Watts Water Technologies, Inc. (NYSE:WTS) Q4 2018 Earnings Conference Call Transcript

Feb 08, 2019 • 09:00 am ET


Watts Water Technologies, Inc. (NYSE:WTS) Q4 2018 Earnings Conference Call Transcript


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Good morning, my name is Casey and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Watts Water Technologies Fourth Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you, Tim MacPhee, you may begin your conference.

Timothy MacPhee

Thank you, and good morning everyone. Welcome to our fourth quarter and full-year 2018 earnings conference call. With me today are Bob Pagano, CEO and President; Shashank Patel, our CFO. Bob will discuss our key accomplishments this past year, touch upon on 2019 focus areas in the macro markets and he will also discuss our smart and connected product strategy. Shashank will offer a detailed analysis of our fourth quarter and full-year results and provide our initial outlook for 2019.

Following our prepared remarks, we will address questions related to the information covered during the call. Today's webcast is accompanied by a presentation, which can be found in the Investor Relations section of our website. We will reference this presentation throughout our prepared remarks. And any reference to non-GAAP financial information is reconciled in the appendix to the presentation. Before we begin, I'd like to remind everyone that during the course of this call, we will be making certain comments that constitute forward-looking statements. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially. For information concerning these risks and uncertainties, see Watts' publicly available filings with the SEC. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Now, let me turn the call over to Bob Pagano.

Robert J. Pagano

Thank you, Tim, and good morning everyone. Starting on Slide 3 in the earnings presentation, let's review our accomplishments for this past year, and I'll provide some initial thoughts on 2019. I'm very pleased with the strategic progress we've made in 2018. The team's focus on increasing customer intimacy and driving productivity continues to be reflected in our operating performance and financial results.

Last February, we mentioned that with the transformation initiatives complete, we wanted to focus on accelerating organic growth. In 2018, we achieved consolidated organic growth of 6%, our fastest pace of growth since 2006. A number of factors contributed, including strong Americas end markets and driving a positive price cost dynamic despite the many input headwinds that surfaced.

We also benefited from our new product development efforts like key products like IntelliStation and Benchmark Platinum boiler driving incremental sales. Spanning business into the Middle East, Africa, Australia New Zealand also contributed to sales growth this past year. We are beginning to see the benefits of our previous year's investments in new product development and geographic expansion. Another 2018 goal was continued expansion of our adjusted operating margin. This year, we increased consolidated adjusted operating margin by 40 basis points, driven by price