Good day, ladies and gentlemen, and welcome to the Q1 2014 Watts Water Technologies Earnings Conference Call. Please be aware that remarks made during today's call about the company's future expectations, plans and prospects constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors, including those discussed under the heading, Risk Factors, in the company's annual report on Form 10-K for the year ending December 31, 2013, and other reports that the company files from time to time with the Securities and Exchange Commission. In addition, forward-looking statements represent the company's views only as of today and should not be relied upon as representing its views as of any future date. While the company may elect to update those forward-looking statements, it disclaims any obligation to do so. During this call, the speakers may refer to non-GAAP financial measures. These measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the press release dated Tuesday, April 29, 2014, relating to the company's first quarter 2014 financial results, a copy of which may be found in the Investor Relations section of the company's website at www.wattswater.com, under the heading Press Releases. I would now like to turn the call over to Mr. Dean Freeman, Chief Executive Officer and Chief Financial Officer. Please proceed.

Thank you, operator, and good morning, everyone. Joining me today is Ken Korotkin, our Chief Accounting Officer; Tim MacPhee our VP, Treasurer and Head of Investor Relations; and Ken Lepage, Chief Legal and Administrative officer. Obviously, I'm going to give you an overview of our Q1, we'll start with our latest view of the market dynamics, give you a sense of where those markets are going, give you an update on how we see the segment sales performance in 2014 and how that looks moving forward. Then I'll hand the call over to Tim, who will give us a detailed financial review. And when Tim finishes up, I'll just summarize for you all. So let me just start on Slide 3, and say we were generally pleased with the quarter. While we didn't see the revenue growth we expected, we saw solid margin expansion in both the Americas and EMEA and our consolidated margin flow through of over 40% on the incremental revenues. We're also pleased with the rate of order growth that all regions reported as we exited the quarter. I'll talk a little bit more about that in detail. Our consolidated sales in the first quarter were up about 2%, but organically, we're essentially flat with the previous year, modest increases in Americas and Asia-Pacific was offset by organic sales reduction in EMEA. We delivered an adjusted operating margin in Q1 of 9.2% or 60 basis points higher than prior year, and our adjusted EPS was $0.55, about 10% ahead of last year. And despite the volume decline in EMEA, the segment saw margin expansion of 70 basis points. And Tim will provide a little bit more color on that. Not surprisingly, our sales growth was impacted in part in the Americas due to weather-related delays in the…

Thanks, Dean, and good morning, everyone. Let's look at the quarter results first, and I'll be speaking to the information that are on Slides 9 to 12. On a consolidated basis, organic revenue for the quarter was up just under 1%. By segment, the Americas grew about 3.7% organically. EMEA was down 3.5% and Asia was up about 1.5%. In the quarter, FX provided about a 90-basis-point tailwind for us. In the Americas, we saw organic sales increase in the wholesale channel by 5%, and the OEM channel was up 1.1% and retail was up -- was basically flat. Increased sales in our residential and commercial flow control product continue to be the primary driver for growth, while as Dean mentioned, some poor weather in the quarter hampered sales by an estimated 200 basis points. Americas order rates accelerated as Dean mentioned, and were up 7% versus March of 2013. And the Americas adjusted operating margin in Q1 of 11.2%, was 70 basis points higher than the same period last year. Driving the increase was volume and some sales mix, a relatively quiet operating manufacturing quarter. We gained about 30 basis points against last year's. We didn't experience any material lead-free related production issues. Included in the adjusted earnings in the Americas, our net legal and trade compliance settlement cost of about approximately $1.2 million, which reduced the Americas quarterly results by approximately 55 basis points. And we did not highlight this as a special item in the press release because there was a corresponding, though unrelated, reduction in cost of approximately the same amount in the corporate cost relating to reduced stock compensation. So on a consolidated basis, no effect in adjusted earnings, but from a segment perspective, the Americas SG&A costs were high and the corporate costs were…

Thanks, Tim. To summarize, our consolidated top line growth was nominal. We were able to deliver solid adjusted incremental operating earnings through our cost savings driven by the various initiatives in EMEA and through better product mix and operating efficiencies in Americas. Revenues were delayed due to poor weather in the Americas as we talked about and we expect they will come back in Q2. We're very encouraged by what we see so far in the second quarter in growth and are hopeful on improvement in the commercial construction market in the second half of the year. We took additional cost actions in the Americas, which will benefit our organizational effectiveness and our financial results in the second quarter. Lastly, we have challenges in our foundry. We expect that they are temporary, we've proven the production model and we're laser-focused on preventing any further issues and getting the plant back on track. So with that, why don't we open up the line for your questions.

[Operator Instructions] Our first question is coming from the line of Jeff Hammond from KeyBanc.

Maybe just to sum up North America, if I have you right, it sounds like the data points and the macro data points you look at are maybe a little more mixed, but the tone from your customers unchanged and the March, April order rates give you confidence in the 6 to 9, is that fair?

Yes, that's exactly right. Talking with -- and we're not just talking about wholesalers that might be pulling up inventories, we're talking about -- we're talking actively to mechanical contractors and the full spectrum of end users to make sure and to better understand the demand dynamics. And again, all trending very positively.

Okay great. And then Asia, can you just elaborate on the margins there, which have been kind of trending high-teens, 20s, and what you think the margins look like for the balance of the year in Asia?

Well, I think the margins get back to sort of historical run rates. They tend to be very volume-sensitive. They tend to be very absorption-sensitive. And again, they had a tough start in the first quarter. They had much lower intercompany sales mix as a function of the stress testing inventory that was being shipped to North America. And they had a slowdown in the eastern part of China, which affected their trade sales. Again, they see all of that coming back and expect to be back to historical levels in the second -- through the second quarter and into the second half of the year.

So March, April, those intercompany sales have normalized?

They have.

Okay, great. And then just final fine-tuning question, can you -- with the corporate cost changes, can you give us a corporate expense number for 14?

Let's see, last year adjusted would be -- just under $28 million. So I would take that, put a little inflation factor on it and that will give you this year.

Yes, typically, if you keep it to 2.1% to 2.3% of revenue, you'll be safe.

Our next question is coming from the line of Garik Shmois from Longbow Research.

First question is just on the consolidated incremental margins, it was very good in the first quarter and outlined some of the reasons for it on the minimal revenue growth. Just wondering if you could expand upon your view on incrementals for the balance of the year, should we expect them to continue to be fairly well above normal levels?

Now look, we obviously want to be careful of going outside of what we've talked about in the past, I think what we talked about in the past, is a 30% to 35% range like this quarter to your point, we're more like 42%, is led largely by Europe. I mean, their revenues were down and their margins were expanding. So -- and that was the big leverage point. I think it just speaks to the effect of the work that they have done and will continue to do both in terms of how they're positioning themselves but how they structured the organization. But we don't want to call out any incremental expansion beyond what we've talked about in the past of 30% to 35%.

Okay, fair enough. And I guess just switching to Europe, couple of questions here. Weather was very dry in Europe in the first quarter.

And warm.

And warm, was there any sort of pull-forward effect in Europe in your sales numbers?

You mean on the fourth quarter of 2013?

No, in this first quarter in 2014.

No. Nothing material.

Okay, and then I guess just my last question, and it also pertains to Europe. Can you provide a little bit more color just if trends -- I recognize that it's choppy for the time being but if trends do improve in Europe and there's some green shoots in several economies, what's the typical lag there between macro data points improving and by the time you start seeing sales improve?

That is going to vary region by region and segment by segment. So I would be totally guessing if I try to sort of call out a lag between economics, broad macroeconomics and the effect on the results and also, obviously, matters what's driving the broad economics. But it is a short-cycle business to a certain extent, certainly on the wholesale side. On the OEM side, I would say it's longer cycles. So you are probably talking more in the 6-month range, frankly, or maybe longer. On the shorter cycle, you might be talking more in the 3- to 6-month timeframes.

Our next question comes from the line of Kevin Maczka from BB&T Capital Markets. Kevin R. Maczka - BB&T Capital Markets, Research Division: Dean, first question on -- there's a lot going on here in terms of restructuring and realignment, we know about your European program going all the way out to 2018. Now we're talking about some actions in the Americas. And I'm just wondering, as we think going forward about the Americas, maybe you're not ready to quantify or give specific examples, but is this -- should this be viewed as kind of a coming attraction of more to come? Or does this position the Americas now, the way you'd like to see it positioned?

I think it does position Americas the way we'd like to see it positioned from an organizational standpoint. Obviously, we will keep a close eye on execution on performance, on our ability to obviously drive results in terms of other actions that we may take. So you never want to say never. I think this action was a function of both -- of taking out some cost-driving performance and improvement, upgrading talent and reorganizing the organization. And I think right now, this is the way we see it. Now I will say there are other initiatives underway, we haven't quite talked about yet, and we're not ready to talk about broadly. But they're more around the operational productivity side of the fence. We talked and some of you have talked about our efforts with regard to our supply chain efforts and our global supply chain strategy. We'll probably roll out a little bit more detail around that in the second quarter. But to answer your question more directly, this is about the way we see it for now for the Americas. Kevin R. Maczka - BB&T Capital Markets, Research Division: Okay, great. And then just on the price increase, it sounds like we're still seeing some reasonably good data as it relates to the North American repair and remodel. You're hearing good things from your mechanical contractors, customers. You're announcing a 3.5% price increase that goes in a couple of months. Can you just talk about -- it's probably too early to talk about response to that, but what's been your experience with rolling our price increases like that and how they stick?

Every cycle has different reactions. I want to be careful about sort of painting this in any one way versus another. I will say, I was on the road with customers at the time the announcement came out. Not seeing any negative reaction, I think they're just still in digestion mode. In some cases it will stick, some cases it won't, as we've seen in the past. Again, they're in selected markets and selected channels and we'll see how it plays out. I would say overall, it should be -- it'll be worth 30 to 50 bps impact on the top line. Kevin R. Maczka - BB&T Capital Markets, Research Division: Okay, and then just finally for EMEA, you've got maybe some unknowns that you're a little bit concerned about as it relates to the foundry, but some of the things that have pressure there that you do know about, I think legal and compliance settlement issues, are those done now, is that behind us, or was that one-time and over and done?

Well, I'd love to say "It was one-time and over and done and we will never have another legal or compliance issue pop up." But that would not be the smartest thing in the world for me to say. What I will say is.. Kevin R. Maczka - BB&T Capital Markets, Research Division: But I mean for the issues that are known at this point, is this something we should expect $1.2 million going forward or is that at least done?

No, no, that's -- those -- again, as Tim pointed out, that was onetime.

Our next question is coming from the line of Jamie Sullivan from RBC Capital Markets.

Dean, a question on commercial construction in one of your comments was that you're seeing some of the early cycle bellwether applications pickup. Maybe you can provide a little bit more detail on what you're talking about there, and maybe how one sees the cycle playing out from a product perspective, what products benefit, early mid late cycle as the commercial construction cycle progresses?

Yes. So I'll try not to get into too many specifics, but when we look at our large diameter back flow products, when we look at our large cast iron project activity, we see both of those product families up single digits -- excuse me, double digits or high single digits. And so we would know that those applications, those products are specific to commercial applications and have been growing at a fairly positive rate over the last couple of quarters. So we view that as positive indicators. But again, I think from our perspective, it's not a broad-based snapback in the commercial side. And until that kind of happens, we're not prepared to sort of project a significant tailwind on the commercial construction side.

Okay, that's helpful. And then on the incrementals, I know you reiterated the 30% to 35%, but you also have a lot of restructuring transformation programs going on, how should we think about that overall? Should we think about it as 30% to 35% with the savings on top of that, the underlying is 30% to 35%, just wondering if you'd give some color there?

Well, it all depends. I think, what we're trying to point out, I think when we're talking Slide 8, I think we're saying look, there could be some continued ongoing headwinds related to the foundry, offset by obviously, actions that we're taking. I mean, I'd love to say "It's all going to be upside." And then we'll have a quarter like we had in the first quarter, which was more like 43% flow-through. I think right now, we're just being cautiously optimistic in saying we're going to stick to the 30% to 35%. And if we get upside to that, then we'll talk about what's driving that, and whether that's a new more positive trend for us in the future.

[Operator Instructions] Our next question comes from the line of Joe Giordano from Cowen.

Just quick on Europe, I'm curious as to how much of that organic decline that you had was from product rationalizations. I know that was part of your transformation strategy over there. And so how would you categorize the growth on products that are part of your go-forward portfolio there?

Yes, so what we've called out -- I would say none of it or maybe a very, very small piece of it. It was all sort of market organics, and was not a part of our discreet effort on the product rationalization side. So again, as we saw the organics around 3.5% or 3.7% in the first quarter, we have seen a modest snapback here at the end of the March and through April on the order of about 2.5%. So I think in my comments, what I said is, "Look, we expect the organic play -- the organic performance of Europe to be nominally flat with a reduction for the year of 1% to 3% being driven by the efforts on the product rationalizations." And we don’t expect that to take hold until about the second half of the year.

Okay. So basically, you expect the market overall to recover from where it is -- from where it was in 1Q but then you have your rationalization in the second half, okay.

Yes. That's our -- yes.

Okay. And then on the U.S. side, I'm just curious, I appreciate that your estimates are good and really by your customers and what they're saying. Would you say that -- how would you categorize their order patterns, would they be consistent with the growth in sales or existing sales in that 2% range and that 20-plus percent range in housing? Or how would you see a lag between -- the data so far year-to-date has been much different than those numbers and a lot of -- some -- I know a lot of other third-party estimates have come in a lot more than the ones in the slide deck. So where do you see a lag between when potentially weaker data starts flowing into orders or how would you categorize that?

Obviously, it's tough to say. I will say that -- it also depends on which region we're talking about. So I was in Dallas recently, and it's gang busters down there but even Boston is strong. So in Southwestern regions, regions where we just got a overall regionally stronger economy, the growth rates are in line with the forecast, in the mid-teens type of growth rates. In other regions, it's more single digits, but again, with a more positive outlook for the second half of the year. So it depends on the region, it depends on obviously, the customer you're talking to. So it's sort of mixed, but I would say, broadly, we can generalize and say that to a customer, we're positive.

I know they're expecting an acceleration from here going forward.

That's what we're hearing, that's what we're hearing. You always want to be careful. Optimism can certainly run ahead of itself. But I think our outlook of 6% to 9% is balanced and it's thoughtful, and I think it's appropriate given what we're seeing.

We have no further questions. I'd now like to turn the call back over to Dean Freeman for closing remarks.

Okay. Thanks, everyone. I'd like to thank you for taking the time to join us today. We appreciate your continued interest in Watts and look forward to talking to you in our Q2 earnings call in July. Have a great day.

Thank you for your participation in today's conference. Ladies and gentlemen, this now concludes. You may now disconnect. Thank you for joining and enjoy the rest of your day.