Good morning, everyone, and welcome to the Pentair Fourth Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Shelly Hubbard, Vice President, Investor Relations. Please go ahead.

Thank you, Jamie, and welcome to Pentair's fourth quarter 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 fourth quarter and full year 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. Please note that during today's presentation, we will be making references to record financial results. These references reflect the time period post the nVent separation in 2018. Following our prepared remarks, we will open up the call for questions. [Operator Instructions] As a reminder, you can reference our 2024 Investor Day presentation 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, Shelly, and good morning, everyone. It has been a crazy last 96 hours and we are excited to finally share our 2024 results and 2025 guidance with you. Our guidance, as shared today, includes the recently announced China tariffs and we believe we have captured the risk of the potential Canada and Mexico tariffs within our 2025 EPS guidance range. Bob will provide more detailed information within his remarks regarding this dynamic situation. 2024 is another transformative year for Pentair and we are very pleased with the strong performance of our balanced Water portfolio. We were excited to share our vision in March at our Investor Day and we exceeded our financial goals driven by Transformation and executing our strategy, as evidenced by record profitability and cash flow in 2024. We continue to demonstrate resilience across our Move, Improve and Enjoy Water segments as we diversified and mitigated risk amidst the dynamic macroeconomic and geopolitical environment. Within Flow, we continue to grow our commercial business and launched cutting-edge innovation with our Xcentric Impeller, while evolving our go-to-market strategy in industrial solutions to drive profitability. In Water Solutions, our commercial filtration business posted strong sales and we launched our first commercial PFAS-certified filtration product, which continued to gain momentum. And in Pool, the aftermarket drove strong sales growth despite weakness in new and remodeled pools, which were impacted by higher interest rates. We also focused on new product development, with new launches planned for 2025. Overall, we finished 2024 in a stronger financial and operational position than we started the year. I'm very proud of our entire team at Pentair, who continue to deliver for our customers while creating value for our shareholders. Let's turn to the Q4 executive summary on Slide 4. We posted record Q4 adjusted operating…

Thank you, John, and good morning, everyone. Let's start on Slide 10, titled Q4 2024 Pentair Performance. I will also be discussing our full year performance on Slide 11. We delivered another strong quarter of margin expansion and adjusted EPS growth despite sales being down slightly. These results were driven by Pool sales growth and triple-digit margin expansion across each of our Flow, Water Solutions and Pool segments. Sales for Q4 were down 1%, which was slightly better than we guided, driven by higher than expected Pool sales, which nearly offset an expected decline in Flow and Water Solutions sales. Fourth quarter adjusted operating income increased 17% to $231 million and return on sales expanded 370 basis points year-over-year to 23.8%. This improvement was driven primarily by our Transformation initiatives. Adjusted EPS of $1.08 was up 24% versus the prior year. For the full year, sales were down 1% at $4.1 billion, with core sales flat, driven by growth in Pool, which offset lower Flow and Water Solutions sales. Our residential businesses continue to be impacted by higher interest rates. Adjusted operating income grew 12% and return on sales expanded 270 basis points to a record 23.5%. All three segments significantly expanded margins and set new annual ROS records. Adjusted EPS increased to a record $4.33 up 15% versus the prior year. Please turn to Slide 12, labeled Q4 2024 Flow Performance. In addition to the fourth quarter performance for Flow, I will also be referencing the full year performance on Slide 13. In Q4, Flow sales were down 5% to $361 million. Commercial sales were up 7%, reaching a new annual sales record. Residential sales were down due to higher interest rates and industrial solutions sales were impacted by delayed CapEx spend. At this time, we do expect certain…

We will now begin the question-and-answer session. [Operator Instructions] And our first question today comes from Brett Linzey from Mizuho. Please go ahead with your question.

Hey, good morning, and congrats on a great quarter.

Good morning. Thank you.

Wanted to square some of the moving pieces on the legacy Transformation program versus the new 80/20. I guess of the incremental $80 million, how is that split between the two savings buckets? And then if you could just help frame the cumulative value savings you think for the 80/20 program over a multiyear period?

Yes. So first of all, 80/20, we're excited to have it. Launched in all of our businesses and we've gone through the analysis. And as you know, it puts your revenue in quadrants and you do that both by part and by customers. So we're just going to keep the benefits of Transformation and the productivity column, regardless if it's 80/20 or Transformation. What 80/20 does do, though, Brett, is it helps us focus the business. And so identifies what we really want to grow and where we don't want to spend our time growing, which has benefits to all four of the pillars under Transformation. So we would expect over time that this is another additive to our Transformation expectations, but it's going to be captured in that productivity column as we go forward.

Okay. Got it. And then I guess just shifting over to price, obviously, a lot of moving pieces with tariffs. I appreciate the bottoms up view for the segments, I guess, how are you thinking about price as a contributor in those segments? And then maybe if you could parse out what's normal course of business price versus tariff related pricing to offset the stated tariffs that you're embedding in the guidance?

Yes. Thank you for the question. So we've guided to 1.5% to 2% price. Think about that as being pretty consistent across the segments. We did mention that tariffs are included in our adjusted EPS guidance. Think about the fact that we can use price to offset any additional tariff costs. So price for us would be additive to that 1.5% to 2% guidance. And you would expect revenue to float higher if tariffs do happen.

We do have $20 million of price captured in the 1.5% to 2%, which is the 10% on the China tariffs, but we don't have anything related to Mexico and Canada yet in the price line.

All right. Got it. Thanks. Best of luck.

Thank you.

Our next question comes from Julian Mitchell from Barclays. Please go ahead with your question.

Hi. Good morning. Maybe just, first off, I wanted to try and understand the seasonality a little bit and what's being assumed there. So I think the Q1 is a little bit lighter share of the year than normal because of currency and perhaps a tough start in commercial in Water. Maybe help us kind of understand how you're thinking about the first half as a share of the year in terms of earnings? And when we're thinking about the phasing of the tariff headwinds, when are you assuming that comes into the company and starts affecting sales and earnings?

Yes. So I mean, as you remember last year, we had anticipated that we would see and the industry anticipated that they would see some type of recovery in residential channels. So what happened was we saw a little bit of loading in the distribution channels in anticipation of the residential recovery, which did not materialize. So we have our last quarter of headwinds in Q1, which is why you see that as a little bit more challenged. In addition, we had one program in Ice China that rolled off, and that was just last quarter contribution. Outside of that, sequentially moving to Q4 to Q1, we're generally seeing things the same. So we see Q2 as the recovery back to easier comparisons as we move through the year. And as far as your questions on tariffs, we'll see some minimal impact in Q1, but the majority of it will roll out pretty consistently between Q2, Q3 and Q4.

That's helpful. Thank you. And then just maybe following up on the Pool market outlook. Maybe help us understand kind of where inventories as you see it among your distributors right now? How much kind of early buy occurred in Q4 versus normal? And what's the assessment on sort of new build market health this year?

Yes. I would say that we're staying cautious even though you've got new pool builds in 2024 really at historical lows, we're trying not to get ahead of ourselves. So our view is for new pools and remodels, up low-single-digits, aftermarket up low-single-digits, and then we have the benefit of the December acquisition. Our view is that early buy was at historical levels as well as the inventory that sits within the distributors and dealers also at historical levels.

Our next question comes from Steve Tusa from JPMorgan. Please go ahead with your question.

Hey, good morning.

Hey, Steve.

Hi, Steve.

Interesting 96 hours. It's been an interesting four to five years I think. Don't you agree with that?

Every year, there's something, right, Steve?

Every day, there's something. Yes. So just trying to like really squint at the bridge on 21, Slide 21. Where are the tariffs embedded there? I guess it's like $95 million. Is that kind of the simple math on the tariffs? That's kind of the dumb math I guess. But is that embedded in inflation?

No. So right now, we would have roughly, as Bob said, we have roughly $200 million of China that would have $20 million more of inflation in it. And then you would expect that $20 million to be in price as a general view. If we were to see the Mexico and Canada, it's primarily all Mexico for us. You would see additive price and you'd see added inflation, Steve.

Okay. So you're not. I got you.

Source and purchase products and depending on where that lands you can do the math and that's how we're thinking about it.

I got it. So you're not embedding the Mexico yet. You're embedding the China, that's an inflation and then you're offsetting that with price and that would be your lever if Mexico comes around?

Exactly.

That's right. But our view is we've got the EPS protected because, again, we would offset the tariff costs with the price.

With the price, right? And I guess just backing up to the bridges here and the rate of inflation that you're seeing, how do you tease out that like rate of inflation versus what you're getting into the numbers from sourcing? It just seems like the inflation, where are you seeing the most inflation? It just seems a bit high relative to our expectations at least. And how are you kind of like teasing that out?

Yes. So we were seeing moderating inflation clearly. I think what we're anticipating is that we're going to get that little bit of China tariff. But as you know, Steve, most people reflect and raise their commodity prices equal to what happened from those sourced products. So you're going to see a little bit of an uptick in inflation across the board as people try to take advantage of getting a little bit more price. So freight was the other area that we were seeing a little bit of uptick in. Outside of that, we were seeing moderating to slightly declining inflation as we're moving through the business model in Q4.

Our next question comes from Bryan Blair from Oppenheimer. Please go ahead with your question.

Thanks. Good morning, everyone.

Hey, how are you?

Doing well. Thanks. Just want to follow-up on Transformation for a bit. If we look at the segment income and ROS walk you provided at Investor Day, is there any meaningful shift in segment contribution through 2026 now that you officially revised the medium-term ROS targets to the 26% level?

We continue to believe that each of the segments will participate within the ROS expansion story. If you think about, we laid out a path to the 26% by 2026 at Analyst Day. And we just delivered $107 million, we're guiding to $80 million. So that puts us at, call it, $187 million, $190 million. So again to get to that $260 million take another $70 million of Transformation. Obviously, we'll build funnels that are higher than that. That will help us mitigate any risk that we might have or provide upside, but we are on a very good path to continue a sustainable journey on Transformation.

And I would add that part of the confidence is the introduction of 80/20 allows us to focus and identify and see more opportunities. But also just as a reminder, we're doing this without the benefit of growth. And Transformation will show up as a form of scale across our existing factories and overhead costs when we do get that contribution for revenue. And we believe it's out there. We just don't know when it's going to come and we need some help on interest rates and some efforts in the residential housing side. So that's our encouragement. And I think as we continue to move along, we feel good that the programs that we've introduced have created structural changes and we believe we're going to benefit from those when the growth comes forward.

I certainly see it in the numbers. And maybe offer some color on G&F? I know this was a smaller deal, but speak to the assets, strategic fit, how it enhances your Pool offering? And then how we should think about growth rates, ROS contribution, any accretion? Thank you.

Yes, we're really excited. It's an example of taking a look across a product line and understanding where you might have opportunities. And while we're really strong in heater positions in most of the markets, in Florida and in some of the south, heat pumps, which are more electric based, are the preferred option. And it wasn't the strength in our product line. And so we had the opportunity to add and solidify some really important positions in Florida, and that's what Gulfstream represents. And it's an example of a really nice tuck-in acquisition that really fits nicely with our strategy, business model and financial expectations.

Yes. Just roughly from a numbers perspective. We closed that acquisition at the beginning of December. We expect in 2025, roughly $35 million would come from that acquisition of top line revenue with about $5 million included in 2024 in that one month of December. So we're expecting a net benefit of the $30 million and that's the two points of growth that Pool would see. It's roughly a 30% ROS business. And we bought it at about 10 times EBITDA. So a really nice bolt-on acquisition for us expanding again our portfolio within the heater area.

Our next question comes from Jeff Hammond from KeyBanc. Please go ahead with your question.

Hey, good morning, guys.

Good morning, Jeff.

Just on margin expansion. I think you're calling for 125 basis points all-in. Any kind of way to think about how the segments play out either order of magnitude or are they all kind of equal contributors?

Yes. I think equal. I think Pool has done a really nice job driving value and we're continuing to invest in growth in Pool both trying to drive automation and new products. So think about Pool being closer to 100 basis points and the other two being equal in their contribution roughly to the difference, Jeff.

Okay. Great. And then Water Solutions, I just want to unpack what you're seeing in resi because we've seen kind of two down years, you're expecting another down year? Is it just rates or is there something else going on there? And then just on the commercial side, it seems like you're through, after 1Q, you'll be through the backlog drawdown in ice. But just what are you seeing in that commercial foodservice space from a fundamental standpoint?

Yes. I'll answer the residential one first. I mean, as you can imagine, our favorite types of residential housing for residential filtration and even Flow our rural homes that have a well and most all wells have water softening and then filtration. When you get into the urban environment, water is generally acceptable to the people who drink it, and therefore, you don't see the same level of filtration penetration. So the interest rates have really hurt that urban sprawl and the farther out builds and that's where I think the residential business has been hit harder. The second element is a lot of water softeners are financed. And the consumer financing challenges have led to lower demand in that particular space. What we've been also doing is spending 80/20 to think through the product portfolio and be very thoughtful about where we want to play long-term. And so you're seeing some top line headwind in lieu of getting more margin expansion so we can operationalize our footprint a little bit better, Jeff. As far as the commercial, North American ice performed just slightly down for the year last year. Most of the year-over-year challenges in the commercial was related to, as I mentioned, China. And that was a large local coffee rollout that happened in 2023. That was pretty lumpy to the year-over-year effect of how we compared against that in 2024. But when you take a look at the North American ice market, it actually outperformed our expectations last year and we just had that headwind related to China.

Do you see more of that continuing?

We have one more quarter of challenged year-over-year, which is Q1, which is the last quarter for that. And then we'd expect to get to more of that mid-single-digits normal growth rate that ice has generally benefited from.

Your next question comes from Nigel Coe from Wolfe Research. Please go ahead with your question.

Thanks. Good morning, everyone.

Good morning.

So another tough question. So I mean, this is a nerdy question, but do you price it through a regular price increase and therefore you have to give customers the customary notice or would it be a surcharge, which might be more immediate? So just wondering on that. And then thinking about the exposure across the three businesses, I think we would all have seen that the Pool business has more Mexico and China exposure. Just maybe just any color there would be helpful.

Yes. So first of all, we have, in normal conditions, 30 to 60 day notice periods across most of our dealer/distributor relationships. Obviously, when these types of events happen, we skew them more closer to the 30 day window for most of our largest customers. So that gives you a level. Usually, we have enough inventory in hand to mitigate any timing impact there. As far as exposure, I mean, interestingly, our Water Solutions business would be the most exposed to Mexico given the fact that most of all the residential products are made in Mexico and then we have our North American ice manufacturing in Mexico. And so those would be the -- so they will have a little bit more effort to recover the tariffs. And we feel like the other two businesses don't have that same level of exposure.

Okay. That's great. And then just my follow-on is the $80 million of initiatives, the benefit in 2025. Are there any, just to be clear, are there any investments against that $80 million or is that a clean number that flows through to the bottom line?

Yes. Thanks for asking. That's the net impact. So that will have both positive benefits from Transformation, net of any strategic growth investments. And, yes, we are making strategic growth investments, primarily in Water Solutions and in Pool. And so you can think about Transformation being a little bit higher and then being offset by incremental investments to longer-term growth programs.

Our next question comes from Nathan Jones from Stifel. Please go ahead with your question.

Good morning. This is Adam Farley on for Nathan. I wanted to follow-up on 80/20. Which of the segments are seeing the most near-term revenue headwinds from Quad 4 actions? And then also have Quad 1 actually identified any areas that can potentially benefit from additional growth investments?

Yes. So 80/20 in itself is not a growth limiter. Quite frankly, there isn't, in the base program itself, there's not really a view that you lose revenue. That being said, our various acquisitions over time create more of a portfolio opportunity. So Water Solutions is seeing some exits of revenue that will help drive margin performance and lead to better productivity paths by exiting out to Quad 4. Everybody else is a combination of moving Quad 4s to Quad 3s, which are changing the way that you transact with customers. And all of the businesses have seen early signs of customers in Quad 1 that like what we're doing and feel like there's opportunities to partner more effective with us.

All right. Thank you for taking my question.

You're welcome.

Your next question comes from Deane Dray from RBC Capital Markets. Please go ahead with your question.

Thank you. Good morning everyone.

Good morning, Deane.

Hey, I just want to circle back on Pool and the growth rates assumed and I recall it was not too long ago right after COVID, where there was this worry that there'll never be another pool built because everyone that could build, possibly build one had done it. But now we're look to be at a more normalized level. So what's on low-single-digits for new and remodeled and aftermarket. Is that -- are we at sort of a normalized rate given demographics and regional? Is it -- does it reflect interest rate pressures or labor shortages and the contractors especially on the new build? Just kind of are we at a normalized level here or are there still some headwinds?

Deane, this is John. I want to jump in here. I feel strongly, we're not. I mean if you go back to 2019, which we always point to is what we would say is a more normal year for both North American housing starts and pool starts, when you look at 2019, both of those views to 2025, we're down 24% in housing starts and 23% down in new pool builds. It's not surprising because pool builds generally are a percentage of new housing starts, given that most homes built in the South have pools attached to them. So we have a long way to go to get back to normal. What we see in 2025, though, is flattish overall new pool builds, slightly higher new remodels and the ongoing benefit of aftermarket, which just feels good for a change, given what we've struggled with in '24 and '23.

That's really helpful. And the second question, I'm not sure how much you can comment on this, but there's been press reports of a very large asset that's being shopped that does food and beverage, water treatments. And just kind of high level thoughts? Is this an opportunity for you? Might there be a competitive impact if this business actually gets acquired by what would be a more natural owner versus where it is presently? So just how do you think this all plays out.

Yes. Not aware of that at all, Deane. But I mean we continue to be focused on taking our businesses, especially the ones that we love that are focused on our Move, Improve and Enjoy. And we're in the bolt-on mode. And so not aware of any assets, so no comment on that.

Our next question comes from Andy Kaplowitz from Citigroup. Please go ahead with your question.

Hey, good morning everyone.

Hi, Andy.

Maybe just a little bit more on Flow. When you're assuming CapEx delays might begin to subside there within the industrial businesses? And we know you've been continuing to streamline your overall Flow business. So what is the ongoing impact of that in 2025?

First of all, Andy, thank you for that. It's a small part of our business, roughly $200 and some million that's really related to food and beverage and industrial. So they tend to be a little bit more projects related to expansion of beer. And obviously then we sell beer membrane filtration. And then ultimately, a lot of our CO2 and gas management aspects. So it's a smaller piece of our portfolio, but we are happening to see delays in those projects, and we're not counting on those delays to recover here in the near-term. Really related to financing and the overall expansion of their business models globally.

And then, John, to the point of new pool sort of standing at these very low levels, you've guided to break and fix and remodeling up low-single-digits for '25. Are you seeing or when should we see like sort of pent-up demand as everybody is just sitting there, could we see a little bit of improvement? Because there just hasn't been a lot of new pool activity in break and fix and remodeling. How are you thinking about that? And then have you seen any impact from hurricanes or maybe any thought process around potentially replacing the wildfire areas in California on the Pool side?

Yes. So real quick. We think we're in at least the second half before we see meaningful recovery in the residential side. I think as rates start to come down or equity markets stabilize, which are the two funding sources for our general pool owners, we believe stabilization leads to decisions, which lead to them moving forward with projects. And so I think we remain optimistic that aftermarket remodels will continue as people take advantage of their lower mortgages in their existing home base in the short run. And then hopefully, we'll see the builds as we go forward. As far as hurricanes, yes, we did benefit in Q4, slightly from the hurricanes, obviously, tragic events that we don't root for. And we imagine that most of the housing rebuilds in California will also once again have pools as they remodel. Obviously, horrific situation. So our hearts go out to those people. But either of those events will have some longer term penetration aspect to them.

Our next question comes from Andrew Krill from Deutsche Bank. Please go ahead with your question.

Hi, thanks. Good morning, everyone. Let me go back to the, I guess, updated 2026 margin targets. Just like can you flush out like what sales growth are you assuming for 2026 in order to hit this new 26% margin? And is there any new contingency in there similar to what you provided at the Investor Day? Thanks.

Yes. Again, just as a reminder, at Investor Day, we talked about mid-single-digit growth. We just guided 2025 to flat to up 2%. So we've assumed something similar at this point for 2026 to achieve the profitability targets that we need. Again, hopefully, we'll be surprised on the upside. The deferred residential recovery comes back, Pool starts to grow it. More historical rates, but continuing to drive that transformation program to deliver the bottom line.

Okay. So it's fair to assume that if we go back to your mid-single-digit growth target, there's a little bit of upside to that 26%?

I don't, I mean, right now, we're updating that we feel good about the 26% ROS. I think embedded in those numbers, as Bob and I said in Investment Day, was growing about $100 million of EBITDA per year through 2026. So you could calculate how you get back to what the revenue number is and that's really a reflection of the fact that we didn't get the mid-single-digit growth recovery earlier in this three-year window that we had hoped for. So we're not raising our overall expectations. We're saying there's a different path to achieve it.

Understood. And then real quickly, just on 80/20, is it fair? I don't think it was commented on explicitly, but is it about a two-point headwind in the sales bridge you're assuming or about half of the Quad 4 sales? Thank you.

No, that's for, maybe a business. But overall we would expect to see no more than roughly one point of headwind from Quad 4 exits from an overall Pentair perspective. And those are embedded in our volume assumptions and our current guide.

And our next question comes from Joe Giordano from TD Cowen. Please go ahead with your question.

Hi. Good morning. This is Vince on for Joe. I wanted to start with this. Should we be expecting some significant debt paydown during this year? And does the guide assume any debt reduction?

We will continue to drive the leverage ratio down as a combination of just having more EBITDA and slight debt paydown. So again, when we look at our capital allocation strategy, it's increasing the dividend to the 9% that we talked about, it's share repurchases to offset dilution. It's some debt paid down and bolt-on acquisitions. So really balanced capital allocation strategy.

Got it. Thank you for that. And you mentioned the residential end market improvement in the second half is included in the guide. Could you help frame how we view Q2 in terms of the bridge? Do you see Q2 improving a little bit, but most of the improvement in the second half, or no improvement until the second half in the residential model?

We see really, really modest improvements as we move to the second half. We're not anticipating a significant amount of rate reductions, which is what we really would like to see to get the jump start going. So what we have is a lot easier comparisons year-over-year and a lot more valuable contribution to the revenue streams.

That was helpful.

Our next question comes from Saree Boroditsky from Jefferies. Please go ahead with your question.

Thanks for fitting me in. So just building on 80/20, you talked about focusing on profitable growth. Can you talk about how you're driving growth in those top clients and products? What are some of the investments required? And how are you incentivizing teams to adhere to the strategy?

Yes. I'll do it as quickly as possible. I mean it's really about identifying what it was that people really saw in your strength as a company, and they started buying core products, for core and marks from you. And then over time, you added a bunch of complexity and in alternatives. So it's really getting back to your strengths. And then working and partnering with, as you said, incentivizing the dealer, incentivizing the distributor and making sure you're incentivizing your salespeople to push through your top products to your top customers.

And then quickly back on the tariffs. You talked about potential pricing actions, but just wanted to see how you're thinking about sourcing given some of the work you've done on that previously? And maybe any changes on how you're thinking about producing water treatment products in Mexico? Thank you.

Yes, I would say that structurally, we thought we had a really good situation. We've worked under the agreement that was put in place and this was a really good alternative to service North America, both from a standpoint of not just access to products, but also access to labor. Because we're pretty tight in some of the manufacturing and labor markets that we participate in. So right now I think we would react accordingly with dealing with what we need to do in the short run and then look longer term strategically what the best alternatives would be.

And our next question comes from Brian Lee from Goldman Sachs. Please go ahead with your question.

Hey, guys. Good morning. Thanks for squeezing me in. Just two quick ones. I might have missed it, but on the Pool view for 2025, fair to assume sort of a normalized two to three points of price and the rest is volume?

Yes. For Pool, it's more like consistent with the overall company, 1.5 to 2 points of price is what's expected.

Okay. Fair enough. And then I know a lot of focus around the tariffs and sourcing and cost risk. There is a larger fairly large European player that you compete with. I'm not sure if as all the dust settles on the tariff situation, if the EU were to get involved or get caught up in this. Does that become a potential market share tailwind for you guys, depending on kind of how all the balls fall in place here sort of what products were could you maybe stand to benefit? Just trying to understand the competitive dynamic if certain regions like Mexico and Canada maybe don't end up seeing tariffs in other regions like the EU and China, do you see tariffs? Just trying to wonder about some of the permutations that might actually be to your advantage potentially.

Yes. It's hard to speculate. I would say that we're looking at those and strategizing. I think the bigger challenge is when we have these types of actions, you can get disrupted in supply chains and give temporary advantage or disadvantage to different regions. But we're a large global player as well. And we have a large global manufacturing footprint and global capabilities. And so when we have more certainty of what's going to happen and will react accordingly.

Okay. Thank you for joining the call today. In closing, I want to reiterate some key themes on Slide 22. We delivered record earnings as a result of solid execution and transformation. We drove significant margin expansion across our balanced Water portfolio despite continued macroeconomic headwinds. We ensured performance accountability across the organization. We ended the year with an even stronger balance sheet and record free cash flow and we maintained a disciplined capital allocation strategy with a focus on driving higher return on invested capital. And finally we believe our focused growth strategy and solid execution are building a solid foundation for long-term growth, profitability and shareholder value. Thank you, everyone. Have a great day.

Ladies and gentlemen, this does conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.