year. Industrial sales were flat in Q2, reflecting our decision to discontinue certain projects that no longer met our profitability criteria. Segment income grew 13%, and return on sales expanded 310 basis points to 21.3%, marking the first time ROS has reached or exceeded 21%. The strong margin expansion was a result of continued progress on our transformation initiatives. Please turn to slide 10. In Q2, Water Solutions sales declined 8% to $311 million, driven by declines in both commercial and residential. We expected our commercial business to be down in light of a record prior year comparison, driven by Manitowoc Ice's ability to work through a significant portion of backlog orders. We were pleased with filtration sales strength in Q2. Segment income declined 3% to $73 million, and return on sales expanded 130 basis points to 23.5%, driven primarily by transformation, which continued to drive operational efficiency as well as mix. This was the ninth consecutive quarter of ROS expansion. Margins have expanded nearly 900 basis points over the last two years. Please turn to slide 11. In Q2, pool sales increased 17% to $392 million. Segment income was $134 million, up 27%, and return on sales increased 270 basis points to 34.1%, driven by sales growth and transformation. Please turn to slide 12. At our Investor Day in March, we shared our updated 3-year margin targets. We expect 2026 ROS to expand to 24%, over 540 basis points as compared to 2022, driven by contributions from all four of our key transformation initiatives: pricing, sourcing, operations, and organization. And we have the opportunities to do even better, as we discussed at our March Investor Day. In 2023, we achieved ROS of 20.8% and expect to continue to drive margin expansion to approximately 23% by year-end 2024, an increase of nearly 100 basis points from our previous guidance. Please turn to slide 13. As we mentioned in our March Investor Day, we expect 80/20 to enable and accelerate our transformation initiatives. It's another tool in our toolkit to help our businesses enhance the customer experience and reduce complexity. The 80/20 analysis uses a quadrant-based strategy to assess customers and products. Simplistically, the first quadrant reflects the combination of customers and products which drive a majority of revenue and profit. Conversely, the fourth quadrant reflects customers and products that represent roughly 4% of revenue, but includes 15%-25% of total cost to serve. We expect to focus on customer segmentation over product segmentation to enable us to implement customer strategies based on each quadrant. As a result, we can take specific actions tailored to each quadrant to drive higher and more profitable growth over time. To date, we have assessed about 50% of our total revenue using 80/20 and are currently evaluating this analysis and developing action plans. 80/20 is about treating our customers fairly but differently, depending on the circumstances. The objectivity of the data frees the organization to make the right decisions.... We expect to see the largest benefit from 80/20 in operations. However, we also believe G&A and new product introductions will be impacted by the fourth quadrant due to the effort required to serve. We expect this to benefit our organizational excellence efforts as well. We believe the 80/20 analysis is a great complement to our transformation program. We expect to see a noticeable contribution in 2025 as these plans are rolled out. I'm excited about the process and the findings, and I expect it to lead to larger transformation opportunities. Please turn to slide 14. In Q2, we achieved a record free cash flow of $522 million. We deployed capital to lower our long-term debt, restart share repurchases, and pay our quarterly dividend. During the quarter, we repurchased approximately 600,000 shares for a total of $50 million. We have an additional $550 million available on our share repurchase program. Our net debt leverage ratio was 1.6 times, down significantly from 2.2 times in the prior year period. Our ROIC was nearly 15%. Long term, we continue to target high teens return on invested capital. We plan to remain disciplined with our capital and continue to focus on debt reduction amid the higher interest rate environment and share repurchases. As I mentioned last quarter, with the net debt leverage ratio within our target range, we have additional flexibility to strategically allocate additional capital to areas with the highest shareholder return. Moving to slide 15. For the full year, we are increasing our adjusted EPS guidance to approximately $4.25, which is up roughly 13% year-over-year and is at the high end of our previous guidance range. Also, for the full year, we expect sales to be approximately flat to down 1%, driven by a continued sluggish economy. The second half of 2024 reflects the anticipated reality of a continued higher interest rate environment and its impact on the global economic landscape. For Pentair, this means we are lowering the back half revenue expectations by about $120 million at the midpoint of our guidance. About $30 million of this is in pool, which reflects the expectation of primarily slower pool builds and remodels. About $30 million is in Water Solutions and is in lower-margin commercial services and global water treatment end markets. About $60 million in flow is primarily related to residential, delayed industrial projects, and being more focused around standardized offerings and recurring revenue to drive higher profitability. We now expect flow and Water Wolution sales to be down approximately low single digits, and pool sales to be up approximately mid-single digits for the full year. Within flow, we expect residential to be down approximately high single digits, commercial to be up approximately mid-single digits, and industrial to be roughly flat as we continue to be selective around certain projects. Within Water Solutions, we expect residential to be down approximately low to mid-single digits and commercial to be down approximately low single digits, primarily due to services. We're also updating expected adjusted operating income to approximately increase 10%-11%. We are pleased to be able to increase our adjusted EPS guidance despite the lower revenue. We are increasing expected transformation savings to approximately $100 million for 2024, as compared to $75 million in our previous guidance, driven by higher productivity. We expect to improve our mix of higher-margin businesses and continue our focus on pricing initiatives to offset inflation. Due to a continued sluggish economy, we expect sales to be down approximately 2%-3% for the Q3, but adjusted operating income to increase 10%-12%. We are also introducing strong adjusted EPS guidance for the Q3 of approximately $1.06-$1.08, up roughly 14% at the midpoint. Before I turn the call over to the operator for questions, I want to say how pleased we are with our Q2 record performance. Our teams have been working diligently and effectively to mitigate uncontrolled risk, like continued global economic pressures, while working to deliver strong financial results and executing our major initiative, transformation, which now includes 80/20. We are very proud of the hard work and dedication of our entire Pentair team. I would now like to turn the call over to the operator for Q&A, after which John will have a few closing remarks. Operator, please open the line for questions. Thank you. ... Ladies and gentlemen, we'll now begin the question and answer session. In the interest of time, once again, we do ask that you please limit yourselves to one question and one follow-up. To ask a question, you may press star and then one on your telephone keypad. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. To withdraw your question, you may press star and two. At this time, we'll pause momentarily to assemble the roster. Our first question today comes from Andy Kaplowitz from Citigroup. Please go ahead with your question. Hey, good morning, everyone. Nice quarter. Thank you. Thank you. John or Bob, can you give us more color regarding what you're seeing in pool and your assumptions for break and fix and remodeling? I think you mentioned a strong aftermarket, weaker remodeling. We obviously know what you're thinking for new pools, but could you talk about your sell-in assumptions to the channel? How concerned are you, or what are you baking for inventories in the channel at this point for 2024? Yeah, I'll go ahead and start with that one, Andy, thanks for the question. Again, pool, from our perspective, we started the year saying pool would grow approximately 7% full year. We've now guided that to, you know, up mid single digits. As a reminder, a significant piece of our growth is coming from the fact that last year's inventory correction will not be happening this year, plus a couple of points of price, and then an assumption that says the overall market's down roughly mid single digits. And so that's how we get to our mid single digit growth for the year. From our last earnings call, we have seen a little bit of pressure on new pool builds and remodels, and that was the reason why we brought our guide down for the pool season. And Andy, I would just add that as a reminder, we had a really easy compare in Q2 versus a really low number last year. And so the growth rate in Q2 is more reflective of last year's performance than it is of anything that is outside performance for this year. It's helpful, guys. And then obviously, your transformation impact is impressive in raising the productivity to $100 million. But, you know, you talked about 80/20. How much of it all is that sort of helping 2024? It seems like it's early days, and, you know, you've got the 23% target for this year and 24% target for 2026. So does it give you a little bit more confidence towards, you know, maybe that upside case, you know, as you go into 2026? Any thoughts on how 80/20 could impact 2025, for example? Yeah. So first of all, 80/20 was not in our 2026 Investor Day longer-term targets. Very little of it is included in our 2024 update guidance. We've completed the training sessions and the fact-based analysis on roughly half of our revenue streams, and we'll have the other half done in roughly the next 90 days. So we're very encouraged of what we're learning and finding, and it does give us confidence that we can continue to improve margins as we go forward. We were very pleased to be able to increase the Transformation savings from $75 million to $100 million. Think of that as primarily coming from our sourcing savings, with also our manufacturing and org excellence piece helping as well. Our next question comes from Bryan Blair, from Oppenheimer. Please go with your question. Thank you. Good morning. Very solid quarter. Thank you. To follow up on transformation, obviously, you know, benefits accelerated in the quarter. You have stepped up the full year guide, just mentioned that it's primarily from sourcing. So should we think that there's somewhat of a weighting to the pool segment in the back half in terms of contribution? And just overall, with that step up, how should we think is Q3, Q4 weighting? Yeah, from our perspective, in terms of the guide we gave for Q3, and then the implicit guide for Q4, we'll see significant ROS expansion in both quarters. We do think that the main beneficiaries in the back half will be the pool business and flow, followed by Water Solutions. Understood. And I was wondering if you could parse out the commercial Water Solutions revenue decline in Q2 across Everpure, Manitowoc Ice, and KBI. And then what you're anticipating in the back half by business line. We know Manitowoc had, you know, in particular, very challenging comp in Q2. Just curious what you're seeing there and what's factored into the outlook now. Yeah, I mean, most of the decline that we're seeing in Water Solutions is coming from, you know, not participating in low-value service contracts within our KBI services arm, and we're adjusting our revenue down to reflect that. That'd be roughly a $20 million adjustment for the year. You know, the rest of it is, you know, filtration grew double-digit in Q2, and they're having a really strong year. And, the Manitowoc Ice business continues to perform to expectations. And as a reminder, we were just under $450 million in revenue last year. We'll, we'll be just in the low $420s this year. So we're managing through a really decent execution, despite having those record backlogs last year that we ended up shipping. So I feel really good about the Water Solutions business. We are tweaking our global residential water treatment business, reflecting some of the lower revenue streams in non-U.S. related businesses. You know, that's a small adjustment here, but it, I think it's reflective that we don't think that those will improve in the back half of the year. ... Yeah, and just as a reminder, the North America filtration business, the ice business, those are very profitable ROS businesses for us, so the mix certainly works in our favor. Our next question comes from Stephen Tusa from J.P. Morgan. Please go ahead with your question. Hey, good morning. Hey, Steve. Can you just maybe talk about the pricing environment that you're seeing out there, and how that should trend over the course of the year? It looks like, I don't know, you're assuming maybe one-two points for the year. That is correct, Steve, and I don't think we should expect that we're gonna outperform that between now and the rest of the year. I think there's pockets of being able to recover some of the incremental inflationary areas, but we don't feel that inflation is significant enough to go out with another round of pricing. So we're generally doing the best we can to net the original list prices, and I think so far, so good. Do you, at any point in time, see price going like, flat to down in pool at all? No, we do not see that happening. You know, at the halfway point of the year, we have 2 points of price reading out. I expect something similar in the back half. Okay, great. And then just on the bridge, the productivity was pretty solid this quarter. What are you guys expecting for the year now on that number? I think it was like 75 before. Yeah. Some of these numbers move around a little, but what, what do you guys expect for the year? $100 million now in my prepared remarks, and you can think about that as roughly split between evenly between Q3 and Q4. Our next question comes from Ryan Lee, from Goldman Sachs. Please go ahead with your question. Hey, guys. Thanks for taking the questions. Good morning. I guess maybe a follow-up on, on the last one. You know, you, you raised the, the kind of transformation benefits from the $75 million to $100 million. I know you don't have much, if any, of the 80/20 in 2024, but can you give us some sense, any sense of sort of how it would compare, just your initial read on 80/20 impact into 2025 when you kind of compare and contrast it to what you've been able to do with the transformation initiatives this year, going from $75 million to $100 million? Yeah, so let me, let me hit the transformation real quickly. I think, you know, it's fair to say we always had an internal funnel that was higher than what we had confidence with in the beginning of the year on the external side. And I think the 100 now reflects that most of the programs that we had in the internal funnel are now being realized. And so that's where our confidence level is as we exited Q2. You know, as a reminder, we had a difficult year-over-year in transformation Q1, and we had a very strong Q2, and now we feel confident in what that full year expectation is. When we look at 80/20, I think it's important to note that the way the math works is that what we call quad four, which is the lowest performing quadrant, these would be less desirable products to lesser desirable customers. That's roughly usually around 4% of revenue. So just to think about that, that frames on a $4 billion-ish revenue stream, you know, what the walk away revenue number would be at its worst, a possible scenario. That same quadrant generally usually reflects about 25% of a company's cost structure. Now, you're not gonna get all that 25% out, 'cause clearly you're utilizing, you know, pieces of people's work efforts, but it starts to tell you about how it's non-profitable being in quadrant four. So as you release yourself from the products that you're spending a lot of time on, you should ultimately be able to reduce your labor and reduce or redirect your NPI and your sales and marketing efforts to your quad one, to generally overserve or create a better service level to your top customers, which gives you an overall better core rate. So we don't have that figured out for all the businesses yet, but the math is not gonna be any different for Pentair than it is for everybody else who goes through the program. And it's really encouraging and gives us a lot of optimism that there'll be a whole other list of transformation ideas as we head into 2025. Okay. Yeah, from my perspective, it brings tremendous focus to the things that really matter. It allows us to seek perfection in quadrant one with our, you know, best customers and best products, and really to reduce complexity and simplify the business in quad four. Okay, super helpful. Appreciate the color. And then, Bob, you mentioned, on the, the guidance walk on revenue, the $120 million at the midpoint that's coming out, versus prior guide. Is there any percentage of that which is being driven by, you know, exiting some of these less profitable business lines, just a more proactive, approach, to kind of how you're structuring the revenue goal for this year versus it all just being market driven? Thanks, guys. I would say in the revenue reduction, there's nothing significant relating to 80/20. There happens to be lower profit revenue streams as we're more selective within flow, as commercial services comes down, those would be, you know, helping the overall mix, but nothing yet directly related to 80/20. Our next question comes from Jeff Hammond, from KeyBanc Capital Markets. Please go ahead with your question. Hey, good morning, everyone. Hey, Jeff. ... Hey, just on Water Solutions, a couple questions. One, you know, the commercial filtration you called out as strong, is that just, you know, attachment synergies from Manitowoc Ice, or is it something more broad than that? And then just speak to commercial food service in general. We're seeing kinda a weaker consumer or mixed results out of Starbucks, et cetera. What you're seeing in general there? Yeah, I would say we're starting to see the synergies coming from that Manitowoc Ice acquisition really benefiting our North America filtration business. Again, we have the opportunity to visit distributors and dealers and talk about the breadth of our offering. We have the opportunity to cross-sell products, and we have an opportunity to go to market in a different way, whether it's setting up at a trade show and selling both Everpure and Ice. Those are all the benefits that are accruing to the filtration business this year. I think this is, Jeff, you know, to answer your question, I mean, we do a lot with quick serve, and, you know, even though the traffic may be a little more challenged from time to time, it's relatively a stable industry when it comes to the replacement side and the sell-through for our related products. Okay. And then just, just to put a fine point on pool, just give me a sense, you know, post some of the pre-announcements, just what feedback you're getting on inventory levels, you know, kinda this absence of destock and, you know, if it's a little bit less or, you know, just a little more color on that. Yeah, I'd say, you know, first of all, I mean, we're disappointed in the new pool builds for the year. I mean, we're almost near historical lows and pretty close to where we were in the 2008, 2009 financial crisis, Jeff. So I mean, we're looking for the movement in interest rates to really start to spur the remodeling side and hopefully begin to get people to move homes and think about pools as part of that attachment. Overall, on the way the segmentation works, we do really well in the high end, and high end is still strong. That's generally a cash buyer, and they're utilizing retirement income to, or retirement funds to drive their buy their dream home in the Sun Belt states. It's really the mid-market and some of the remodeling that we believe has slowed. And so, as we mentioned in our remarks, our dealer pulse would suggest that it's a little less optimistic here, as we enter the second half of the year than we saw in the first half of the year, which is why we adjusted our guide downward by a couple of points. Our next question comes from Deane Dray from RBC Capital Markets. Please go ahead with your question. Thank you. Good morning, everyone. Morning. Hey, it's, you mentioned in prepared remarks that Flow was seeing some of the government stimulus coming through. Can you provide any color there? Yeah, I mean, I think it's just overall, you know, we really pleased with the fact that there's been a fair amount of infrastructure spend, and, and we focused our activity there, had some solid marketing programs to focus on where that growth and expansion is, and I think we feel really pleased that we're participating in that, that segment right now. Got it. And what kind of contribution are you expecting for the second half in that stimulus? Yeah, it's not much at all. It's, it's modest. We called it out as a particular area of the economy that continues to be invested in, and I'm sure you're struggling with some of that road construction and infrastructure spending as well, as we all are here in the summer construction season. But it's been nice to participate in that and, and see a little bright spot, from the, government funding in that area, which offsets some of the lack of interest rate, benefits we're getting elsewhere. Our next question comes from Saree Boroditsky from Jefferies. Please go ahead with your question. Good morning. This is James in for Saree. Thanks for taking questions. So I kind of wanted to touch on pool here. So, like, a very strong growth in 2Q. Can you kind of break that up down by, like, what's the contribution from early b uy? What was the sell-in and sell-through? Yeah, sell-in and sell-through, about flat in the quarter for us, and the rest of what happened in Q2 was the year-over-year comparison of really what didn't happen, which was last year, there was a sizable, about percent inventory correction, and this year, generally, sell-in matched sell out. Got it. Thanks. Wanting to kind of understand the pool guidance a little bit better. So you delivered a lot of, like, pre-buy in Q2 of 2024. So how should we think about the pre-buy for Q4 of this year? Like, what does the guidance assume for the pre-buy, the current pre-buy? Yeah, I hear you. Yeah. So as a reminder, the pre-buy starts in, you know, Q3 and Q4 the previous year, and we take those orders ahead of the price increases for the next pool year. Right now, we have what we'd say is a modestly down to normalized environment as we look forward in 2025, reflecting that we think that we won't really see benefits from lower interest rates across the residential businesses to probably second half of 2025. Our next question comes from Andrew Buscaglia from BNP Paribas. Please go ahead with your question. Hey, good morning, guys. Morning. Just wanted to know, you know, you, you're talking more about those 80/20 costs. ... transformation costs accelerating. Where, like, specifically within each segment, and pool in particular, are you finding this beneficial to one segment versus any other? And then if you could just talk more about details, maybe specifically for pool in that regard. Yeah, I mean, it has got the same math-based equation for every revenue stream we look at. I just want to start there, and it is roughly 4%-5% of your revenue falls in that lower right quadrant, which is, again, the less desirable products to the less desirable, or less profitable customers. It won't be any different. It is straight math, and it'll be the same. It's harder for Pool to execute on because their quadrant four, reflective of their overall margins, is a significantly higher margin than what we're seeing in some of the other businesses. So it gets a little bit more challenging to exit quickly because you fall in love with the fact that you still are making money in that quadrant in a business like Pool. Mm. The reality is that by serving that quadrant, you're taking away from your performance to your top customers, and you're taking away from your ability to produce new products and new sales and marketing programs around those top products. It will have the same impact across the entire organization. I would say right now, Pool is a little bit more challenged in how to deal with quadrant four, and the other businesses who are in a lower profitability standpoint can move faster to eliminate quad four. Does that answer your question? Yeah. Yeah, no, very helpful. Okay, yeah, that's interesting. And then, you know, the—your cash flow was really strong this quarter, and seemingly a little more profitability as we exit the year. What are you thinking about in terms of capital allocation at this point? Has anything changed there? Any thoughts on a buyback, and/or M&A? Yeah, again, very pleased with our free cash flow generation in the quarter, over $500 million. You know, what that's allowed us to do is, you know, pay down close to $300 million of debt in the first half of the year. Excuse me. We've been able to restart our share repurchases in the Q2, and also, you know, continue to pay the dividend. If you think back about when we closed the Manitowoc Ice acquisition back in, you know, July of 2022, our leverage was in the high 2s. We've now delevered down to, you know, 1.6 times and created a lot of optionality for the company to drive shareholder value. So, you know, paying down variable debt continues to make sense at the interest rates that we see, continuing to offset dilution. But, you know, we'll obviously have a nice problem to have come the end of the year, where we're below our target net debt to EBITDA. So again, lots of options around accelerating share repurchases, or potentially bolt-on M&A. Our next question comes from Nathan Jones from Stifel. Please go ahead with your question. Good morning, everyone. Morning, Nathan. I wanted to, wanted to ask a couple of questions on the 80/20 initiative. You guys, one of the comments you made was you're gonna focus on customer segmentation versus product segmentation. Can you just talk a little bit more about, you know, what goes into that decision, how it manifests itself at Pentair? Is it, you know, a little bit easier to focus on customers versus products, so just what, you know, what goes into that decision? Yeah, I appreciate the question. No, it's harder, actually, and I think it's the right way to do it, and the only way to really do 80/20 is because ultimately, your customers are determining what parts you're selling and why you're selling those parts. Nathan, we talked about this. You usually self-create your own complexity. I mean, we did design and introduce all these parts, so we have to take accountability for that. But really, as Bob said, we're gonna treat our customers fairly, and you know, basically differentiate how we serve them. And so not all our customers are buying quantities, and not all our customers are buying the same levels of transportation and expectation. So it is harder, it takes longer because we have to have honest and fair and transparent pricing across the customer base, and then we have to work the rebates and the volume discounts accordingly, which takes time to work its way through. And that's what we're doing, and we're gonna do it, obviously, legally and compliantly, but we're making sure that we notify everybody that at the end of the day, we can't give everybody the same on-time delivery. We can't give them the same, you know, volume purchases because it gets really complex to someone who's not buying the right quantities. Makes sense. I guess next question: 80/20 typically will, will create some near-term headwinds to revenue. It may increase the revenue growth in, in the long term, but that Q4, getting that Q4 out, usually creates some near-term headwinds to revenue. We've also, you know, got FY 2024 guidance that's, you know, flattened down a little bit. Should we start to think about a base case where the 2026 targets are reached with lower revenue and higher margins, and get to the, you know, somewhere around the same point, but with a, with a different pathway than originally targeted? I'll answer your question quickly. That is a possibility, Nathan. I don't know that yet, obviously. I mean, we framed it, and I, I shared with you that the nearer term impact of walking away from quadrant four could be 4%-5% total revenue. What we don't know yet is usually in any short-term period, there would be a little bit of a pullback, but you would get the, the cost out and therefore the margin lift. What we would hope that this leads to, though, is a faster core growth rate, because we're able to give the products and customer experiences to our top customers and grow greater than our historical growth rate. Bob and I don't know what that math looks like yet across the portfolio. I do think it increases our confidence level of what ROS could be. Certainly, we feel like this will be additive. At the same time, you're probably not wrong on the fact that some of our dollar growth that we might have forecasted in 2026 could be lower. Yeah, I would agree with that. I think we end up with higher quality revenue, higher margin revenue. We remain fanatically focused on quadrant one, and we improve lead times, quality, on-time delivery. We have our best service teams working with our best customers. How can that not help drive growth in quadrant one? So our view overall is we end up net better on the top line and then continue to drive ROS expansion through, you know, reducing the costs in quadrant four. Our next question comes from Julian Mitchell from Barclays. Please go with your question. Hi, good morning. Maybe just a first question around some of the operating profit levers. So just to understand, I think it's $30 million a quarter of productivity savings in the second half. And then the assumption would be, you've still got good transformation waves into next year, plus the 80/20. So that $30 million a quarter run rate is a sort of reasonable placeholder starting out next year. I just wanted to check I had that right. And sort of unrelated, price net of inflation was a headwind to op profit year-over-year in Q2. Is that quantum of headwind expected to remain steady through the back half? Yeah, I would say I'll take the second one first. I mean, at the year to date, we're slightly below price versus inflation. Price is right around $40 million, inflation's at $47 million. So inflation continues to be running a little higher than what we thought. I would say in the back half, our goal is to catch up and end the year, roughly speaking, price equaling inflation. On the run rate going into next year for transformation, too early to kind of give a calendarized view of that, but transformation will be significant next year in 2025, and certainly help us accelerate our ROS expansion goals. Our next question comes from Damian Karas from UBS. Please go with your question. Hey, good morning, everyone. Congrats on the transformation progress. Thank you. So first, just a follow-up to some of your earlier comments on pool. The business, being up year-over-year for the first time in a few years, but, you know, underlying markets still kind of down, for the rest of the year, which would kind of suggest like an extended three-year down cycle, more or less. I'm just curious, you know, given channels being kind of more or less normalized now, you know, what, what do you think a market recovery looks like for pool, you know, presumably in 2025? Yeah, it's too early to tell yet. I do think I agree with all your earlier comments. It has been a three-year cycle, and quite frankly, when you look point to point, it's, you know, one in which we don't yet agree that there's been any type of pull in or anything related to COVID. We definitely think that we'll start seeing new pool builds increase from this level as we head forward in 2025 and beyond. And we're hoping to get more to that historical level, which would be just, you know, somewhere around 90,000, 80,000-90,000 a year, kinda led and aided by the interest rates starting to ease. You know, I think overall, still pleased that we're growing year-over-year, despite the challenges. I think from this point forward, we think we're returning to growth. Okay, appreciate your thoughts. And then you called out the launch of your first commercial, PFAS, product, as well as expansion of the existing PFAS product line. I know you haven't necessarily put a number around the PFAS opportunity, but maybe you could just speak to that. You know, would you say that's firmly in your mid-single digit sales target, over the medium term, or is there, is there maybe some upside there? No, I think it helps. I mean, it's gonna be in that mid-single digit. It gives customers a reason to wanna continue to partner with us and our strong brand and, and our value proposition to the industry. You know, we've, we've been working hard to make sure that, you know, all of our food service-related customers understand the value of, of a high-quality water, and I think that segment of the market definitely understands it. But as we start to expand our ice footprint and certainly expand our, our water drinking footprint, we wanna make sure that all the other adjacencies also understand the value of a higher filtration capability. So we're very excited about the offering, and we're starting to make sure that we tile that value proposition to the ones that aren't... directly serving a customer who's coming in for a food-related, drink or beverage. Think schools- Our next- Think institutions, think about that as, as the backdrop. Our next question comes from Andrew Krill from Deutsche Bank. Please go ahead with your question. Hey, thanks. Good morning, everyone. I don't believe it's been touched on this way, but for Q3, and the guidance for sales down 2%-3%, just anybody can help us with expectations by segment there for the sales growth? Just I think the, you know, inflection from growth to being down that much was a little surprising. Is it fair, maybe Water Solutions and Flow still kind of down that low single digits area, and then Pool is really what's flowing into the Q3? Thanks. For Q3, and that's down 2%-3% guide, we expect Pool to be up slightly and for Flow and Water Solutions to be down slightly. Great. Very helpful. And then for sticking with Pool, just, you know, margin in Q2, over 34% were very impressive. Just, you know, do you expect that you can maintain that level of margin in the back half of the year? I know seasonally, they tend to trend a bit lower, but you have all this transformation savings coming through. Trying to see how those two factors might offset each other. Thank you. Yeah, we do expect to have a similar ROS expansion story for Pool in the back half of the year. So, again, they're executing very well. They'll get, you know, some slight growth in the back half, and so should be able to see, again, impressive ROS expansion story. Our next question comes from Scott Graham from Seaport Research. Please go ahead with your question. Yeah, hey, good morning. Good morning. Two questions. Most of mine have been answered. On the price cost to catch up to sort of get to parity for the year, do you have to increase prices anywhere to get there? Is that 1 to 2, the math, you know, for the second half, does that work to increase parity to get to parity? Yeah, again, a couple of points of price in the back half gets us very close to what we think inflation will read out. Again, remember, inflation is about $47 million at the turn. That's around 3% of the cost base, and so we think something similar will play out. Again, we're seeing inflation in the commodity space, the freight space, but overall, our goal, and we should be very close to price equaling inflation. At price plus two, I think you're saying, yes? That's pricing running about 2%-2%. That's right. Thank you. And the second question is an easy one. You use the wording, "We restored a share repurchase." I don't know if that—what that means more than that you just did some this quarter for the first time in a while. Is the Q2 share repurchase number, is that maybe a good number to use from here, or is it maybe go higher? We think for modeling purposes, it's a good number to use. Again, our stated goal is to offset dilution. So, $50 million a quarter is kind of what we've built into the overall guide for the balance of the year. Our next question comes from Joe Giordano from Cowen. Please go ahead with your question. Hey, guys. Good morning. Hi. So just curious on the level of productivity you're getting in Pool, does that change the calculus around, like, your desire or, like, willingness to put volumes out in pre-buy? If, like, you know, are you willing to maybe give up a little bit of future price because of how much cost you're taking out of the organization, and you know that you can keep margins on a good trajectory anyway? So just to give you more flexibility to, like, release more than you otherwise would have to protect volumes and maybe taking share. Yeah, I just wanna make sure, I mean, early buy is, is done, and, you know, it's just really more to level load the factory. Otherwise, we'd have, you know, all of our revenue in Q2 and Q3 and very little in Q3 and Q4, or Q1 and Q4. So we make that decision as we head into the year based upon, you know, what, what level of revenue we're comfortable with to still maintain a, a decent profit level and, and also make sure that we can keep a consistent employment level. So that's how we make that decision. It's too early to make that, that call right now, and, you know, as the season approaches, that's, that's the discussions we have with the Pool team. Fair enough. And then, just on the PFAS solution here, just wanna clarify, is this like a secondary treatment? Like, is this another product on top of, like, an Everpure that a commercial customer would have, or is this kind of an integrated solution that's doing multiple, you know, removing multiple contaminants? Yes. The answer is yes. That is an add-on to what we currently have. Our next question is a follow-up from Stephen Tusa from J.P. Morgan. Please go ahead with your follow-up. Hey, guys, sorry, just, just wanted to, like, touch on this whole inflation and price thing. It looked like the, you know, kind of the, the stack comp pricing in Pool went down sequentially, and I think as a follow-up to the other question, just wondering, can you just maybe delve into what was so inflationary for you guys? I mean, like, trying to disaggregate a sourcing benefit versus- ... you know, cost increases, that would just be more basic in nature. Just wanted to maybe, I guess, just delve into what you're seeing, by category in that inflation number. Like, what's really driving that? Yeah. So Steve, we do have some stubborn commodity inflation around a couple of the raw materials that everybody is experiencing that, you know, is a little higher than our overall expectations. Also, this year, labor inflation still remained high, especially in the non-core U.S. areas, Mexico being one of the areas that saw significant labor inflation. So those are the, what I'd say are the abnormal inflation in the year. As far as the pricing aspects, we do feel like when you look at it on a full year basis, it all levels out. But within periods, because we do give rebates to dealers, and we also give discounts to distributors, you could have a little bit of abnormality as you work through the quarters, but overall, it usually comes right in on the forecasted number. Okay. That's super helpful. Thanks a lot. Thank you. Ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the conference call back over to John Stauch, President and Chief Executive Officer, for closing remarks. Thank you for joining us. In closing, I wanted to reiterate our key themes. First, solid execution across our balanced water portfolio drove significant margin expansion for the ninth consecutive quarter. Second, we are increasing our 2024 ROS and adjusted EPS guidance, which reflects continued confidence in our strategy and our ability to mitigate risk where we can and maintain agility in a dynamic environment. Third, we expect our transformation in 80/20 initiatives to continue to drive strong margin expansion. And finally, we believe our focused water strategy and solid execution are building a foundation to continue to deliver value creation beyond the 2024 fiscal year. Thank you, everyone, and have a great day. Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.