Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2013 Watts Water Technologies Earnings Conference Call. My name is Janata, and I will be your operator for today. At this time all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). 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 ended December 31, 2012, and other reports 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 these 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, February 18, 2014 relating to the company's fourth quarter 2013 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 conference over to your host for today, Mr. Dean Freeman, Chief Executive Officer and Chief Financial Officer. Please proceed.

Thank you, Operator. Good morning everybody, and thank you for joining our fourth quarter earnings call. We’ve got a lot of ground to cover and I’ve got some help here with me. Joining me today are Ken Lepage, our General Counsel and Chief Administrative Officer; Ken Korotkin, our Chief Accounting Officer; and Tim MacPhee, our Treasurer and VP of Investor Relations. I'll start by providing a high level overview of our fourth quarter results. I'll talk briefly about some financials for the full year as well. I’ll talk about the market conditions in our key regions, update you on our key initiatives and give you a sense at a high level of how we are viewing our expectations for 2014. Tim will then walk us through quarterly and full year performance in more detail and some relevant financial points related to 2014. And after Tim’s discussion, I’ll summarize and open the call to your questions. So let me start by providing a brief overview of the fourth quarter results, just flipping to Slide 3. Our sales were $376 million in the fourth quarter, a 6.1% increase over Q4 2012. Our adjusted EPS was $0.57, $0.03 below our adjusted earnings from the same period last year. I’d like to point out a couple of items that affected our adjusted earnings during the quarter. First, rebate costs were adjusted in Q4, reflecting achievement of annual volume incentive targets for certain large customers. $3 million of these costs related to catch up of our rebate reserves. The second item related to the manufacturing inefficiencies we’ve experienced as part of our lead-free conversion project. In Q4 we incurred approximately $1.4 million of costs, including furnace repairs, excess scrap, professional services and other costs related to the new foundry. We expect that these inefficiencies are…

Thanks Dean and good morning everybody. I’ll start by walking through the highlights of the quarter in the full year slides, on Slide 11 and 12 and then make some general comments about 2014. So looking at slide 11, on a consolidated basis, organic revenue for the quarter was up 4.6%. By segment, the Americas was up 7.9%, offset partially by the EMEA which had a small decline of 0.7%. And Asia had another strong quarter with organic growth up about 12.5%. FX provided a tailwind for us in the quarter as well. The Americas saw organic increase in its wholesale channel of 8.7%. OEM channel was up about 4% and retail channel was up almost 7%, driven primarily by increased sales in our residential and commercial flow products. As Dean pointed out, we’re continuing to see results and strengthening trends in North American residential new construction and repair place in markets. Looking at EMEA for the quarter, organic wholesale sales declined 3.5%, offset for the most past by an uptake in the OEM market of 3.7%. While certain markets within EMEA were down to flat in the quarter, we continued to see signs of potential stabilization. EMEA in the quarter had adjusted operating margin of 11.1% which expanded by 90 basis points over Q4 2012. EMEA reaped some early benefits for the restructuring effort as you may have noticed in slide 8, plus other productivity and cross initiatives that have been ongoing for much of 2013. We will continue to drive our productivity efforts through both the restructuring and transformation initiatives that Dean mentioned earlier. Asia Pacific, strong performance in the quarter was driven largely by continued growth of plumbing and HVAC market sales. And adjusted operating profits for the quarter were $36.7 million. As a percentage of sales,…

Thanks Tim. So in closing, in the fourth quarter we saw sales grow in the Americas and Asia and better sequential performance in EMEA. We talked about adjusted operating profits in the quarter included a couple of items related to rebates and lead-free costs, which dampened our margin results. For the year, our Asia team delivered very solid results. EMEA worked diligently to negate some strong macro headwinds to deliver a very respectable performance in 2013. The Americas delivered on improved top line performance and executed in the challenging lead-free conversion. Full year adjusted operating profits again were negatively impacted by the items mentioned earlier. But we believe that the issue is related to lead free conversion and product liability costs have been largely mitigated with the proposed class action settlement. And as I mentioned earlier, we believe much of the lead free issue conversion issues are in our rearview mirror. Looking ahead at 2014, the market dynamics are positive and continued growth in Americas and Asia Pacific, and some emerging positive signs in Europe. Out European team will still be busy executing both the restructuring program and the transformation process, which will require incremental investment that will drive significant benefit to us both in the medium and in the long term. Overall for 2014, we expect to deliver healthy operating profit growth through continued focus on growth, operational excellence and one [lives]. And so with that, why don’t we open up the line for questions, operator.

(Operator Instructions). Your first question comes from the line of Mike Halloran with Robert W. Baird. Please proceed. Mike Halloran – Robert W. Baird: Just to make sure we’re on the same page under your team restructuring, these are two separate initiatives and the announcement today is incremental to the announcement that you made mid-year, correct?

That’s right. Mike Halloran – Robert W. Baird: Okay. And then could you talk a little bit about the competitive pricing dynamics on the retail side in North America? It doesn’t sound like it’s impacting the business all that much based on the growth rates the last couple quarters. But I wouldn’t mind hearing what the win rate looks like from your perspective and then how disciplined you guys have been from your perspective as well.

Look, I don’t think we’re necessarily calling out to specific win rates. I’m not sure we’ve done that in the past. But I think what we can talk about and what we have talked about is that we had a fair number of line reviews in the year. Certainly in the first half of the year, the environment got very competitive. We continued to see a high volume of line reviews throughout the balance of the year, although they have started to moderate in the second half of the year. And I think all we’re pointing out is that, we had a historically high number of line reviews which drove pricing down in some cases as we tried to capture market share. So broadly I think that we believe that many of those line reviews are behind us. We think that the environment continues to be tough but we’ve come out of it I think in a way that allows us to continue to be competitive, but the same time maintain discipline moving forward. So retail continues to be tough. On the wholesale side, I think we’ve been very balanced in our approach both in pricing. In some cases we continue to try to capture market share with price. In other cases we’ve been able to hold price. And certainly we’ve been fortunate that on the lead free side, we’ve been able to hold price consistent with our expectations. And so we’ve really tried to be very balanced about that. Mike Halloran – Robert W. Baird: And then on the rebate side of the equation, any sense some of that pull forward in demand, and you’ve got a pretty healthy outlook for North America growth in to 2014. So I suspect you’re saying that a lot, but just curious.

No, none of that was necessarily related to pull forward in demand. It was really more the basis of historical growth trends and then obviously the inflection point in growth that we saw in the fourth quarter.

Your next question comes from the line of Jeff Hammond with KeyBanc Capital Markets. Please proceed. Jeffrey Hammond – KeyBanc Capital Markets: So just to walk through -- so the $5.9 million lead free doesn’t repeat. The $3.5 million of product liability doesn’t repeat. The rebate true up, I guess you would have rebates next year, it would just be more smooth?

Yeah, the rebate does not affect the year. We only called out for the quarter. Jeffrey Hammond – KeyBanc Capital Markets: Okay and then it looks like you’re going to get $3 million or so of incremental savings in Europe from your first plan. The other one is a push. So I guess if we pull all those out, how should we think about maybe, one, a normal incremental outside of those moving pieces? And then two, any other headwinds to think about that would temper some of the margin expansion?

Look, we still think that -- if there was a concern -- to answer your first question. I think if there’s any incremental headwinds that at least we’re certainly thinking about. I think it’s exactly what we said which is Europe. I think that while we’re obviously all very hopeful, I think we’ve learned lessons about being overly optimistic with regard to any recovery. I mean there’s news out today as matter of fact that I think is rattling markets a little bit. So I think it’s a tenuous recovery. I think it’s fragile, but obviously we’re hopeful. So I think that’s the one area that we’re flagging with regard to concerns. I think the numbers as you laid them out are exactly how we think about it in terms of normalizing margins for Americas on a consolidated basis. So I think you got the numbers right. Jeffrey Hammond – KeyBanc Capital Markets: Okay and then, just real quick, what do you think of price in the 6 to 9 and maybe just update us on the CEO search and when you think you’d have an announcement there?

I guess what I will say on this 6 to 9 normal pricing environment as we’ve expected, I think things will continue to be competitive, but we do see again healthy end markets and that should be positive for price overall. And in that number I think as I mentioned there’s about 1% to 1.5% of lead free pricing in there. Jeffrey Hammond – KeyBanc Capital Markets: Okay. And CEO search?

Oh, CEO search is underway. The committee is active and I think as we’ve announced, it’s a four to six month process.

Your next question comes from the line of Kevin Maczka with BB&T Capital Markets. Please proceed. Kevin Maczka – BB&T Capital Markets: Dean, it looks like lead-free for the most part has played out about like you thought it would. I’m just wondering, I know we’re early in the New Year, but have you been able to see any signs of any share opportunity actually materializing there?

No, not specifically that I would call it, Kevin. I think our focus has been to get the capacity in that foundry up to our own expectations, to normalize our production flows, to make sure we’ve got good harmonized delivery flows, both with our supply chain and with our distribution centers, and then obviously ensuring that we continue to drive efficiency in the foundry. So we’ve been very much internally focused for now as we get through this transition. And obviously as we move forward and we get our production ramped up, we can have more thoughts on any incremental volume coming from third parties or otherwise. Kevin Maczka – BB&T Capital Markets: Okay. Now that we’re beyond that, there was such a big initiative throughout most of 2013 I guess. You’ve made some strides elsewhere on productivity and costs and things like that. I’m just wondering, to the extent that any focus was diverted away from those other things because lead free was so big in 2013, is there an even bigger productivity opportunity now away from the restructuring that you’ve called out as we look at 2014 and beyond?

I think there is. I think you’ve heard us talk about and I think the quote is building up of the muscularity of the organization around lead-free, both in terms of engineering capability, supply chain capability or maybe manufacturing capability. And our thinking was as we wind down lead-free, we would obviously divert those resources, lift and shift as I like to say towards enhanced productivity and enhanced supply chain efficiencies. And in fact we have a number of initiatives under way to incrementally drive productivity in other places other than what we talked about in Europe. So it’s perfectly consistent with some of the things that we talked about in leveraging those resources to drive more productivity across the Americas and obviously in support of what we’re doing in Europe. Kevin Maczka – BB&T Capital Markets: And I may have missed it, but because of all of that, is it still fair to think about a 30% plus type incremental margin on the 6 to 9 in North America?

Yeah, absolutely. It’s a great call out. Yeah, we’re still in the 30% to 35% incremental flow through.

Your next question comes from the line of David Rose with Wedbush Securities. Please proceed. David Rose – Wedbush Securities: I was wondering if you could go into the incremental costs for lead-free. I think you called out $1 million last quarter and was $1.4 million. Was there anything operationally that stood out?

No, David. I think it was exactly as we called it. Obviously through a transition like this you don’t have perfect clarity on what’s on the horizon, what costs may come up. I think the one thing that we’re clear about is that we see and we have seen that through this process consistent improvement, both in terms of capacity, flow rates, production efficiencies. It’s not where we wanted to be yet. Obviously we went through a lot in the year. But consistent improvement is certainly one of the key things that we look for and we saw that through the fourth quarter. David Rose – Wedbush Securities: And so to be clear on Q1 we’re not going to hear anything about lead free?

That’s what we’re hoping. David Rose – Wedbush Securities: Okay. And then as we look at Asia, is the product mix impact a trend or is it just a one off event?

I think it’s a one off event. I don’t see necessarily a full year trend there or multiple. David Rose – Wedbush Securities: And then lastly if you could on the European transformation, can you provide us a little bit more color in terms of the specific buckets, how we’re going to be looking at the $18 million in annual savings, how much of it is from severance, how much it is from materials and maybe back office?

I wish I could, David. I think it’s still very much in the planning stages and we haven’t finalized all that quite yet. I think what we want to do is update you on a quarterly basis as we develop our plans further. So I’m not prepared to break that out at this point beyond what we’ve already communicated. David Rose – Wedbush Securities: I may have missed it. Could you repeat where we’re starting to see the biggest cost incurred then as we get through the year, in which quarters?

We haven’t broken it up by quarter. We did call out

I can give you halves, David. It’s about $9 million non-recurring costs in 2014 and on a half to half basis it’s 50-50.

Your next question comes from the line of Joe Giordano with Cowen. Please proceed. Joseph Giordano – Cowen & Company: Just quick question on the growth rate for revenue in the Americas, is that predicated on that 19% Dodge estimate for new starts/

Not necessarily. If you look at our business, I think the mix of our business between new residential and repair, replace, we’re much more weighted on the repair/replace side of shareholding and not necessarily in the starts. But obviously starts are a leading indicator for the overall health of the industry. So we obviously look at that very closely. Joseph Giordano – Cowen & Company: I guess more is like when you’re coming up with a number, is that something that’s almost plugged into like the way you’re looking at it or is that just for our benefit to see what others are thinking in terms of the market. Like if that came in at 10 for example, would that have -- would you guys be basing it on 19 and then have to shift towards 10 or are you using a more conservative number internally when you’re coming out with your growth expectation?

I can answer the question this way. They’re not directly linked in terms of how we look at our growth. And secondly -- but they are a key indicator of how we view the end markets. And so as we see changed in the health of the general construction market, obviously we evaluate our business on the same level. Joseph Giordano – Cowen & Company: And then one last thing, I think David might have hinted at this, in terms of lead-free, I know you said it’s substantially behind you at this point, but is there anything left to get over? Is there any potential -- what would you say the potential for leakages into 2014 is?

Look, it’s a complex foundry with a lot of technology. We look at the conversion costs very discretely as isolated to exactly the conversion. But it is always possible that we continue to have productivity issues. It’s always possible that you have issues with supply chain or material cost increases or any of the things that any normal foundry has to deal with given the level of complexity we have there. So I think what we’re calling out is that the discrete items related to the transition are behind us and we’re continuing to ramp up our production and our efficiencies in the foundry and on a go forward basis. Joseph Giordano – Cowen & Company: So there’s nothing you’d call out on the efficiency side that made up that $1.4 million that stood out in any one aspect?

No. I think it was very much similar to what we saw earlier in the year.

Your next question comes from the line of Kevin Bennett with Sterne Agee. Please proceed. Kevin Bennett – Sterne Agee & Leach Inc.: First off on the non-residential market here in the U.S, I know we’re hoping for some decent growth this year. Can you guys dig a little deeper on what you’re currently seeing? And then maybe talk about what areas within that may be stronger than others and what may be weaker?

Look, from a residential perspective, as mentioned earlier, we’re encouraged by the housing starts data. We’re encouraged by the overall momentum that we see in new construction. We’re encouraged by the LIRA information which obviously points to I think is more closely correlated to our growth rates which is the repair/replace end markets which is expected to be up about 11% next year. So from our perspective, it is about the health of the repair/remodel market, the health of the overall new construction market. Where the opportunity lies is as those markets get healthier, obviously small commercial, multi-family, the broader commercial verticals like hospitality and office space, also have a pull on effect. And that’s where we see really the incremental opportunity in the second half of the year. Kevin Bennett – Sterne Agee & Leach Inc.: And then in terms of your inventories in the channel, how are you feeling about those right now?

Look, if demand has increased and our fulfillment performance continues to improve -- we had very solid fulfillment performance in the second half of the year despite what we were going through on lead-free. We think we’re fairly well balanced and we feel like we’re meeting customer requirements. At the same time, we’re getting a lot more efficient on our inventory. We obviously had to invest significantly both in lead and in lead-free inventory as buffer stock through the conversion. But we think that we’re getting back on track at levels that we think are normalized. Kevin Bennett – Sterne Agee & Leach Inc.: And then two more quick ones. First on the buyback, should we think about that $40 million being evenly spaced throughout the year, $10 million a quarter or are we going to be opportunistic or how should we think about that in 2014?

Right now Kevin, I would think about it at $10 million a quarter. Kevin Bennett – Sterne Agee & Leach Inc.: And then last question for me, on the M&A pipeline, can you just Dean talk about what you’re seeing and is there anything close or anything you can talk about?

No, nothing close. There’s still opportunities out there, but nothing imminent. Obviously we’re working through a number of priorities here internally. We’re keeping a very healthy pipeline and an active pipeline, but nothing imminent.

(Operator Instructions). Your next question comes from the line of Jim Giannakouros with Oppenheimer. Please proceed. Jim Giannakouros – Oppenheimer & Company: As far as -- if you can give us any update on the timeline for achieving your previously stated 12% operating margin goal. I know that there was formally in the out years, but just given the improved visibility you’re getting to leverage opportunities in North America and obviously your cost takeout in Europe. Any update there would be great.

Jim, I’d be loath to call out a specific date because we hadn’t done that in the past. I think what we talked about is in the next two to three years, probably closer to the two years, but I think the range we’ve talked about is two to three years and I don’t think there’s a big change in that. Jim Giannakouros – Oppenheimer & Company: And I apologize if I missed it, but when you were talking about your sales rationalization in Europe, does that have more to do with duplicative SKUs in certain geographies or just low performers? Can you give us some specifics around where you’re calling your offerings?

So obviously it’s difficult for us to get into the specifics on that given the early stages we are in the program, but it is a top to bottom comprehensive assessment of SKUs products categories and the discrete margin profiles across those categories and then obviously taking a rationalization view of do we keep it, do we sell it, do we increase pricing, how do we rationalize across that portfolio and ensure that we’ve got the optimal product mix with the optimal margin profile that we’re targeting? And over the years, one of the issue, if you think about the acquisitions and the integration of acquisitions over the years, this is a lot of components, a lot of SKUs that generate low or in many cases no margin whatsoever. And so that’s all a part of this effort to better integrate as we leverage our pan-European capabilities, as we try to leverage more cross selling. Rationalizing SKUs is just a good way to effect those initiatives, but also to expand margins.

At this time, we have no further questions. I will now turn the call back over to Mr. Dean Freeman for any closing remarks.

Thanks everybody. I know there was a lot to cover. I appreciate your interest. Thanks for the time and we look very much to -- thank you for your continued interest in Watts and look forward to talking to you again in the first quarter earnings call in late April. Thanks everybody.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.